Business leaders yesterday made a last-ditch effort to voice their opinions on the proposed minimum corporate tax rate, suggesting that the rate not surpass 7.5 percent, although the Ministry of Finance is proposing 10 percent.
"We're not opposed to the establishment of a minimum tax rate on businesses, but the taxation system must allow us to maintain competitiveness," said Rock Hsu (許勝雄), chairman of the Taiwan Electrical and Electronic Manufacturers Association (電電公會), after a breakfast meeting with Premier Frank Hsieh (謝長廷) and high-level economic and financial officials.
The meeting, arranged by the Chinese National Association of Industry and Commerce (工商協進會), offered an opportunity for business and industry heavyweights to exchange opinions with the Cabinet.
Citing China's system of preferential tax rates as an example, Hsu said that the Beijing government offers tax exemption for the first two years and a halved tax rate for another three years, which brings the annual tax rate to an average of 7.5 percent.
"This is why our association suggests that the rate be set between 3.5 percent and 7.5 percent. The cap must be at 7.5 percent; otherwise Taiwan will lose its competitive edge," he said.
Luring overseas investment to Taiwan has been one of President Chen Shui-bian's (
Douglas Hsu (徐旭東), chairman of the Far Eastern Group (遠東集團), which operates businesses in the retail, finance, textiles and telecommunications sectors, suggested an even lower rate of 5 percent.
Matthew Miau (苗豐強), chairman of Mitac-Synnex Group (聯華神通集團), the nation's first own-brand computer company, said that the minimum tax system should be simplified to avoid scaring away foreign investors.
As part of the government's tax-reform program, the finance ministry proposed levying a minimum tax of 10 percent on businesses with annual earnings of more than NT$2 million (US$62,600) and a 20 percent tax rate on individuals with an annual income of NT$8 million or more.
The ministry submitted the draft proposal to the Cabinet for review on Wednesday. The Cabinet would like to finalize the taxation scheme and send it to the Legislative Yuan for approval in September.
After listening to various suggestions from business leaders, Hsieh said that the level of taxation was not as important as building a fair taxation system.
"My suggestion is that a gradual taxation scheme might be adopted, with the rate being hiked on a yearly basis," Hsieh told reporters after the meeting.
He said that the Cabinet would take all suggestions into consideration to finalize the long-disputed issue.
Business representatives also suggested that the government should waive the 10-percent tax on companies' "undistributed earnings" as soon as the planned minimum tax scheme is put into practice.
The government in 1998 introduced a 10-percent tax on undistributed earnings of companies that show a profit when it introduced the Unified Taxation System (
In response, Minister of Finance Lin Chuan (林全) said that the issue should be shelved until the minimum taxation scheme has been implemented, Theodore Huang (黃茂雄), chairman of the Chinese National Association of Industry and Commerce, quoted him as saying.
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