The government is to decide on the expiration date of planned tax reduction measures in the draft of the special regulations for free economic pilot zones by the end of next week, the Council for Economic Planning and Development (CEPD) said yesterday.
The government plans to grant a three-year period of tax reduction measures for companies investing in the zones after the plan is implemented, the council said.
The period can be extended to five years if the investment is dependent on land that needs further development, it said.
On Sunday, Minister Without Portfolio Schive Chi (薛琦) proposed that the government give companies a 10-year timeframe to apply for the tax reductions after the draft measure is approved and takes effect.
“Based on our exchanges with the Ministry of Finance, we think Schive’s proposal offers too many benefits,” Connie Chang (張惠娟), executive director of the council’s center for economic deregulation and innovation, told reporters yesterday.
The expiration date for tax reductions is likely to be the focus of a Cabinet meeting tomorrow and Schive is to start working on the draft on Friday, CEPD Minister Kuan Chung-ming (管中閔) said, adding that the Cabinet is to send the draft to the legislature later this month.
The draft aims to halve income tax levies on employees from overseas in the free economic pilot zones during the first three years of their stay, and to exempt local companies from taxes on dividend income and profits generated from abroad if they invest the funds in the zones, according to the council.
Meanwhile, Kuan said he is more optimistic about the nation’s GDP growth next year than the Directorate-General of Budget, Accounting and Statistics (DGBAS).
The council expects GDP to grow by 2.79 percent next year, higher than the 2.59 percent forecast by the DGBAS last month, Kuan said.
“We think that the rise in exports could play a more significant role in raising the nation’s investment and consumption volumes,” Kuan said.
The council forecast the nation’s exports of goods and services would rise by 3.86 percent next year, higher than the 3.41 percent forecast by the DGBAS.
Private investment would rise by 6.99 percent next year, higher than the 4.37 percent forecast by the DGBAS, and private consumption by 1.89 percent next year, compared with the 1.72 percent forecast by the DGBAS, he said.
If the draft regulations for the free economic pilot zones and the cross-strait service trade agreement are approved, and the regulations in the financial sector are liberalized, it is likely that the economy will grow by 3.2 percent, Kuan said.
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