Fri, Oct 06, 2006 - Page 11 News List

Authorities mull tax break for firms in Farglory zone

By Jessie Ho  /  STAFF REPORTER , IN TAOYUAN

The government is considering giving a five-year tax break for companies operating in the Farglory Free Trade Zone as an incentive to encourage more businesses to make use of Taiwan's first free-trade air cargo zone.

"We are considering extending the application of the Statute for Upgrading Industries (促進產業升級條例) to companies operating in the zone and offering five years of zero income tax," Hu Sheng-cheng (胡勝正), chairman of the Council for Economic Planning and Development, said yesterday.

Hu made the remark while accompanying a group of China-bound Taiwanese businesspeople on a tour of the zone yesterday.

One concern of companies that intend to operate in the zone is the comparatively high income tax -- 25 percent -- stipulated in the Statute Governing the Establishment and Management of Free Trade Ports (自由貿易港區設置及管理條例), Hu said.

The Farglory Free Trade Zone, located near Taiwan Taoyuan International Airport was originally touted as the world's largest free-trade air cargo zone. The zone was inaugurated at the end of last year, but business has not been as good as expected.

At present, approximately 50 companies have signed contracts to operate in the zone, and progress is rather slow, said Kevin Tung (董啟文), marketing vice president of the free trade area.

Besides income tax, the statute stipulates that Aboriginal laborers must account for 5 percent of the staff hired by a company, but employers have found it difficult to meet this quota.

Farglory has been communicating with the government to remove the stipulation since the statute was first passed in 2003, but with no result. Most companies in the zone try to keep their staff numbers below 20 to get around the regulation.

To resolve the issue, Vice Premier Tsai Ing-wen (蔡英文), who also visited the zone yesterday, promised to review the statue within a month, Tung said.

If the problem can be solved soon, Tung said he is confident that more companies will move into the zone before the end of the year. Many China-bound Taiwanese companies have shown interested in making use of the free trade zone, saying the business environment is degenerating in China, Tung said.

Companies operating in the zone are exempt from tariffs, commodity taxes, tobacco and alcohol taxes and port service fees.

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