As expected, the Ministry of Finance's draft of the alternative minimum tax (AMT) proposal passed its third reading in the legislature yesterday, with Minister of Finance Lin Chuan (
Lin made the remark at a press briefing yesterday evening to express the ministry's gratitude to lawmakers, after the bill was passed into law, making it the nation's first tax hike in nearly five decades.
The new law will take effect on Jan. 1, allowing the government to levy a tax rate of 10 percent to 12 percent for businesses whose annual profits exceed NT$2 million (US$59,700) after government subsidies have been taken into account, and a tax rate of 20 percent for individuals with annual earnings of more than NT$6 million, including overseas income of more than NT$1 million.
In addition, employee bonus shares will be accounted in personal incomes at market value, instead of par value.
But the Cabinet will be able to adjust the taxation rate depending on the economic environment. The Cabinet is also authorized to start collecting taxes on overseas income of high-income earners no later than 2010, under the new law.
The ministry, which began pushing forward the minimum tax scheme earlier this year, estimated the new law will affect about 5,000 companies, and between 16,000 and 17,000 households.
Foreign investors such as Morgan Stanley and BNP Paribas Securities yesterday welcomed the bill's passage, saying it will help rationalize the nation's taxation system in the long run, although it may have a certain impact on companies due to higher taxes and employee compensation costs in the near term.
The legislature yesterday also approved a government proposal to remove tariffs on 141 products imported from Afghanistan and 49 other less-developed countries.
The move was made in response to a WTO resolution adopted at the Doha Round of ministerial talks calling for duty-free treatment for products exported by less-developed countries.
The Cabinet said the WTO follows the UN's definition of less-developed countries, ie, those whose per capital GDP over the past three years averaged less than US$750, are short of human resources, or have a fragile economy.