Tue, Feb 22, 2005 - Page 10 News List

MOF to lift film-royalty tax exemption

By Joyce Huang  /  STAFF REPORTER

The Ministry of Finance has decided to cancel a decades-old tax exemption on copyright royalties for foreign film producers that license local agents to release their movies for screening.

"In accordance with Article 8 of the Income Tax Law (所得稅法), a 20 percent tax will be imposed on royalty payments made in Taiwan," the ministry's secretary-general Joanne Ling (凌忠嫄) said yesterday.

After receiving the consent of the Government Information Office (GIO), the 25-year-old tax break, promulgated in 1979, will be officially terminated in August this year, she said.

Consumers have expressed concern that the extra royalty payments will eventually lead to an increase in ticket prices, but none of the eight major local distributors of foreign films were available to answer phone calls made by the Taipei Times as of press time yesterday.

"The promulgation [of the law], made some 25 years ago, conflicts with the income tax law," Ling said.

According to Ling, the GIO initiated the cancellation of the tax break, which it argues creates unfair competition between foreign film makers and their local counterparts.

The cancellation is in line with international practice. Most countries levy taxes on copyright royalties, and will facilitate a fair competition for local and foreign film makers, according to the taxation administration.

The tax administration said earlier this month that half of the royalty payments received by foreign film makers that have no local offices but license local agents to release their movies, will be taxed at the 20 percent rate.

For film producers with local offices, 45 percent of the royalty payments will be taxed, the statement said.

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