Finance Minister Lee Sush-der (李述德) yesterday confirmed media reports that logistic firms engaged in both exports and imports would be exempted from business income levies while operational centers would be taxed at the minimum income rate.
The proposed tax reform is designed to encourage domestic and foreign firms to stay in Taiwan after tax preferences provided by the Statute for Upgrading Industries (促產條例) expire at the end of the year, Lee said.
The Cabinet will give its go-ahead to the tax reform bill on Thursday now that finance and economic officials have ironed out their differences.
Currently, import-oriented logistics firms are spared from paying business income tax. Minister of Economic Affairs Yiin Chii-ming (尹啟銘) reportedly insisted during cross-ministerial talks on Saturday that the tax break be extended to distribution companies involved in exports as they are part of the supply chain.
Yiin told local media the tax preference, to be included in the bill for industrial innovation (產業創新條例), could help attract multinationals to set up logistics centers in Taiwan, which could help domestic manufacturers deliver their goods more speedily.
“Taiwan has the opportunity to become a regional distribution hub following direct links between the country and China,” Yiin said.
The economic minister, however, sought unsuccessfully to extend the tax exemption to operational headquarters.
Lee said that to ensure fair taxation, the rule requiring operational headquarters to pay the minimum business income tax rate of 10 percent should not change.
“It is ill-advised to do away with the minimum business income levy for companies that reinvest their profits earned overseas in Taiwan,” Lee said. “The practice would violate the principle of fair taxation.”