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Ministry provisionally approves alternative tax rates

The Ministry of Finance has decided to provisionally approve the tax rates stipulated in its Alternative Minimum Tax (AMT) proposal, with a rate of 10 percent for profitable corporations and 20 percent for high-income individuals, Minister Lin Chuan (林全) said yesterday.

The complete draft proposal is expected to be submitted to the Executive Yuan for approval next week.

Under the ministry's proposal, minimum corporate tax rates will include the original tax reductions or exemptions aimed at encouraging investment in public construction or industrial development, capital gains on stocks and future investments, and income reported by financial institutions' offshore business units.

Overseas investors' capital gains on stocks and future investments, however, will be exempted from the minimum corporate tax scheme, according to the ministry.

The ministry expects to garner extra revenue of NT$18.6 billion (US$579 million) per year in the next four or five years after levying a 10 percent minimum tax on businesses with annual earnings of more than NT$2 million, Lin said.

However, the Ministry of Economic Affairs maintained its insistence on a minimum corporate tax rate of 7.5 percent, citing concern over the impact on businesses' willingness to invest.

As for the minimum individual income tax, the ministry would not make a decision until next week on whether the taxation threshold will be an annual income of NT$8 million or NT$10 million, Lin said.

It has been decided that the disputed taxation on high-income individuals' overseas income will not be included in the AMT plan because of the problematic nature of conducting audits and determining levies, Lin said.

The levies on overseas income will likely be included in the second stage of tax reforms, when the nation's Income Tax Law (所得稅法) will be revamped by including the resident-based income in addition to current source-based income in the future, the minister said.
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