Tracts of privately-owned urban land already designated as lanes and alleys are becoming a legal loophole for tax evasion among major Taiwan businesses, according to a Taipei City councilor.
At a press conference yesterday, councilor Yang Shih-chiu (
Under Taiwan law, monetary, land and other donations made to government agencies and government-recognized NGOs are tax-deductible. Corporations therefore frequently make donations to save on taxes.
The donors had given the land to the city at prices set by the government, even though they had bought the land at 10 to 15 percent of those set prices, Yang said. The government-set land prices are only meant for reference and do not correspond directly to market prices, even though the government normally uses them as a basis for land requisition.
The owners of land that has become lanes and alleys usually sell their land cheaply because the land is destined to be requisitioned by the city sooner or later, Yang said.
Taipei City has NT$700 billion to NT$800 billion in lane and alley land still in private ownership. Financial difficulties have delayed the city's requisition of the land, in some cases for two or three decades.
Yang also cited donations from Compal Electronics Inc (
Huang bought a piece of lane-and-alley land in Taipei last September and donated it to the city in December, while Compal bought a similar tract in early December and donated it later the month, Yang said.
Yang also named several other corporations at the press conference, including Metropolitan Construction (
A piece of lane-and-alley land worth NT$150 million at government-set price may only be worth NT$20 million at the market price, Yang said. By buying the tract and donating it to the government, a corporation can cut up to NT$60 million in income tax, thereby saving a net NT$40 million, he said.
The donor would also enjoy benefits in added-value land taxes and win an honorary medal from the city to boot, Yang said.
Yang called on the city government to quickly set up new regulations on the requisition of lane-and-alley land, which he hoped would take care of the city's interests and stem the tax drain.
Yang also called for the establishment of an evaluation on land requisition within one month.
Yeh Tien (
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