Wed, May 23, 2018 - Page 3 News List

MOTC Announcements: MOF’s tax move expected to encourage foreign firms in free-trade port zones

By Shelley Shan  /  Staff reporter

The government is hoping to attract more foreign investment in logistics and other value-added services in free-trade port zones by reducing the taxes on firms that transport and store cargo in Taiwan, the Ministry of Transportation and Communications (MOTC) said yesterday.

Based on a tax proposal approved by the Ministry of Finance (MOF) on April 17, foreign investors who solely import, store and transport cargo would only be taxed on 3 percent of their profits, down from the previous 12 percent.

The finance ministry would no longer factor in the cost of buying the ingredients or semi-finished products in Taiwan when it calculates the taxes for such companies, the MOTC said.

It said that it decided to ask the finance ministry for help after an offshore oil platform builder in the free-trade zone in Kaohsiung Port in 2015 entrusted a Taiwanese manufacturer with processing its products before they were shipped overseas.

However, that meant the offshore oil platform builder’s profits generated in Taiwan could not be accounted for in the paperwork.

The MOTC said it asked the finance ministry in July 2015 to stipulate a way to calculate profits generated by overseas investors in the free-trade port zones if they have trouble accounting for the profits they produce in Taiwan.

Multiple rounds of negotiations were held to resolve the two ministries’ differences on the tax threshold for foreign investors and basis of taxation before the finance ministry agreed to reassess the tax scheme.

The two ministries then held forums in the north, center and south of the nation to gather information on issues faced by different foreign investors, which led to the finance ministry eventually reinterpreting the tax laws.

The decision should encourage foreign investors to establish product distribution centers in Taiwan, the MOTC said.

Investors would also be more motivated to buy components from Taiwanese manufacturers, as the cost of purchasing the components would not be included in the basis of taxation, the MOTC said.

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