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Taiwan Unblocks Air Agreement Revenues

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

09 June 2010


The Taiwan legislative Yuan has given legal substance to a 2009 transport agreement between China and Taiwan with an appropriate amendment, in order to unblock funds held in China.

Two transport agreements between Taiwan and China were signed in 2009 that set up reciprocal rights for air and sea carriers respectively to repatriate their earnings from the other country tax-free. Chinese carriers had started repatriating their earnings from Taiwan, but the Chinese authorities refused exchange control clearance on the Taiwan funds until the legal formalities had been completed. Without the transport agreements, a 3% business tax and a 1.25% income tax were applicable.

A revision to the Act Governing the Relations between the Peoples of the Taiwan Area and the Mainland Area has now been passed to unblock an accumulation of funds in China on behalf of Taiwanese airlines, which was said to have reached TWD6.5bn (USD200m).

A spokesman for China Airways, one of Taiwan's largest carriers, told Focustaiwan that his airline alone would make annual remittances of about TWD5bn from China in future.

TAGS: transport treaty | tax | business | law | aviation | China | Taiwan | agreements | legislation

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