Tue, Nov 02, 2004 - Page 10 News List

3G providers to get break on taxes

By Ko Shu-ling  /  STAFF REPORTER

Operators of third generation (3G) mobile telecommunication services will be entitled to a five-year tax break as part of the government's efforts to build the sector to an annual production value of NT$1 trillion, a government official said yesterday.

Following a cross-ministry meeting yesterday, the government decided to revise existing regulations in order to allow the 3G industry to join the semiconductor and flat-panel display sectors as a "NT$1 trillion industry" within the next 10 years.

Third generation technology allows mobile phones to offer high-speed Internet access, data, video and CD-quality music services.

Despite concerns over the government's potential revenue losses due to the five-year tax break, investment efficiency in the 3G industry is expected to outweigh this, said Chien Jen-ter (簡仁德), head of the Directorate General of Telecommunications under the Ministry of Transportation and Communications.

"While an estimate of NT$3.3 billion in total tax income will be affected due to the policy, the industry is projected to yield over NT$1 trillion in production value over the next decade," Chien said.

Operators of 3G services have had difficulties raising funds because of the industry's potentially high investment risks.

With the new tax break, the government hopes to see telecom service providers invest NT$364.4 billion over the next three years in building the broadband network.

"The tax break inducement is conducive to reaching our ultimate goal of entering a new broadband era by 2008," Chien said.

The Cabinet has targeted increasing household access to broadband Internet services to 6 million homes by 2008 in its NT$2.6 trillion, six-year national development project, dubbed "Challenge 2008."

The project is aimed at turning Taiwan into a "green silicon island" -- a nation devoted to clean high-tech industries.

Currently, about 4 million families have broadband Internet access.

The tax break incentive was one of six measures approved by Premier Yu Shyi-kun yesterday during a weekly cross-ministry meeting.

Yu also requested the Ministry of Transportation and Communications to lower the threshold for obtaining a fixed-line operating license in a bid to encourage cable television network operators or power line owners to provide broadband services using their existing lines.

Currently, the licenses are issued to those with more than 1 million customers and NT$40 billion capital investment.

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