If a profit-making enterprise sells multiple plots of land at the same time, the tax regulations shall be applied separately according to the date of acquisition of the land.

When a profit-seeking enterprise sells multiple plots of land at the same time in the same year, it should pay attention to the date of acquisition of each plot of land to avoid mistakenly reporting the income from taxable land transactions subject to the new system of integrating real estate and land as income from tax-free land transactions under the old system and deducting it from the annual income for the same year, thereby underreporting taxable income.

The Ministry of Finance's Kaohsiung National Taxation Bureau stated that for profit-making enterprises with their head offices in the Republic of China, if the date of acquisition of the land they sold was before December 31, 2015, they are exempt from income tax under Article 4, Paragraph 1, Item 16 of the Income Tax Act (old system); if the date of acquisition of the land was after January 1, 2016, they are subject to the real estate and land combined income tax under Article 4-4 of the same act (new system), and the income from land transactions is calculated in accordance with Article 24-5 of the same act, and the taxable amount is calculated separately according to the tax rate applicable during the holding period and reported together. The profit-seeking enterprise shall report all the gains from the sale of multiple plots of land in the same year in Column 40, "Gains from disposal of assets", of the profit-seeking enterprise income tax return (hereinafter referred to as the return). The portion of the gains from the land transactions that are exempt from income tax (old system) shall be entered in Column 101, "Gains (losses) from the sale of land that are exempt from income tax" and deducted from the annual income of the same year; the portion of the gains from the land transactions that are subject to income tax (new system) shall be entered in Column 134, "Gains (losses) from transactions that meet the provisions of Article 4-4 of the Income Tax Act for houses, land, house-use rights, pre-sold houses and the bases on which they are located, and shares or capital contributions" of the return, and the taxable amounts shall be calculated separately according to the applicable tax rates according to the holding period (fill in page C1-1), and then filled in Column 135 for joint declaration and payment of profit-seeking enterprise income tax.

The bureau gave an example, saying that Company A sold five plots of land in 2013, with a profit of NT$30 million from the land transactions. The company reported the entire amount in column 40, "Profits from disposal of assets," and column 101, "Profits from sale of land exempt from income tax," on the annual return form. When calculating the taxable income, NT$30 million was deducted from the annual income. Subsequently, it was found that one of the lands was acquired in 2020, with a transaction profit of NTD 10 million, and should be subject to the real estate and land integrated income tax (new system). The land was held for more than 2 years but less than 5 years, and the applicable tax rate was 35%, and the tax adjustment was determined to be NTD 3.5 million (NTD 10 million × 35%).

The bureau specifically reminds that when a profit-making enterprise sells multiple plots of land in the same year, it should pay special attention to the date of land acquisition and calculate and declare them in accordance with the relevant provisions of the Income Tax Law to avoid being required to adjust and pay taxes by the tax authorities due to underreporting of income, which would affect its own rights and interests. If the public has any questions, they can call the toll-free service number 0800-000-321 for inquiries, or go to the bureau’s website (https://www.ntbk.gov.tw) and use the National Taxation Bureau’s smart customer service “National Taxation Assistant” for online inquiries.

Provided by: Fengshan Branch
Contact Person: Section Chief Lin Shufen Contact Number: (07) 7404001 ext. 5880
Written by: Su Yici Contact: (07) 7404001 ext. 5902