Taiwanese Cabinet Approves Tax Reforms, Recommends Introduction Of Tonnage Tax

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

07 May 2009

A package of tax cuts for individuals and businesses has passed its third reading by the Taiwanese legislature. A new tonnage tax scheme has also been proposed.

Announcing the news, the MoF explained that they had first passed an amendment to the current Income Tax Act, reducing the rates of consolidated individual income tax on three of the five main brackets. Under the new regime, the bottom three brackets will be reduced by 1% to 5, 12 and 20% - a change which is likely to benefit around 70% of low-earning households during 2011's tax return season.

In addition, the lowest four brackets for personal income tax have had their thresholds raised.

Corporate income tax will be cut by 5% from 25% to 20%.

The MoF has also explained that it will allow the unemployed and individuals on unpaid leave to apply for the right to pay less income tax this year, with the option to delay their payments by up to three months.

The government has been advised by one of its committees that it should now consider introducing a new, optional tonnage tax system.

According to the committee, such a regime would enhance international competitiveness during the current recession, and also boost ship registrations.

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