Shipping Links Between Taiwan And China To Become Tax-Free

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

06 November 2008

Shipping companies in Taiwan and China using the Taiwan Straight as a direct method of transportation are set to gain exemption from business and income tax, it has been announced this week.

The move, which is aimed at boosting opportunities for trade and investment between the two countries, was made on Tuesday by the Vice Chairman of China's Association for Relations Across the Taiwan Strait, Zhen Lizhong.

Under the agreement, China will open up 63 direct shipping ports to Taiwan, with Taiwan offering 11 to China. Ships will then be permitted to use the Strait as a direct link to the ports when transporting cargo between the two countries.

Previously, this method of getting goods from China to Taiwan and vice versa had not been allowed, meaning shipping companies had to devise alternate transportation routes through neighbouring countries which were often long-winded and extremely costly.

However, the new regime will reverse this, encouraging greater trade to take place between China and Taiwan by increasing the amount that factories and investors can transport to and from each side.

Additionally, transportation officials from both countries have also signed a deal enabling greater benefits for air travel and postal links between the two sides. Passengers requiring direct air travel will now have an extra 72 flights to choose from each day after the ministers agreed to shorten certain air routes, and postal links will also be improved.

Tuesday's announcement is the first in a series of negotiations between the two countries aimed at improving their business relationship. It is also hoped that by the beginning of next year another agreement will be reached which could see banks on each side setting up branches in opposite countries in order to link them further.

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