Taiwan's Financial Supervisory Commission (FSC) is studying how it could resolve a taxation problem related to the special reserve fund of domestic insurers that amount to around NT$100 billion (US$3.45 billion).

According to the Taiwan Economic News, the special reserve fund will have to be listed as shareholder's equity following the adoption of International Financial Reporting Standards (IFRS) in 2013. Under these standards, the reserves would be a form of retained earnings and become subject to 10% tax. The fund is established under the island's insurance legislation to ensure that insurers would have the capability to pay out compensation in major events.

The FSC, which will discuss the issue with the Ministry of Finance, is considering allowing insurers to pay the tax in instalments. The FSC and the ministry have reached a consensus not to levy tax on increased income or retained earnings resulting from implementation of the IFRS. However, some matters remain unsolved, including treatment of  the special reserves of insurance firms.

Meanwhile, the FSC has set up an IFRS service centre to help companies better understand and employ the new standards.