Taiwan To Slash Inheritance And Gift Taxes

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

17 October 2008

Proposals for a substantial cut in inheritance and gift taxes have been approved by Taiwan’s cabinet.

It is expected that the tax rate will be dramatically reduced in an effort to lure back millions of dollars the island’s wealthy have invested abroad.

At present, inheritance and gift taxes are levied at rates of up to 50%, which has prompted many wealthy Taiwanese to shift their money offshore, particularly to low-tax Hong Kong and Singapore.

To address this, the Ministry of Finance proposes to introduce a uniform tax rate of 10%. In addition, the inheritance tax exemption will be increased to NTD12m (USD370,000) from the current NT7.8m, while gift tax exemption will be raised to NTD2.2m from NTD1.1m.

Vice-premier Paul Chiu said the government could lose up to NT20bn in tax revenues a year because of the tax cut, but he expects that much of this could be offset by a corresponding slowdown in capital outflow.

Mr Chiu announced that the cabinet is also considering cutting the current 25% income tax on financial institutions, as part of tax reforms aimed at promoting Taiwan as a credible Asian financial hub.

According to a government statement the proposal for the change in inheritance tax is expected to be approved by the legislature later this month.

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