Fri, Oct 17, 2008 - Page 12 News List

Cabinet approves setting gift tax at 10%

ENGLISH SPEAKERS NEEDED Creating a regional finance center will require more tax reforms, deregulation and more professionals who speak English, analysts said

By Crystal Hsu  /  STAFF REPORTER

The Cabinet approved a proposal yesterday to set a flat rate of 10 percent for the inheritance and gift taxes, but industry analysts and academics said the cut was only one of several steps needed if the government hopes to turn Taiwan into a regional financial hub.

Ending months of debate, the Cabinet gave the green light to lower the inheritance and gift tax to 10 percent and raise the exemption level to NT$12 million (US$370,000) and NT$2.2 million from NT$779 million and NT$1.1 million respectively.

But creating a regional finance center will require more tax reforms, deregulation and more professionals able to speak English, analysts said.

Polaris Research Institute (寶華綜合經濟研究院) president Liang Kuo-yuan (梁國源) said taxation was only one of many factors investors take into consideration.

Liang said that the government had yet to complete its industrial policy, which would be crucial to national development.

If the government is serious about creating a regional financial center, Liang said, another concern is that there are not enough local professionals who speak English.

“I’m afraid we don’t have enough bilingual people, like in Hong Kong or Singapore,” Liang said by telephone. “We also don’t have enough people with an international vision.”

Likening language proficiency to infrastructure, Liang said the country would have to reform its education system.

Wang Lee-rong (王儷容), a research fellow at the Chung-Hua Institution for Economic Research (中經院), said the government should press ahead with deregulation to coax back Taiwanese capital abroad and attract foreign investors.

Wang said a sizable number of Taiwanese businesspeople in China had expressed interest in returning as the investment environment in China has become increasingly unfavorable.

“But they hesitate to do so because of the tax system and legal obstacles here,” Wang said by phone.

Wang said that she could not speculate as to how much Taiwanese capital could return from abroad, but said that investors would not even consider the idea unless the government reformed the tax system and deregulated cross-strait trade.

With a more favorable tax system, Wang said domestic and foreign investors might channel more money into the equity and property markets, creating more job opportunities and boosting tax revenues.

Lai Cheng-i (賴正鎰), chairman of the Taichung-based real estate developer Shining Group (鄉林集團), said the inheritance and gift taxes should be scrapped altogether to facilitate the return of nearly US$100 billion in capital distributed around the world.

Lai, whose business has been hit by the global financial crisis, said the government should be bolder in its measures to fix the economy — and ignore criticism along the way.

The construction tycoon said the government should remove legal barriers preventing Chinese nationals from investing in the property market, among other measures.

The government will next consider a proposal to trim corporate income tax from 25 percent to 20 percent or 17 percent and scrap a 10 percent levy on companies’ retained earnings.

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