My electoral district includes Taipei’s Tianmu area, where many foreigners reside. However, in recent years, the number of foreign residents has gradually decreased and stores relying mainly on business with them are closing. In schools catering mainly to the children of foreign residents, many students are Taiwanese who hold foreign passports.
Taiwan has long said it wants to become an Asia-Pacific Regional Operations Center. But apart from foreign blue-collar workers, fewer foreigners are seen at the airports. The number of foreign business travelers and the amount of foreign investment have almost halved, and those who care about Taiwan’s overall economic development are deeply worried.
Friends at both the American Chamber of Commerce (AmCham) and the European Chamber of Commerce (ECCT), say many foreigners are reluctant to leave the city, saying that Taipei has numerous advantages compared with other cities in the region, such as Hong Kong, Beijing, Shanghai, Singapore or even Tokyo.
It is a diverse and open democratic society with good social order and living facilities. If you live in Taipei, you can easily reach the mountains or beaches within half an hour. Schools aimed at foreigners have excellent faculties, and tuition is relatively cheap. More importantly, there is the National Health Insurance program. There is also a friendly and enthusiastic attitude toward foreigners, and Taiwanese businesspeople’s experience and accomplishments in China.
With so many advantages, Taiwan is certainly qualified to become an Asia-Pacific regional operations center. The biggest reason for the withdrawal of foreign companies, in addition to the rise of China and, in the past, tense cross-strait relations and bans on direct links, is high tax rates. Complex taxes and levies and inefficient handling of paperwork for deductions and exemptions, it is difficult for Taiwan to compete with the tax systems of Hong Kong and Singapore.
Since cross-strait relations have improved, Taiwan should seize the chance to turn itself into a regional operations center. It should attract the world’s top 500 corporations to establish their Asia-Pacific centers right here, to draw capital and boost employment.
Therefore, the government plans to offer a preferential tax policy for the establishment of operational centers in the proposed industrial upgrading statute, which failed to be passed by the end of the recent legislative session.
Oftentimes, the outside world mistakenly believes that a preferential tax policy for the top 500 corporations may benefit conglomerates, while causing losses for the government. This is a serious misunderstanding. Since many of these companies have not even invested in Taiwan, what loss could they cause?
As for local enterprises, only five or six are included in the top 500, according to the strict standards of the Ministry of Economic Affairs and Ministry of Finance, and they are mostly high-tech companies listed on the stock market.
Under the current tax policy, such high-tech companies enjoy tax deductions for research and development (R&D) or for training staff, so their average tax rate is actually between 10 and 13 percent. That percentage is already lower than the 15 percent proposed in the abovementioned statute. Besides, there will be no deduction for R&D or staff training under the proposed new law.
How could anyone accuse the government of benefiting conglomerates only?
Ting Shou-chung is a Chinese Nationalist Party legislator.
TRANSLATED BY EDDY CHANG
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