Finally, the government has decided to pull in high-income earners with a minimum tax scheme that has been in the works for decades, but its latest effort may prove ineffective, an academic said yesterday.
"There will be a loophole in the proposed tax plan if the authorities fail to tax high-income individuals for their overseas income," Su Jain-rong (
Su said the Ministry of Finance should include levies on the overseas income in the proposed minimum-tax plan for high-income individuals, to prevent rich people from moving their assets abroad to avoid taxes.
Wealthy people can keep their overseas earnings from flowing into the nation's territory by establishing paper companies abroad or moving productive assets to foreign countries to dodge the taxes, he added.
According to local newspapers, Minister of Finance Lin Chuan (
But Su disagreed, saying the cost of taxing overseas income is lower than the tax revenue the government can garner, since the authority plans to impose the minimum-tax scheme on high-income individuals only, which form a minority of the nation's population.
The ministry on Monday unveiled the details of its minimum-tax proposal for individuals, including plans to levy a minimum tax rate of 17.5 percent and 20 percent on individuals who enjoy annual gross income above NT$8 million and NT$10 million, respectively.
Under the proposal, it is estimated that only around 1,000 high-income individuals would be affected.
While it excluded overseas income from the plan, the ministry added four other items: non-cash donations made to public institutions, insurance compensation, gains from employee stock bonuses and capital gains from trading unlisted stocks.
Amid growing concern, Lin said in an interview with the cable station USTV yesterday that the decision on whether to tax overseas income will not be affirmed until July 10, when the final version of the proposal comes out.
Apart from minimum individual income tax, the ministry is also proposing a minimum-tax scheme for companies whose annual gross income exceeds NT$2 million, or with annual revenue above NT$30 million.
The ministry provided three tax rates for the minimum corporate tax scheme, ranging from 7.5 percent, 10 percent to 12.5 percent.
The ministry estimated it would garner extra tax revenue of no more than NT$30 billion annually, while around 13,500 company taxpayers would be affected, at the most, after carrying out the minimum corporate tax scheme.
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