Companies affected by the COVID-19 pandemic would be allowed to delay paying corporate income tax for a year or pay it in installments, the Ministry of Finance said yesterday, as industrial heavyweights press for sweeping tax cuts.
Minister of Finance Su Jain-rong (蘇建榮) made the announcement at a meeting of the legislature’s Finance Committee, saying that tax cuts would require lengthy legal revisions before they could be implemented, while grace periods only need executive orders, which he could issue right away.
“I will promulgate administrative orders later in the day that would allow companies affected by the pandemic to postpone paying business income tax by a year or pay in installments over three years,” Su said.
Photo: Peter Lo, Taipei Times
Trade groups have urged the government to suspend business income, land, house and entertainment taxes, among others, to help local companies withstand a plunge in economic and consumer activity.
A NT$60 billion (US$1.99 billion) relief package is not enough to achieve that goal, Chinese National Association of Industry and Commerce chairman Lin Por-fong (林伯豐) said, adding that other nations have introduced more robust stimulus packages.
Su said that Taiwan did not cut taxes during the SARS outbreak in 2003 or the global financial crisis in 2008.
The 2008 crisis wreaked havoc on tax revenue with a drop of NT$250 billion and it is too early to gauge the effects of COVID-19, as the situation is evolving rapidly, Su said.
Companies whose revenues have fallen 10 percent from a year earlier would qualify to apply for tax deferrals, he said.
As of last week, the outbreak had prompted 109 firms to introduce unpaid leave for a combined 3,835 workers, and the number is expected to climb amid tightening measures on travel and gatherings.
The tax moratorium would encompass a wide range of obligations, but would not extend to inheritance, gift and land value increment taxes, which suggest an increase in wealth, Taxation Administration Director-General Lee Ching-hua (李慶華) said.
The National Stabilization Fund could step in when necessary to bolster the local bourse if volatility becomes too high, Su said.
“The market would start to improve one or two weeks after interventions, based on experience,” Su said, adding that the government has not seen a need to act yet.
The fund, overseen by members from across party lines, can mobilize NT$500 billion and would require uniform consensus for an intervention, Su said.
The fund posted a profit in five of its six rescue attempts, he said.
Meanwhile, people affected by the COVID-19 pandemic would be allowed to postpone tax payments for up to one year or pay by installments for up to three years, Su said.
The ministry had said earlier that those ordered into isolation due to COVID-19 infection, or quarantine at home after having contact with a confirmed case travel to outbreak-affected areas, would be allowed to delay payment for up to one month, with taxes covered being vehicle license, individual income, house, business income, business, commodity, tobacco and alcohol and selected goods and services taxes levied from this month to May.
The grace period would be extended to up to one year, Lee said, adding that people who are eligible could also opt to pay in installments.
Monthly installments could be paid over a maximum of three years, Lee said.
Government compensation of NT$1,000 per day for Republic of China citizens ordered into isolation or quarantine would be tax free, Lee said.
Additional reporting by CNA
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