Legislature gives firms tax breaks

Boosting competitiveness ■ Mergers and acquisitions will be exempt from stamp duty, contract tax, securities exchange transaction tax, business tax and increment tax on land value. ■ The Cabinet's Development Fund will provide funding and loans to facilitate corporate mergers and acquisitions. ■ Companies with headquarters in Taiwan will be exempt from business profit tax. ■ Transactions of corporate and other types of financial bonds will be exempt from the securities exchange transaction tax. ■ Restrictions on land use will be relaxed and the user-management charge reduced from 3 percent to 1 percent.

The Legislative Yuan has passed revisions to a new statute that will provide preferential tax treatment to corporations that move forward on consolidation measures and for multinationals that seek to establish their regional headquarters in Taiwan.

Lawmakers hammered out the final readings of the "Statute for Upgrading Industries" (促進產業升級條例) on Friday, further implementing the consensus reached at last August's Economic Development Advisory Conference.

Under the new statute, when conducting mergers and acquisitions, and following approval from the Ministry of Economic Affairs, corporations can be exempted from stamp duty (印花稅), contract tax (契稅), securities exchange transaction tax (證交稅) and business tax (營業稅).

The increment tax on land value (土增稅) would also be put on hold for a period of two years for companies that qualify.

The statute also allows the Cabinet's Development Fund (開發基金) to provide funding and loans to facilitate corporate mergers and acquisitions.

Multinational corporations may also gain exemption from business profit tax if they have regional headquarters or branch offices in Taiwan.

The statute also notes that its definition of multinational corporation includes Taiwanese corporations doing business in China.

Tax breaks will also be provided on corporate bond (公司債) transactions and other types of financial bonds (金融債券) with the aim of stimulating the bond market and reducing costs for corporations by pooling capital.

The government could lose between NT$100 million and NT$200 million in tax income annually as a result of the new measures, according to some estimates.

The revisions also include relaxed restrictions on industrial land use and the removal of some clauses that had placed time constraints on the users of industrial property.

When purchasing industrial property, corporations will pay a management charge of 1 percent of the purchase price from the government. Previously, the fee was 3 percent.

To encourage industrial upgrading, the statute provides tax breaks for research and development projects. A tax deductible ceiling on R&D expenses and staff training has been raised from 25 percent to 35 percent.

Lauding the statute's passage, Vice Premier Lai In-jaw (賴英照) yesterday said that the government is attempting to make the nation a regional center for knowledge-based businesses, which will ultimately sharpen competitiveness and improve Taiwan's investment environment.

He said that it is vital to Taiwan's technological and economic development to attract foreign talent as well as cultivating local talent.