Taiwan and Britain signed an Avoidance of Double Taxation Agreement in London on Monday, a move described by Taipei's outgoing de facto ambassador to Britain, Tzen Wen-hua (鄭文華), as "mutually beneficial" to both countries.
"The agreement will go a long way to boost bilateral ties in trade, investment, culture, technology and personnel exchanges and cooperation between the two countries," Tzen told the Taipei Times in a phone interview yesterday.
The agreement is the 17th comprehensive tax agreement Taiwan has signed with other countries, making the United Kingdom the largest country with which Taipei had formed such a pact, sources said.
The agreement will go into effect one year after both sides complete the related procedures required by the laws of each country, Tzen said.
The agreement was also the third of its kind reached between Taiwan and a European country, according to the Ministry of Foreign Affairs.
On Feb. 27 last year, Holland became the first European country to sign an Avoidance of Double Taxation Agreement with Taiwan. Sweden subsequently followed, signing the agreement with Taiwan on June 8 of the same year.
Taipei and London spent nearly two years negotiating before signing the agreement, sources at the foreign ministry said. London initially preferred to sign, either a related "memorandum of understanding" (MOU), or an "arrangement" with Taipei, but Taiwan rejected both proposals because they are not legally binding in the United Kingdom and the Commonwealth countries, sources said.
Tzen signed the accord in London with David Coates, the director of the British Trade and Cultural Office, the British de facto embassy in Taipei. The formal description of the accord is that is an "agreement between the Taipei Representative Office in the UK and the British Trade and Cultural Office for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains."
On the UK side, the agreement will apply to three tax categories: income tax, corporate tax and capital gains, Tzen said. He added that the pact will apply to two tax categories on the Taiwan side, namely profit-seeking enterprise income tax and individual consolidated income tax.
Minister of Foreign Affairs Eugene Chien (簡又新) said on Monday that the agreement marked "significant progress" in Taipei-London ties.
Chien also said the agreement would also facilitate more such pacts between Taiwan with Commonwealth and European Union member countries.
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