Despite complaints from business leaders, Premier Wu Den-yih (吳敦義) said yesterday that the Executive Yuan’s decision not to continue to offer tax breaks to big corporations remained unchanged.
Wu said on the legislative floor that the Executive Yuan would deal with the matter from the perspective of “social justice,” adding that it was “reasonable” for those who make more money to pay more taxes.
Wu was responding to several corporate leaders’ opposition to removing an article in a draft statute on promoting innovative industries (產業創新條例).
The article, proposed by a group of Chinese Nationalist Party (KMT) lawmakers led by Ting Shou-chung (丁守中), proposed that multinational corporations establishing corporate headquarters in Taiwan and meeting certain requirements be taxed a flat business income tax of 15 percent — 5 percentage points lower than the recently adopted rate for businesses.
The Ministry of Economic Affairs said the article would have applied to some Fortune 500 companies, which would include four local enterprises — Hon Hai Precision Industry Co (鴻海), Acer Inc, Asustek Computer Inc (華碩) and Quanta Computer Inc (廣達).
Tax fairness advocates had criticized the tax-break plan, saying it would only benefit big corporations, while larger domestic companies, which already enjoy R&D-based tax breaks, threatened to pull out of Taiwan if they were not included in the planned lower rates.
Minister of Economic Affairs Shih Yen-shiang (施顏祥) told reporters at the legislature that the Executive Yuan decided to withdraw its support for the article because it was “too controversial.”
Acer chairman Wang Jeng-tang (王振堂) has voiced opposition on several occasions to removing the article.
Wang said on Thursday night that the article could serve as a bargaining chip for Taiwan to convince enterprises to stay in Taiwan.
He accused government officials of “living in a different world” from businesspeople.
The premier said Hon Hai, Asustek Computer and Quanta Computer may still enjoy tax breaks for innovations and nurturing talent as proposed in another article in the draft act.
Acer may be affected more because it is a service-oriented company, Wu said, adding that the ministry would deliberate over how to minimize the impact on Acer.
KMT Legislator Lo Shu-lei (羅淑蕾) urged the premier not to give in to businesspeople’s threats to pull out of Taiwan.
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