Minister of Finance Shea Jia-dong (
The announcement helped buoy the local bourse by 250 points and effectively killed any chance of implementation of the plan during President Chen Shui-bian's (
After the Ministry of Finance (MOF,
However, MOF officials, including Shea, claimed that to levy the tax is completely legal, and have been insisting on levying such a tax.
During a meeting held yesterday with officials from the Ministry of Economic Affairs (MOEA,
Shea apologized to other officials at the meeting for having to put of the plan, but refused to admit that the measure had been completely killed.
Since there are only three calendar years left for Chen's four year-term, a postponement of three years means it will not be implemented during the president's current term. Market watchers said this signifies that Chen has won the battle on the issue.
Shea said yesterday that in order to take care of the development of the high-tech industry, the stock dividend tax on company employees will be levied on face value of the stock dividend, which is NT$10, in the three years. Instead of levying on actual market value, which is normally worth 10 times as much. As to other measures, like stock options, that related to the stock dividend tax on company employees based on actual market value, Shea said it will be designed and implemented by MOEA and CEPD in two years.
After MOF was planning to levy the stock dividend tax on actual market value, high-tech companies expressed their strong opposition to the idea. Some high-tech companies even vowed to move their production to China or other places with no such taxation. President Chen recently told executives of high-tech companies that the measure would not be implemented. Then after MOF officials said the measure would still be considered, Chen expressed his opposition again. Finally MOF officials compromised and announced the three-year suspension.
After President Chen first expressed his opposition, MOF officials said that according to Article 14 of the Income Tax Law, stock dividends of company employees are a kind of income, and any income should be valued on the price accepted by the government. Therefore, if the stock dividend is not levied according to its actual market value, the government officials themselves will be violating the law.
However, after MOF decided not to levy the tax on actual market value, MOF officials found another way to explain the law.
Wang De-shan (
The local stock market jumped 250 points or 3.2 percent to 8048.14 on news of the postponement.
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