TAX NEWS - June 2010

Taiwan Tax: ECFA lower corporate income tax, help lure foreign investment

Taipei, June 24, 2010 -- Taiwan's reduction of corporate income tax and the signing of a trade pact with China will significantly enhance the incentive for foreign businesses to invest in Taiwan, a scholar said Thursday.

National Chengchi University professor Yin Nai-ping said Taiwan has reduced its corporate income tax from 20 percent to 17 percent, thereby cutting the costs of foreign businesses investing in the country.

Yin also noted that wages in China have recently been increased, but said they are still low compared with those in Taiwan.

"Even so, after the signing of the economic cooperation framework agreement, many of Taiwan's exports to China will enjoy tariff waivers and Taiwan's competitiveness will be enhanced, which will be a big incentive for foreign businesses," he said.

Although Taiwan's wages are higher, foreign businesses will take into consideration Taiwan's lower corporate income tax and other issues, and will set up plants in Taiwan, he predicted.

"High-tech, automobile and computer industries could very well inspect the investment environment in Taiwan," he said.

Taiwan also has done better in protecting intellectual property rights, he added.

But he said that at this stage, foreign businesses are still learning about Taiwan's investment environment and conducting assessment, so that "it will be a long time" before they actually set up plants in Taiwan.