The Legislative Yuan’s Finance Committee yesterday approved a proposal to trim personal income tax rates by 1 percentage point for the lowest three brackets and cut the corporate income rate by 5 percentage points.
The tax reform bill, which needs to pass a final reading before taking effect next year, is expected to benefit at least 3 million households and cost the national treasury NT$18 billion (US$532 million) a year.
Initiated by the Cabinet, the bill seeks to cut income tax rates to 5 percent, 12 percent and 20 percent. Minister of Finance Lee Sush-der (李述德) said the tax cuts would ease the financial burden on people with low and middle incomes.
“If things proceed smoothly, the planned cuts can take effect in May next year,” Lee said after the review. “Households may save between NT$4,000 and NT$40,000 in taxes depending on their incomes.”
The planned cuts will not affect people earning more than NT$2.18 million a year as they are considered wealthy.
The lawmakers attached a provision that would raise the minimum taxable amount from NT$410,000 to NT$500,000, which would cut another NT$700 million a year from state coffers if passed.
The committee also passed a proposal enabling the finance ministry to adjust income tax rates once inflation hits 3 percent, down from 10 percent. The Cabinet had proposed lowering the threshold to 5 percent.
Meanwhile, the committee gave a nod to cut the business income tax from the present 25 percent to 20 percent, with the minimum taxable amount increased from NT$50,000 to NT$120,000.
Lee said the planned revision was designed to encourage companies to stay in Taiwan after tax preferences included in the Statute for Upgrading Industries (促進產業升級條例) expire at the end of this year.