Thu, Feb 12, 2009 - Page 12 News List

Finance ministry to bring back tax refund for exporters

By Crystal Hsu  /  STAFF REPORTER

Seeking to placate exporters, the Ministry of Finance said yesterday it would reinstate a tax refund policy compensating companies for duties on imported raw materials used in exports.

The policy could take effect by the end of this month

“The ministry has decided to restore the duty drawback system that was largely phased out after a series of rate cuts rendered the levy insignificant,” Deputy Minister of Finance Chang Sheng-ford (張盛和) told a press conference last night.

More than 3,000 items, chiefly imported farm and industrial materials, will qualify for the refund policy whether their tax rate is 0.1 percent or 5 percent, Chang said.


The announcement came one day after Minister of Finance Lee Sush-der (李述德) raised the idea of easing exporters’ pain.

Outbound shipments dropped a record 44.1 percent last month and shipments were expected to remain abysmal in the first half of the year, officials have said.

The Industrial Development Bureau and the Council for Agricultural Affairs would draw up a list of materials eligible for duty drawback, Chang said.

At present, refund claims are denied if the tax rate was lower than 5 percent or if the refundable tax to be offset accounts for less than 1 percent of the free-on-board export value.

As foreign sales account for 70 percent of the nation’s GDP, exporters claimed NT$2.1 billion (US$61.7 million) in duty refunds last year, Chang said.


The ministry has also been considering removing land and house tax preferences to boost the treasury and distribute the nation’s wealth more equitably.

The ministry’s Tax Reform Committee met yesterday and afterwards, academics and experts said that they had suggested scrapping some obsolete land and house levy preferences.

However, the minister said that the idea needed further consideration before a decision could be made.

There are 86 land and house tax breaks that amount to more than NT$40 billion a year, Lee said, adding that the two taxes contribute more than NT$110 billion to the state coffers.

“The government could recover about NT$20 billion in tax losses a year by reforming the tax code as advised,” Lee said. “The matter has yet to be finalized. It is better to wait until the economy shows signs of recovery.”

Lee said some farmland and farmhouses have been turned into commercial properties but continue to enjoy tax preferences because the government had failed to update its records.

He also said there was a huge gap between property values set by the government and their real market worth, resulting in considerable tax losses.


The committee also wants to reduce the definition of residential housing to 61 pings, from the current 91 pings.

Housing properties enjoy lower tax rates than their commercial counterparts.

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