Taiwan Still Undecided Over Inheritance Tax Cut

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

07 October 2008

The meeting of The Tax Reform Committee this week, at which it had been hoped the final extent of the Inheritance and Gift Tax changes would be determined, potentially slashing the maximum rate from 50% to as little as 10%, has ended without a consensus.

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.

Whilst no definite decision has been made, it is widely believed that the committee will recommend a new rate of between 10% and 30%, with the most likely outcome being 10%.

The Committee was due to make its final decisions, and propose the changes to the Executive Yuan this week, though this is now looking increasingly unlikely. The changes are attracting growing opposition from protestors, who claim that they will only benefit the wealthy in society.

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