Taiwan tax agency advises on trading gains from foreign exchange options

An August 31 statement from Taiwan’s Ministry of Finance states that companies with trading gains from trading foreign exchange options must include those gains in taxable income.

The statement explains that companies engaged in the export and import business often sign contracts for foreign exchange options with financial institutions to avoid the risks of foreign exchange rate fluctuations.

Under provisions of the income tax act, the statement notes, certain gains or losses resulting from financial derivatives as approved by the competent authority must be included in the income of businesses in the year of settlement and taxed accordingly. For these purposes, financial derivatives include foreign exchange options.

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