The Ministry of Transportation and Communications has proposed changes to regulations governing a tax-free scheme in free-trade zones (FTZs) to avoid being listed as a noncooperative jurisdiction for tax purposes by the EU.
Key changes to the Regulations Governing Business Income Tax Exemption for Foreign Countries, Mainland China, Hong Kong or Macau Profit-Seeking Enterprises Conducting Goods Storage and/or Simple Processing Operations in Free Trade Zones (外國大陸地區香港或澳門營利事業於自由貿易港區從事貨物儲存或簡易加工免徵營利事業所得稅辦法) would state that the benefits would apply to “profit-seeking enterprises engaging in purely preparatory or auxiliary activities,” rather than “foreign profit-seeking enterprises,” the ministry said.
Meanwhile, tax-free activities in FTZs would include procurement, import and storage or transport of goods, rather than only storage of goods and simple processing operations, it said.
Currently, goods produced or processed in the FTZs are completely tax-free if they are exported to foreign countries, but for those sold domestically, only 10 percent would qualify for tax exemption, it said.
Following the amendment, the tax exemption would apply to goods sold globally and domestically without any limitation, it said.
Deputy Minister of Transportation and Communications Chi Wen-chung (祁文中) said the amendments were proposed in response to an EU request calling for fair treatment in terms of tax benefits in FTZs.
The ministry has consulted the model convention with respect to taxes on income and on capital stipulated by the Organisation for Economic Co-operation and Development for its proposed amendments, Chi said.
Taiwan has free trade zones in six seaports and one airport, which generated about NT$13.91 million (US$451,594) in tax revenue in 2016, Deputy Minister of Finance Wu Tzu-hsin (吳自心) said.
The amendments would cause a tax revenue loss of about NT$268,200, but the nation would incur more financial losses if it was listed as a noncooperative jurisdiction, Wu said.
The amendment is scheduled to be implemented next year, Department of Aviation and Navigation Director-General Chen Chin-sheng (陳進生) said, adding that investment cases approved before the end of this year can still enjoy the tax benefits until 2021.
Tax exemptions for simple processing goods would be eliminated through the amendment, but labeling, packaging and categorization of goods in FTZs would still be tax-free, Chen said.
While most lawmakers agreed that the changes are necessary, People First Party (PFP) Lee Hung-chun (李鴻鈞) questioned their effectiveness.
With Vietnam and Japan having signed free-trade agreements with the EU, what good would it bring Taiwan to initiate the changes at the request of the EU, he asked.
Although Taiwan cannot afford to deny a request from a big economic entity like the EU, changes should be made with a view to ensuring that the nation can use its advantages to stay competitive in the Asia-Pacific region, Lee said.
The US-China trade dispute has caused some Taiwanese businesspeople to move their bases back to Taiwan, Lee said, adding that the ministry should draft policies to accommodate them in FTZs.
The first two F-16V Bock 70 jets purchased from the US are expected to arrive in Taiwan around Double Ten National Day, which is on Oct. 10, a military source said yesterday. Of the 66 F-16V Block 70 jets purchased from the US, the first completed production in March, the source said, adding that since then three jets have been produced per month. Although there were reports of engine defects, the issue has been resolved, they said. After the jets arrive in Taiwan, they must first pass testing by the air force before they would officially become Taiwan’s property, they said. The air force
GLOBAL: Although Matsu has limited capacity for large numbers of domestic tourists, it would be a great high-end destination for international travelers, an official said Lienchiang County’s (Matsu) unique landscape and Cold War history give it great potential to be marketed as a destination for international travelers, Tourism Administration Director General Chen Yu-hsiu (陳玉秀) said at the weekend. Tourism officials traveled to the outlying island for the Matsu Biennial, an art festival that started on Friday to celebrate Matsu’s culture, history and landscape. Travelers to Matsu, which lies about 190km northwest of Taipei, must fly or take the state-run New Taima passenger ship. However, flights are often canceled during fog season from April to June. Chen spoke about her vision to promote Matsu as a tourist attraction in
PAWSITIVE IMPACT: A shop owner said that while he adopted cats to take care of rodents, they have also attracted younger visitors who also buy his dried goods In Taipei’s Dadaocheng (大稻埕), cats lounging in shops along Dihua Street do more than nap amid the scent of dried seafood. Many have become beloved fixtures who double as photography models, attracting visitors and helping boost sales in one of the capital’s most historic quarters. A recent photo contest featuring more than a dozen shop cats drew more than 2,200 submissions, turning everyday cat-spotting into a friendly competition that attracted amateur and professional photographers. “It’s rare to see cats standing, so when it suddenly did, it felt like a lucky cat,” said Sabrina Hsu (徐淳蔚), who won the NT$10,000 top prize in
STRIKE: Some travel agencies in Taiwan said that they were aware of the situation in South Korea, and that group tours to the country were proceeding as planned A planned strike by airport personnel in South Korea has not affected group tours to the country from Taiwan, travel agencies said yesterday. They added that they were closely monitoring the situation. Personnel at 15 airports, including Seoul’s Incheon and Gimpo airports, are to go on strike. They announced at a news conference on Tuesday that the strike would begin on Friday next week and continue until the Mid-Autumn Festival next month. Some travel agencies in Taiwan, including Cola Tour, Lion Travel, SET Tour and ezTravel, said that they were aware of the situation in South Korea, and that group
RSS