Taiwan vs Intracom, November 2018, Supreme Administrative Court, Case No 691 of 107

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Intracom Taiwan had deducted losses on intra-group receivables and management fees in its taxable income.

These deductions had been partially denied by the Taiwanese tax administration due to lack of documentation and economic substance.

Intracom brought the case to court.

The Supreme Administrative court dismissed Intracom’s appeal and upheld the assessment.

On the issue of deduction for bad debt the court states:
The Appellee’s request for such documents was in accordance with the law. However, the Appellant was unable to produce documents that met the statutory requirements, and from this point of view, the Appellee’s refusal to allow the recognition of the doubtful accounts could not be considered an error.
(3) The appellant’s argument that the tax authorities should accept the recognition of doubtful debts as long as the appellant obtains the documentary evidence of the “foreign office certification” which proves the objective fact that “the debtor of the receivable has gone into liquidation” is clearly inconsistent with Article 94 of the R.O.C.

On the issue of management fee the court states:
Under the aforesaid objective circumstance that “the authenticity and necessity of this management fee expenditure is highly doubtful

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