Many companies thought that underreporting the income of the company will not have a penalty as they do not generate taxable income. Actually, according to the regulation of Income Tax Act, where a profit-seeking enterprise, due to tax exemption provided under the incentive statute or because of the business deficit, shall not have a taxable income even though the amount of income omitted or under-reported is added to it, a fine shall be imposed separately at prescribed times according to the preceding two paragraphs on the taxable omission and under-reporting of income calculated at the profit-seeking enterprise income tax rate applicable in the current year. The amount of the fine, however, shall not exceed TWD 90,000 or be less than TWD 4,500.

For example, Company A file a profit-seeking enterprise income tax return for the year 2018, the loss of the company for the whole year is more than TWD 30 million, and after inspection, founded that Company A was underreported the income from insurance claims of more than TWD 740,000. Although the company is still under the situation of loss even after adding on the underreporting amount, however, according to Paragraph 3, Article No.110 of the Income Tax Act, the amount of more than TWD 740,000 was underreported by Company A, it should apply to the rate of the current year, that's 17%. The fines subject to the penalty is up to TWD 120,000, the omission or under-reporting of income taxable hereunder shall be subject to a fine of no more than twice the amount of the tax evaded. Since Company A issue a letter of commitment admitting the situation of the violation, therefore, according to the regulation of the Reference Table for Fines and Multiples of Punishments, they will subject to a fine of 0.4 times of the amount of tax evaded, that is TWD 50,000.