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Ho Mei-yueh stands up for high-tech firms on tax

Minister of Economic Affairs Ho Mei-yueh (何美玥) yesterday said that tax incentives for high-tech investors should not be downgraded after the minimum tax code is adopted because simultaneously imposing the two changes would increase financial pressure on them.

A government plan to claw back tax incentives for high-tech investors has angered industry leaders, including Taiwan Semiconductor Manufacturing Co (台積電) chairman Morris Chang (張忠謀).

They have demanded the government change the law that encourages people to invest in certain "strategic" industries rather than winding down incentives by administrative decree.

The Ministry of Finance and the Ministry of Economic Affairs have not reached a consensus on the issue.

Under the government's plan, investors would choose between a five-year tax holiday or a tax exemption on selected types of investment.

Ho said the two preferential treatments have operated in tandem for 30 years. She said that if investors are to be required to choose between them, the law should be amended to this effect.

She noted that her ministry would submit an amendment proposal within one year in accordance with a request from the Legislative Yuan.

The "minimum tax" code, which comes into effect next month, requires that a company with annual income exceeding NT$2 million (US$60,400) pay between 10 percent and 20 percent in corporate income tax.

Ho said that the new tax code has increased the tax burden on corporate leaders, and that this burden would become heavier if tax holidays and tax deductibles are revoked.

She suggested that a "right time" be chosen to withdraw the tax benefits for businesses that had been invited to invest in "emerging" strategic industries.

She admitted that the government had given quite a number of incentives to investors, measures which she claimed were beneficial for the nation.

Last year, for example, government revenue increased by NT$130 billion, due in part to a massive 28 percent increase in private investment, she said. This year, private investment rose only 9 percent compared with last year.

Some firms previously paid less than 5 percent of their earnings in income tax, and if the tax rate immediately jumped to more than 10 percent, it would not be appropriate, Ho said.

While some think that business enjoys too many tax benefits, certain companies benefiting from the system have been "the pride of Taiwan," Ho said.

The firms had provided an impetus for increased investment, she said, adding that they should be cheered rather than discouraged as they moved through certain stages of their development.
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