Taiwan's Government Postpones Decision On Tax Overhaul

by Mary Swire, for LawAndTax-News.com, Hong Kong

07 February 2008

The government of Taiwan announced this week that a decision on whether to substantially amend the country's corporate tax regime will be taken following the Lunar New Year break.

According to reports in the regional media, two courses of action have been proposed to follow the likely scrapping of the Promotion of Industry Upgrade Act, under which certain businesses in Taiwan currently receive tax incentives.

According to the China Post, under the first proposal, the existing incentives would be dropped, as would a 10% tax on undistributed corporate income. In addition, the business tax rate would see a 5% reduction, to 20%.

Under the second proposed option, the tax on undistributed income for companies would be scrapped, and the business tax rate would see a deeper cut, to 17.5%. In addition, individual income tax caps would be increased.

The news service quoted Premier Chang-Chun-hsiung as pledging a decision after February 11, and announcing that:

"The government will meet with various ministries to review the feasibility of reducing business taxes and increasing income tax deductions."

In addition to the tax cuts currently under consideration, the Taiwanese authorities recently announced the planned launch of a programme providing low-interest loans to SMEs and businesses in fledgling industry sectors, in order to boost economic growth.

The loan amounts, reportedly up to NT$100 million, at less than 4.51% interest, are expected by the government to help in the region of 27,000 businesses list for the first time.

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