The Cabinet approved several draft changes to cross-strait investment rules yesterday, including measures that will end "double taxation" for Taiwanese companies operating in China.
The policy changes are part of the revisions to the Statutes Governing the Relations Between the People of the Taiwan Area and the Mainland Area.
Under current rules, companies operating in China are taxed by the Chinese government. But many firms rarely repatriate their profits because they would face additional taxes at home.
The Cabinet yesterday adopted rules to eliminate the domestic tax burden if a Taiwanese company has already paid a tax on its profits in China. If none was paid, then tax would be due in Taiwan.
The change was one of the proposals put forth at the recently concluded Economic Development Advisory Conference.
The idea behind the tax change is to allow more capital that flowed to China to return home.
Another policy approved by the Cabinet is a measure that will allow Chinese capital to be invested in local real estate, with government approval.
In addition, the Cabinet passed a measure that will provide Taiwanese companies with unregistered operations in China a six-month grace period to file the appropriate paperwork with the government.
To put the measures into effect, the Cabinet asked government agencies, including the Mainland Affairs Council, to develop application procedures for its review.
Small three links
The Cabinet yesterday also broadened its "small three links (
The change would allow domestic ships leaving from Penghu to enter Chinese ports with approval by the Ministry of Transportation and Communications on a case-by-case basis.
Penghu officials applauded the move, as the new policy would help boost the economy of the island group. But they are also worried whether many ships would be allowed to make the trip.
"Several religious groups have applied for permission to make pilgrimages to China via Penghu," said Penghu County Commissioner Lai Feng-wei (
Lai said the trips, if approved, would surely bring new business opportunities to the Penghu islands.
The county commissioner also proposed that the central government allow Chinese to visit Penghu for up to 72 hours without having to obtain a visa.
Other draft revisions that were approved yesterday allow mid-ranking government officials from the counties of Kinmen and Matsu to visit China for the purpose of visiting relatives or cross-strait exchanges. The officials must apply to the central government to make the trip.
In addition, mainland Chinese who have been given permission to visit Kinmen or Matsu can make the trip within 30 days instead of 15, after they receive the permission.
Restrictions on travellers who accompany family members to seek medical treatment in China were also relaxed yesterday, removing a requirement that family members live in the same household.
Getting tough on smuggling
The Cabinet yesterday also reviewed a draft of the anti-smuggling law, which would impose fines 15 to 30 times higher than current penalties for some crimes.
For example, convicted smugglers could face up to seven years in jail or a fine of NT$3 million, up from NT$200,000.
For those who try to shoot their way out of an arrest or inspection, and kill or injure government officers, the highest fine would be raised to NT$10 million.
Under current law, a shoot-out can lead to a 10 years to life sentence in prison, with a maximum fine of just NT$300,000.
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