Taiwan May Slash Inheritance Tax

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

06 October 2008

Following weeks of discussion and speculation, the Taiwanese government appears to be getting ready to push through its Inheritance and Gift Tax changes, potentially slashing the maximum rate from 50% to as little as 10%.

Much uncertainty remains at the present time, but current analysis suggests that the government may be preparing to announce the changes in the coming week.

The current system is progressive, with the highest rate being 50%.

Changes are under discussion as part of the government's ongoing efforts to encourage Taiwanese investors to repatriate billions of dollars from overseas. Whilst Inheritance and Gift Taxes are not one of the government's primary revenue sources, amounting to less than USD1billion in 2007, the government hopes that the eventual increase in revenues resulting from such a rate cut would dwarf the early cost. In addition to increasing the repatriation of existing funds from overseas, the change is intended to encourage wealthy Taiwanese citizens to invest more in the local economy, rather than looking to external markets.

Analysts are split on the final extent of the rate cut, but current estimates suggest the new rate will be between 10% and 30%, with the most likely outcome being 10%. An announcement from the Executive Yuan is expected this week.

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