Taiwan will attempt to tax the overseas income of its citizens in the next two years, helping expand government revenue as economic growth slows.
The nation's "worldwide" tax rule may swell its coffers by US$180 million a year, Minister of Finance Ho Chih-chin (
Ho's plan may target an increasing number of Taiwan's 23 million people who derive income from countries such as China, where economic growth is almost three times as fast. Taiwan lacks tax treaties with many countries, making it harder to enforce new rules.
"It'll be pretty difficult as you need to avoid double taxation and, technically, how do you get the information needed?" said Yophy Huang (黃耀輝), a taxation professor at the National Taipei College of Business.
Growth in Asia's fifth-largest economy has weakened amid cooling demand in export markets and political deadlocks that curb government spending.
Taiwan's total tax revenue last year was NT$1.6 trillion (US$48 billion). Residents with income of at least NT$6 million a year will be covered by the new rules.
"We don't have tax treaties with many countries -- that will increase the difficulty of enforcement," Ho said on May 4.
The nation has agreements with 16 countries, including the United Kingdom, New Zealand, Australia, Singapore, Vietnam and the Netherlands, and is seeking more.
Ho, 54, formerly an economist for the US Internal Revenue Service and chair of the economics department at National Taiwan University, was named finance minister in June.
He says he wants to broaden the government's revenue base while cutting taxes.
Extra revenue from planned cuts to tax breaks for industries may let the nation reduce the top income-tax rate to 35 percent from 40 percent and corporate tax to 20 percent from 25 percent, Ho said. He didn't talk about the timetable.
Taiwan's budget for this year is yet to be approved because of a deadlock in the Legislative Yuan between the ruling and opposition parties.
The World Bank and International Monetary Fund last month both predicted Taiwan's economic expansion will cool this year on easing demand for exports.