The legislature’s Finance Committee yesterday approved plans to extend tax cuts for electric car sales by another five years to help electric car and parts makers grow and stay viable.
The bill, which must still pass second and third readings, exempts electric motorcycles and cars valued at less than NT$1.4 million (US$43,411) from sales tax from next month to December 2021 to boost sales.
The tax exemption was introduced in 2011 and was due to expire on Jan. 26.
Vice Minister of Economic Affairs Shen Jong-chin (沈榮津) said that the extension is necessary to encourage the development and purchase of electric vehicles.
The tax incentive could increase electric cars sale by 5,939 units and electric motorcycles sales by 150,000 units over the next five years, or generate related industrial output by NT$94.39 billion, Shen said.
Governments abroad have introduced measures to boost electric vehicle sales because the vehicles are seen as more environmentally friendly.
LOCAL FIRMS
Twenty-eight local firms are involved in the development and production of electric vehicles and parts, Shen said.
The expected increase in electric vehicle sales may help boost business tax by NT$4.36 billion a year, more than offsetting tax losses estimated at NT$2.4 billion per year, Minister of Finance Sheu Yu-jer (許虞哲) said.
Critics have questioned the success of the tax exemption, citing low sales figures.
Shen attributed the lackluster performance to a lack of battery packs in the supply chain and the extended tax exemption is intended to address that.
The legislature’s Finance Committee also approved plans to allow the Ministry of Finance five more years to collect back taxes on notorious tax debtors, including family members of late business tycoon Huang Jen-chung (黃任中) and Holiday Inn Asiaworld Taipei (環亞飯店).
UNSETTLED CASES
A revision of the Tax Collection Act (8) in 2007 stipulated that the government has 10 years to collect outstanding back taxes, which is due to expire on March 4 next year, meaning it has to close any unsettled cases at that time.
The extension would allow the ministry to pursue those cases further and recover an additional NT$5 billion in back taxes, Sheu said, adding that the recovery unpaid of tax is an important element of a fair taxation system.
The ministry is to target 370 people, each of whom owes more than NT$10 million tax, Sheu said.
The minister remained uncommitted to tax cuts for daily trade to invigorate the local bourse, saying daily trade does not enjoy favorable tax terms in other countries.
The ministry needs more time to contemplate the issue, Sheu said.
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