Employee training may get lift

INCENTIVE:Firms must spend at least NT$600,000 to get a tax write-off on professional training expenses, but that may soon change

By Shirley Sun  /  STAFF REPORTER

Wed, Jan 12, 2000 - Page 17

The Industrial Development Bureau (工業局) said yesterday it has been negotiating with the Ministry of Finance (財政部) to make more favorable a tax break that allows companies to write off professional training expenses.

Currently, a company must have at least NT$600,000 in annual professional training expenses in order to get the tax break. But officials say that minimum is set too high and out of reach of smaller businesses.

"It [the elimination of the requirement] will encourage companies to investment in professional training," said Duh Tuzz-jjun (杜紫軍), 6th division director of the bureau. "Most small and medium business don't invest NT$50,000 a month in professional training. It is just not realistic."

The finance ministry is likely to support lowering the requirement, Duh said. "Their only concern is administrative hassle, since more companies will be eligible for the tax deduction," he said.

The final decision on the proposed change will be announced next month, Duh said.

The bureau also announced that the government would spend NT$280 million to help companies train 34,000 professionals this year.

According to the bureau's report, it is estimated that by 2005, traditional industries -- such as print makers, shoe manufacturers and textile firms -- will account for just 45 percent of the nation's production output, down from 60 percent today.

This year, traditional industries will receive NT$168 million professional training subsidies, or 60 percent of the NT$280 million total, with the remainder going to the high-tech sector.

"The government would like to see traditional industries upgrading -- not vanishing," Duh said. "The private sector is less willing to make investment in traditional industries. Therefore the government has to do it."

According to Duh, the new version of the Statute for Upgrading Industries (促進產業升級條例) will also encourage companies to provide professional training by raising tax credits from 20 percent to 25 percent. The tax benefits could go even higher, as companies are rewarded for increasing their professional training budgets year over year.

For example, take a company that invests NT$1 million per year for two years straight and then ups its professional training budget to NT$2 million in the third year. In that third year, the firm would be able deduct 25 percent of the first NT$1 million and 50 percent of the second NT$1 million.

Duh also noted that, under the statute, companies need no longer be in "cities" (縣市), as they now can be in "counties and towns" (鄉鎮) in order to enjoy tax credits.

"There will be more counties and towns that will enjoy business investment," Duh said. "We intend to have at least half of the current 369 counties and towns eligible for tax credits."

Population growth rate, transportation, unemployment rate and average household income are some of the factors considered when evaluating the chosen areas.

As for the definition of "new important strategic industries" (新興重要策略性工業), which are the industries that will benefit from the new statute, Duh said that general guidelines will be announced next month, and the detailed indexes for companies is expected in March.