The National Development Council (NDC) said yesterday that it will consider extending the three-year income tax reduction for foreign employees in the government-designed “free economic pilot zone” project to attract talent from abroad.
According to the draft proposal for the project, which is currently under review in the legislature, the government will cut half of income tax for foreign employees working in the zones during the first three years of their stay.
At a public hearing regarding the establishment of the “free economic pilot zones” yesterday, Jason Hsu (許祺昌), a tax expert with PricewaterhouseCoopers (PWC) Taiwan, said the government should extend the tax reduction period for foreign employees to encourage them to stay longer in Taiwan.
Biomedical professionals, most of whom are currently in China and the US, tend to stay in places where they can have the most after-tax disposable income, and the “free economic pilot zone” policy is likely to draw these people to Taiwan, Hsu said.
Vice Minister of Finance Wu Tang-chieh (吳當傑) said the ministry will evaluate the outcome of the three-year tax reduction measure before it agrees to extend the policy.
“We have to ascertain whether the measure is really attractive to talented people overseas, and whether the measure will reduce jobs for local people,” Wu said.
Jeffrey Huang (黃益豐), general-counsel of Taipei Computer Association, said the tax reduction policy would not reduce job opportunities for locals.
Local companies hire foreign employees because they want to make sure their products and business strategy are suitable for their target markets, Huang said, adding that local companies are not likely to offer these jobs to Taiwanese.
Meanwhile, asked about the negative impact of the “free economic pilot zone” policy on local agriculture, Council for Agriculture Deputy Minister Wang Cheng-teng (王政騰) said the possible impact would be small.
The government is to allow food-processing companies in the zones to import raw materials from China after the draft is passed, the council said.
The total output for Taiwan’s agricultural sector was NT$470 billion (US$12.55 billion) in 2012, with about NT$170 billion of the amount generated by agricultural products used for food processing, Wang said.
However, only 20 percent of the NT$170 billion generated by agricultural products used in food processing will be affected by the policy because 80 percent of the products are not likely to be substituted by products from abroad, Wang said.
The legislature’s Economic Committee decided yesterday that it will complete five public hearing for the pilot zone policy by April 14, before it starts reviewing the draft.