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Taiwan Proposes Tax Cuts To Prop Up Low Wages

Mary Swire, Tax-News.com, Hong Kong

16 June 2014


On June 12, a meeting of Taiwan's Cabinet approved an amendment to the Statute for Developing Small and Medium-Sized Enterprises (SMEs), which will provide corporate tax breaks to those businesses increasing wages for their lower-level employees.

To tackle wage growth stagnation, the amendment would offer a 130 percent tax deduction for small- and medium-sized enterprises against corporate income tax. The deduction would be allowed relative to the increase in payroll expenses for existing, domestic, entry-level employees. However, it will not take into account wage increases as a result of a rise in the statutory minimum wage, and employees at supervisory, managerial, and higher levels will be excluded.

The Government anticipates that the amendment will encourage about one-third of SMEs, or 430,000 businesses, to increase salaries. The 1.3m SMEs in Taiwan, which represent almost 98 percent of businesses in the country, employ 8.5m workers or 78 percent of all employees.

Having been passed by the Ministry of Finance, the measure will now go to the Legislative Yuan for parliamentary approval.

TAGS: individuals | tax | business | law | employees | corporation tax | Taiwan | payroll | small and medium-sized enterprises (SME) | legislation | tax breaks | legislation amendments

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