Offshore Income Safe From Taiwan’s Tax Reforms

by Mary Swire, Tax-News.com, Hong Kong

17 June 2005

Taiwan's leadership has reassured businesses and individuals that offshore income will not be targeted under proposals to introduce a minimum rate of income tax.

The government of Taiwan is currently considering a package of new tax measures, the centrepiece of which is a plan to set a minimum tax rate for companies, probably at a rate of 10%, in an attempt to widen the tax base, make the system more equitable and balance the budget by 2011.

At present, many Taiwanese firms are able to pay little or no tax thanks to generous exemptions from the government to encourage investment, especially in the technology sector. Wealthy individuals also benefit from this system.

Speaking to reporters after a cabinet meeting on Wednesday, Cabinet spokesman and State Minister Cho Jung-tai assured investors that the treatment of offshore income for enterprises and individuals - currently untaxed under Taiwan's laws - would not be changed as a result of the tax reforms.

However, Cho conceded that many members of the tax reform committee had "different views" on whether gross foreign institutional income or individual offshore income or income from overseas banking unit accounts should be taxed.

"The question of taxing offshore income requires separate study that would include supporting measures," revealed Cho.

According to Finance Minister Lin Chuan, a 10% minimum corporate tax rate would raise some NT$10 billion (US$320.7 million) in additional revenues. He also stressed recently that the rate would still be much lower than Taiwan's economic rivals in the region, and only "a few hundred" firms would be expected to pay the tax.

Recommended