Taiwan Finance Ministry Approves Minimum Corporate Tax

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

12 July 2005

Taiwan's Ministry of Finance has provisionally agreed to a plan that will introduce a minimum rate of tax for both corporations and wealthy individuals, Finance Minister Lin Chuan has announced.

In a bid to achieve "taxation fairness and rectify the serious erosion of (the)taxation base," the government will impose a minimum 10% tax on business income, according to a draft statute approved by the Ministry of Finance on July 7.

A minimum tax will also be levied on domestic personal income exceeding a certain limit. There are two options for both the minimum tax and the income limit, which are yet to be determined: 20% or 17.5%, and NT$10 million or NT$8 million (US$250,400 or US$313,000).

The statute for the minimum tax will take precedence over the existing income tax law, statute for industrial upgrading, and the tax-exemption stipulations of other laws.

However, capital gains on stocks belonging to overseas investors will be exempted from the alternative minimum corporate tax scheme, according to the finance ministry.

In addition, under the principle of trust protection, enterprises can continue to enjoy their existing tax incentives, a move which is expected to drastically cut the number of domestic businesses liable for the new tax to 1,000, sharply down the original estimate of 5,000.

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