Surtax on Undistributed Profits
Profit of a year can be distributed to shareholders in the next year. To neutralize a company’s dividend distribution decision, if there is any earnings of the current year not distributed in the following year, an additional income tax will be levied on such undistributed surplus earnings.
The return must be filed before 31 May of the year after the next year. For example, if the profit incurred in 2021 is not distributed in 2022, the surtax on undistributed profits should be paid before 31 May, 2023. Companies must attach to the annual corporate income tax return a report detailing changes in its retained earnings.