Pegatron Corp (和碩) chairman Tung Tzu-hsien (童子賢) urged the government to review and amend income tax regulations to prevent the flight of domestic talent.
“Taiwan’s industrial development depends on talent. However, there has been a tendency of talented Taiwanese to move to the other side of the Taiwan Strait and to other countries over the past few years,” Tung told the opening ceremony of the IT Month in Taipei on Saturday, which was attended by President Ma Ying-jeou (馬英九).
Tung said that besides the obvious difference in salaries between domestic and international companies, Taiwan’s heavy income tax rates also acted as a factor pushing talent away.
“Taiwan is in a troubling situation, in which competent people are leaving the nation,” Tung said.
He said it is unfortunate to see the government continue to keep raising tax rates for high-ranking executives, who are invaluable to the companies they work for and to the society in general.
The Ministry of Finance last year raised the individual progressive income tax from 40 percent to 45 percent, with the effective tax reaching 49 percent, while tax rates for capital gains from stock investments or property transactions remain at 0.3 percent at most.
As a result, numerous corporate executives working at locally listed companies have transferred their nationalities to countries that levy a progressive income tax rate as low as 17 percent, Tung said.
“Tax regulations should provide an incentive for people to work hard and should not be used to indulge people who rely on capital gains. This is bad for society,” he said.
Separately, when asked by reporters about his opinion on lifting a government ban on Chinese investments in Taiwan’s IC design industry, Tung said that if there are companies that are worried about losing their advantage to Chinese competition after the ban is eased, “Taiwan might as well close all the doors for all investments.”
“Enterprises cannot rely on the government to protect them from competition, they have to work in this difficult environment and become stronger,” he said.
He said he had a discussion last week with MediaTek Inc (聯發科) chairman Tsai Ming-kai (蔡明介), Delta Electronics Inc (台達電) chairman Yancey Hai (海英俊), Minister of Economics Affairs John Deng (鄧振中) and Minister of Labor Chen Hsiung-wen (陳雄文) regarding the issues of Chinese investments and flight of talent.
Quoting Tsai’s remarks during the discussion, Tung said that the “red supply chain” should not be an issue as long as companies abide by regulations.
“Taiwan cannot keep closing the doors if we want to maintain our competitiveness in the global market,” he said.
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