Finance ministry still pushing for corporate tax revamp

Proposed changes * The finance minister said it would be difficult to raise the national taxation rate to 15 percent within three years without a minimum level of taxes for businesses. * Reducing tax exemptions to businesses and lifting the value-added tax would also help achieve the goal. * The finance ministry expects to submit a final plan for a minimum corporate-tax scheme to the Cabinet in July, and hopes to send it to the legislature next year. * In March, the finance minister suggested setting the minimum corporate-tax rate at 10 percent.

Without of the planned minimum corporate-tax scheme this year, it would be difficult to achieve President Chen Shui-bian's (陳水扁) goal of raising the national taxation rate to 15 percent in the next three years, Minister of Finance Lin Chuan (林全) said yesterday.

Lin the remark in the afternoon after the president's economic advisers agreed a minimum tax rate should be imposed on corporate income.

The economic advisers -- led by Lin Hsin-yi (林信義) -- said yesterday morning that the Cabinet will decide on the rate.

The national taxation rate is the nation's taxation level divided by its GDP.

According to the Ministry of Finance's statistics, tax revenue increased by NT$100 billion, while the tax-GDP ratio grew to 13.6 percent last year from some 12 percent in 2003.

Lin Chuan told a cable TV program that the president's plan to boost the ratio to 15 percent means increasing tax revenue by another NT$150 billion.

He said that goal could be achieved if the government can carry out the minimum-tax plan, reduce tax reductions and exemptions offered to businesses and raise the value-added tax rate by 1 percent to offset the possible narrowing of the inheritance tax rate of 50 percent.

Some Taiwanese companies, especially technology companies, don't have to pay any income tax because of tax breaks offered by the government to encourage investment.

The ministry is expected to submit its final proposal for a minimum corporate-tax scheme to the Executive Yuan for review sometime in July with the goal of sending the plan to the Legislative Yuan next year, Lin Chuan said.

He said he expected that the implementation of the minimum-tax scheme this year would be successful.

On March 14 he said that a minimum rate of 10 percent on corporate income would add more than NT$10 billion to the treasury.

A minimum 10 percent tax rate would still be lower than those of nearby countries, such as South Korea, which has a minimum-tax rate of 16 percent on companies, Lin Chuan said at the time.

The rate ``would affect a few hundred companies,'' he said.