Thu, Dec 29, 2011 - Page 11 News List

Taiwan, Germany agree to avoid double taxation

By Shih Hsiu-chuan and Amy Su  /  Staff Reporters

Taiwan and Germany signed an agreement to avoid double taxation on income and capital gains, and on the prevention of tax evasion, pending revisions of their respective domestic laws and notifications of any changes in their laws.

According to the Ministry of Foreign Affairs, Germany is one of the nation’s major trading partners in Europe. The volume of trade between the two countries last year amounted to US$14.8 billion, an increase of 42 percent from the previous year.

Among the EU countries, Germany is the third-biggest source of foreign investment in Taiwan, with investments amounting to US$1.9 billion from 250 enterprises, while there are more than 200 Taiwanese businesses operating in Germany, with a total investment amounting to US$100 million.

encourage

The agreement is expected to create a friendly environment that would encourage bilateral investments, create jobs and enhance exchanges and bilateral ties, the ministry said.

Taiwan has made some progress this year in reaching agreement on the avoidance of double taxation with its major trading partners.

The first deal, between Taiwan and France, took effect on Jan. 1 and was followed by a similar deal between Taiwan and India in August, while another agreement between Taiwan and Switzerland took effect earlier this month.

In particular, the agreements with France, Switzerland and Germany are expected to further cement Taiwan’s bilateral economic ties with the European countries.

commodity tax

Meanwhile, the Ministry of Finance said yesterday that the cut in commodity tax for liquefied petroleum gas (LPG)-powered hybrid cars will take effect tomorrow, a move that is expected to help the nation reduce greenhouse-gas emissions.

The reduction in the commodity tax on LPG hybrid vehicles by NT$25,000 (US$825) per vehicle will last for a five-year period, the ministry said in a statement.

The tax breaks for LPG hybrid car distributors may create a demand for up to 5,200 LPG hybrid cars in the next five years, which would reduce tax income by an estimated NT$136.5 million, the ministry said.

Currently, automobile companies pay a commodity tax rate of between 25 percent and 30 percent of the factory value of a car, which they then pass on to buyers, ministry data showed.

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