Government officials yesterday vowed to make the nation an Asian distribution center with a bill that would introduce new tax incentives to foreign enterprises that set up logistics distribution centers in Taiwan.
“The number of global logistics centers in Taiwan is expected to increase speedily from the current 15 if the bill is enacted. There have been some global logistics groups expressing their interest,” Minister Without Portfolio Chu Yun-peng (朱雲鵬) told a press conference.
Draft article 32 of the bill states that a foreign enterprise or its branch registered in the country, by itself or entrusting a local enterprise in the country, which engages in storage or simple reprocessing and delivers the products of a foreign enterprise to customers abroad or in the country with its supply chain, shall be exempted from business income tax.
Currently, companies are granted exemption on their business income tax only if their goods are sold to domestic customers, while the tax rate imposed on their business income earned from products sold to overseas customers is 0.3 percent.
“With the opening of cross-strait direct transportation, we have removed a major obstacle to foreign companies. Lifting the tax will remove another,” Chu said.
The bill stipulates that the conditions needed for a foreign enterprise to qualify for the tax credit and the procedures to apply for preferential treatments will be determined by the Ministry of Economic Affairs in consultation with the Ministry of Finance.
The bill is also designed to encourage innovation in industries because tax incentives included in the Act for Upgrading Industries (促進產業升級條例) will expire at the end of this year.
Minister of Economic Affairs Yiin Chii-ming (尹啟銘), who also attended the press conference, said that the bill would offer a tax exemption for businesses that devote up to 31 percent of their spending on research and development and personnel training in the first five years.
The maximum exemption each year shall be no more than 50 percent of the business income tax an enterprise is supposed to pay.
A business that establishes its operational headquarters in the nation could also get tax credits if its headquarters reaches a certain scale that economically benefits the country through cooperative programs with foreign enterprises.
Meanwhile, the Cabinet said it hoped the bill would transform its agencies from institutions managing industries to institutions pushing industrial development because the bill would authorize them to provide incentives or subsidies to industry.
“For example, the Department of Health will not only be an agency managing hospitals and health institutions, but an agency driving the medical industry,” Chu said.