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Taiwan

Business and foreign investors face higher taxes in Taiwan as ministers seek fairer system

Government plans changes that will also see income tax cut after complaints locals are losing out

PUBLISHED : Saturday, 02 September, 2017, 6:10pm
UPDATED : Saturday, 02 September, 2017, 10:28pm

Taiwan plans to raise taxes on corporate income and foreign investors’ share dividends but cut personal taxes as part of broader reforms.

The government plans to raise the business income tax from 17 per cent to 20 per cent and lower the cap on personal income tax to 40 per cent from 45 per cent, Finance Minister Sheu Yu-jer said on Friday.

Foreign investors’ cash dividends from shares would be taxed at a rate of 21 per cent, up from 20 per cent now, he said.

The ministry said the changes were intended to achieve a more equitable distribution of the tax burden. The government has long been criticised for favouring foreign investors over domestic investors, while allowing companies to transfer more of their major shareholders’ income to corporate income.

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“Our current business income tax of 17 per cent is relatively low compared with other major countries,” the minister said.

“We are aiming to build a fair tax system that follows global trends and is more globally competitive, which would be to everyone’s benefit.”

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Tax on foreign investors’ cash dividends from shares would be raised as it was much lower than the existing 45 per cent local investors had to pay, he said.

The tax restructuring, subject to cabinet approval, would result in a net reduction in tax revenue of T$5.9 billion to T$6.9 billion (US$196 million – US$229.3 million) annually, the minister said.