Taiwanese industry leaders yesterday urged the government to scrap the tax on part of their net income reserved for future investment in a bid to reduce profit erosion caused by the passage of a new minimum-tax bill.
The remarks came after legislators on Friday gave the green light to a controversial tax-hike bill, which among other things imposes a minimum tax of between 10 percent and 12 percent on companies with annual net income exceeding NT$2 million.
The new tax scheme will come into effect next year.
much higher
The new rate is much higher than the industries' earlier expectations of it ranging between 3.5 percent and 7.5 percent. Industry representatives, including Taiwan Electrical and Electronics Manuf-acturers' Association (電電公會) chairman Rock Hsu (許勝雄), expressed their disappointment with the bill's passage.
"The high minimum tax rate will erode the profits of local firms, especially those in the volatile high-tech sector, and will reduce investors' willingness to invest in Taiwan Taiwan," said Luo Huai-jia (羅懷家), a spokesman of the association.
The association, one of the nation's three biggest industry bodies, represents more than 4,000 local electronics companies.
Luo said that the new bill could drive local companies to look to other countries for future investments, as the government's tax hikes bucked the trend of offering lower taxes as an incentive for foreign investors.
meeting soon
To minimize the impact, Luo said the association would meet with Ministry of Finance officials soon to discuss scrapping or lowering the 10-percent tax rate on an unspecified portion of a company's annual earnings.
Around 5,000 companies will be affected by the new law, according to ministry estimates.
The Chinese National Federation of Industries (
The federation said that if the new minimum tax was set at 10 percent, it would diminish the profits of listed companies by at least 4.4 percent.
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