On July 12, 2016, the Legislative Yuan approved amendments to Articles 43-3 and 43-4 of the Income Tax Act, providing that there will be two additional mechanisms, which are “Controlled Foreign Company” (CFC) and “Place of Effective Management” (PEM), established for the purpose of anti-tax avoidance.  With resepct to a Taiwan company holding shares in a CFC, the Taiwan company shall be required to report and pay business income taxes on the income or gain from its investment in the CFC, based on its shareholding / capital contribution and the length of holding.  For a company established elsewhere but operating in Taiwan with its PEM in Taiwan, such company shall be deemed a domestic company and shall be required to report and pay the business income tax in accordance with the Income Tax Act.