only to remittances involving a conversion between New Taiwan dollars and U.S. dollars or other foreign currencies.  The discussion below describes the principal Republic of China tax consequences of the ownership and disposition of ADSs  representing common shares and of common shares. It applies to you only if you are:  You should also consult your tax advisors concerning the tax consequences of owning ADSs and common shares in the  Republic of China and any other relevant taxing jurisdiction to which they are subject.  Dividends declared by us out of our retained earnings and distributed to you are subject to Republic of China withholding  tax, currently at the rate of 20%, on the amount of the distribution in the case of cash dividends or on the par value of the common  shares in the case of stock dividends. However, a 10% Republic of China retained earnings tax paid by us on our undistributed after- tax earnings, if any, may provide a credit of up to 10% of the gross amount of any dividends declared out of such earnings that would  reduce the 20% Republic of China withholding tax imposed on these distributions.  Share or cash dividends paid by us out of our capital surplus which are derived from the issuance of shares at a premium are  not subject to Republic of China withholding tax. According to the rulings of Ref. Tai-Tsai-Hsuei-Tzi-09504509440 issued by the  Ministry of Finance of the Republic of China, if a company reduces its share capital and redeems for cash its outstanding common  shares issued to the company’s stockholders by capitalization of capital surplus, those premiums under the capitalized capital surplus  derived from re-evaluation of assets, sale of lands and/or merger with other enterprise shall be deemed as the gain in the stockholders’  capital investment, and shall be deemed as stockholders’ dividend income (or investment revenue) and be subject to R.O.C income  tax. As the legal reserve is set-aside from company’s profit earnings (after tax) in accordance with Article 237 of R.O.C  Company Act, receipt of distribution of legal reserve shall be deemed as stockholders’ dividend income (or investment revenue) and  be subject to R.O.C income tax collected by way of withholding at the time of distribution, currently at the rate of 20%, unless a  lower withholding rate is provided under a tax treaty between the R.O.C and the jurisdiction where the Non-R.O.C Stockholder is a  resident. Gains from the sale of property in the Republic of China are generally subject to Republic of China income tax. Under the  current Republic of China law, capital gains on securities transactions (including sale of common stock) are exempt from income tax  but subject to Income Basic Tax (alternatively known as the Alternative Minimum Tax) assessment at the rate of:  115 ●  10% of the gains realized if you are an entity that is not a natural person and have a fixed place of business or business agent  in the Republic of China.  ●  20% of the gains realized if you are a natural person residing in the Republic of China; or  ●  a corporation or a non-corporate body that is organized under the laws of a jurisdiction other than the Republic of China for  profit-making purposes and has no fixed place of business or other permanent establishment in Taiwan.  ●  an individual who is not a citizen of the Republic of China, who owns ADSs or common shares and who is not physically  present in Taiwan for 183 days or more during any calendar year; or  E. Taxation Republic of China Taxation Dividends Capital Gains P AR T I