According to the ruling issued by the Ministry of Finance (MOF), shareholders who subscribe the shares in accordance with Paragraph 1, Article 7 of the Act for The Development of Biotech And New Pharmaceuticals Industry ("Act") shall, by applying with the issuing company, relinquish their rights to defer the income tax associated therewith upon depositing their shares into the securities account at the securities firm. The income should be calculated in accordance with the value of the transfer date and consolidated with other income of such individuals in the year their shares are transferred to the securities account.
Pursuant to the MOF's Ruling Ref. No.: Tai-Chai-Shui-Zi-10304601000, dated 2 April 2015, top executives and technology investors of biotech and new pharmaceuticals shall first apply with the issuing company to cancel the tax deferral notice on their shares before such shares can be transferred to the discretionary investment account opened with the securities firm. The income will be calculated in accordance with the value as of the transfer date. Such an application cannot be subsequently withdrawn or revoked nor can the time of the application be altered after the shares have been transferred. According to Paragraph 3, Article 7 of the Act, in the event that a technology investor is unable to provide documents proving the costs for acquiring the transferred shares when reporting its income, thirty percent (30%) of the purchase price will be deemed the acquisition costs. However, this provision is not applicable to top executives.
Within thirty (30) days from the following day of the share transfer, the issuing company concerned shall file relevant reports to the local tax authorities, i.e., "Report and Declaration For Transferring Tax-Deferred Shares" and "Report For Transferring Tax-Deferred Shares", in accordance with Paragraph 2, Article 7 of the Act.