AmCham officials worried over taxes

High-level executives of the American Chamber of Commerce in Taipei (AmCham) yesterday met with Vice Premier Wu Rong-i (吳榮義) to express foreign companies' concerns about the government's proposed minimum tax measure, which is expected to affect business entities across the board.

The Cabinet is scheduled to review the draft to the Alternative Minimum Tax (AMT) proposal submitted by the Ministry of Finance tomorrow. If passed, the draft will be submitted to the legislature for approval next month when the new legislative session begins.

"Our main appeal is that the new taxation measure should not affect the companies which have applied to launch investment projects in Taiwan because their decisions were made based on the five-year tax-exempt offer promised by the government," said Lorene Chen (陳嘉宜), chairwoman of the joint tax committee of AmCham and the European Chamber of Commerce Taipei (ECCT), yesterday.

Chen was one of the representatives exchanging opinions with Cabinet officials yesterday. She refused to detail who else attended the meeting.

According to the finance ministry's taxation version, a 10 percent minimum tax will be levied on the businesses with annual earnings of more than NT$2 million (US$62,000).

This would have an impact on corporations, especially high-tech and manufacturing businesses, if they have applied for five-year tax break incentives in compliance with the Statute for Upgrading Industries (促進產業升級條例), she said.

AmCham and the ECCT's stance is that if the companies have obtained the formal approval documents from the Industrial Development Bureau under the Ministry of Economic Affairs to enjoy tax exemption, then the incentive should remain effective, despite the implementation of the minimum tax policy, Chen said.

The Cabinet tends to reach a compromise by allowing tax breaks for those who start their planned construction within one year and finish their investment projects in three years.

According to Chen, most of their group members said they can accept this offer, as they understand the government's incentive scheme cannot be continued indefinitely.

"We hope the government can work more to ensure `predictability' and `certainty' as companies rely on these promises to decide whether they will invest huge amounts of money in certain nations," she said.

She said that their meeting yesterday did not touch upon Corning Inc's investment projects.

According to Chinese-language media reports yesterday, Corning Inc, the world's largest maker of glass substrates used in liquid-crystal displays (LCDs), is considering moving a planned third plant from Taiwan to South Korea if the government revokes its tax incentives.

Corning currently has two plants in Taiwan -- one in Tainan, which has been running for more than two years, and the other in Taichung, which will be completed this year and start operation. Local flat-panel makers including AU Optronics Corp (友達光電), Chi Mei Optoelectronics Corp (奇美電子) and Chunghwa Picture Tubes Ltd (中華映管) rely on Corning for material supplies.

However, the company denied the media reports, saying their investment plan remains unchanged.

"Now, we do not have any blueprints for a third plant," said an official with Corning Display Technologies Taiwan, the US-based company's local affiliate, on condition of anonymity.