The G20 industrialized nations’ recent pledge to clamp down on tax havens provided Taiwan with an opportunity to develop into a regional asset management center, Financial Supervisory Commission (FSC) Chairman Sean Chen (陳冲) said yesterday.
Early this month, G20 leaders said they would take action against so-called tax havens, including the British Virgin Islands, Cayman Islands and Gibraltar.
The top financial regulator said the government could take advantage of the G20 effort and turn the country into a regional asset management hub through tax preferences and other policy reforms.
Chen floated the idea of setting up “special accounts” under which funds wired from abroad to be managed by local financial institutions would be exempt from inheritance taxes.
“The government has sought to turn Taiwan into an asset management haven in the region,” Chen said in a speech. “The idea has met with political and economic difficulties. The G20 consensus provided an incentive for the pursuit.”
The government has promised to crack down on tax evasion and recently set the inheritance tax at a flat 10 percent from a range of 2 percent to 50 percent based on the amounts inherited, Chen said.
The FSC chief said he would have to talk to the Ministry of Finance about the special account proposal because it involved taxation.
Chen also said the government should cut income taxes further to induce capital inflows and help invigorate economic activity.
Chen said tax havens were a concern to other countries because of the continuous outflow of capital.
Countries like the US, the UK and Germany have drawn up measures to facilitate capital repatriation, the FSC head said, adding that the government could learn from them.
Chen said lower borrowing costs and greater trade freedom for regional and global operational headquarters could make the nation an asset management hub.
He declined to comment on when the country would sign a financial memorandum of understanding with China, saying the upcoming cross-strait talks would only address a financial cooperation framework.