PART I Tax Treaty  Retained Earnings Tax  U.S. Federal Income Tax Considerations for U.S. Holders  The Republic of China does not have an income tax treaty with the United States. On the other hand, the  Republic of China has income tax treaties with Indonesia, Israel, Singapore, South Africa, Australia, Vietnam,  New Zealand, Malaysia, Macedonia, Swaziland, the Netherlands, United Kingdom, Gambia, Senegal, Sweden,  Belgium and Denmark, Paraguay, Hungary, and France, which may limit the rate of Republic of China  withholding tax on dividends paid with respect to common shares in Taiwan companies. It is unclear whether if  you hold ADSs, you will be considered to hold common shares for the purposes of these treaties. Accordingly,  if you may otherwise be entitled to the benefits of the relevant income tax treaty, you should consult your tax  advisors concerning your eligibility for the benefits with respect to the ADSs.  Under the Republic of China Income Tax Laws, a 10% retained earnings tax will be imposed on a company  for its after-tax earnings generated after January 1, 1998 which are not distributed in the following year. The  retained earnings tax so paid will further reduce the retained earnings available for future distribution. When the  company declares dividends out of those retained earnings, up to a maximum amount of 10% of the declared  dividends may be credited against the 20% withholding tax imposed on the non-resident holders of its shares.  The following is a summary of certain U.S. federal income tax consequences of the ownership and  disposition of our shares and ADSs as of the date hereof. The discussion set forth below is applicable to  beneficial owners of our shares or ADSs that hold the shares or ADSs as capital assets and that are U.S. holders  and non-residents of the Republic of China. You are a U.S. holder if you are: • an individual who is a citizen or resident of the United States;  • a corporation or other entity taxable as a corporation for U.S. federal income tax purposes created or  organized in or under the laws of the United States, any state thereof or the District of Columbia;  •  an estate the income of which is subject to U.S. federal income taxation regardless of its source;  • a trust that is subject to the primary supervision of a court within the United States and one or more  U.S. persons have the authority to control all substantial decisions of the trust; or  • a trust that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a  U.S. person.  • a dealer in securities or currencies;  This summary is based on the provisions of the Internal Revenue Code of 1986, as amended (the “Code”),  and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be  replaced, revoked or modified so as to result in U.S. federal income tax consequences different from those  discussed below. It is for general purposes only and you should not consider it to be tax advice. In addition, it  is also based in part on representations made by the depositary and assumes that the deposit agreement and any  related agreement will be performed in accordance with their terms. This summary does not represent a detailed  description of all the U.S. federal income tax consequences to you in light of your particular circumstances and  does not address the effects of any state, local or non-U.S. tax laws (or other U.S. federal tax consequences, such  as U.S. federal estate or gift tax consequences). In addition, it does not represent a detailed description of the  U.S. federal income tax consequences applicable to you if you are subject to special treatment under the U.S.  federal income tax laws, including if you are:  114