The Ministry of Finance has issued a Ministerial Ordinance on 13 April 2007 with regard to the tax treatments of triangular mergers, which will apply as of 1 May 2007.

Triangular mergers are presumed to occur when a domestic company owned by a foreign parent company merges with a "target" domestic company by giving shareholders of the target company shares in the foreign parent company as consideration for the shares in the target company. This is because the current Companies Act does not allow a direct merger between a foreign company and a domestic company.

The new Ordinance allows the target company's shareholders to defer their tax obligation from the resulting capital gains accrued by the transfer of their shares to an acquiring company, under certain conditions, on the basis that the tax imposition on those capital gains would cause obstacles or setbacks for triangular mergers, which were introduced for the purpose to promote an inflow of foreign capital.

The Ordinance stipulates that the tax deferrals are granted only when certain conditions are met i.e. (i) the domestic acquiring company must not be a "paper" company, and must conduct its physical business by having a fixed place of business and employees and (ii) the business relationship between the acquiring company and the target company must be identified.