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Ripples from aborted Taiwan-China tax pact continue to be felt

Taipei, Dec. 30 (CNA) The failure of Taiwan and China to conclude a tax agreement in formal talks earlier this month continued to stir debate at the Legislative Yuan Wednesday, with officials and lawmakers attributing the stalemate to different factors.
Minister of Finance Lee Sush-der said Taiwan had no idea why China changed its mind and backed off from its decision to ink the pact with Taiwan during the latest round of cross-Taiwan Strait talks held in Taichung City Dec. 22-23.
He acknowledged, however, that some technical issues needed to be resolved to forge a consensus on the deal designed to help Taiwanese businessmen operating in China.
"Taiwan has no knowledge of why China altered its decision. Both sides were fully aware that further negotiation was necessary on the question of whether taxes should be collected based on their country of origin or the country in which they reside, " Lee told ruling Kuomintang (KMT) Legislator Lo Shu-lei at a legislative hearing on the cross-Taiwan Strait talks.
Lo said she suspected the agreement was shelved at the last minute because of a backlash from China-based Taiwanese businesses, which were worried they might be penalized by Chinese authorities for tax evasion based on information provided by Taiwan under the terms of the planned agreement.
Lee responded that paying tax is both an obligation and responsibility of a country's citizens, and he said Taiwan and China would only exchange information in serious tax evasion cases "in line with Taiwan's laws." KMT Legislator Lai Shyh-bao attributed the breakdown in talks to opposition from Hong Kong, which feared it might be unable to collect taxes once a deal was signed from the many Taiwan businessmen who have invested in China through the former British colony.
In their fourth meeting, Chiang Pin-kung, chairman of the Taipei-based Straits Exchange Foundation (SEF) , and Chen Yunlin, president of the Beijing-based Association for Relations Across the Taiwan Straits (ARATS) , signed accords on industrial product standards, fishing crew cooperation and agricultural product inspection.
But the two negotiators failed to clinch an anticipated pact on the avoidance of double taxation, with neither side providing a clear explanation for the stalemate.
It was the first time in the four rounds of Chiang-Chen talks since June 2008 that an agreement that was expected to be reached failed to materialize.
Meanwhile, Fan Liqing, a spokeswoman for the Taiwan Affairs Office under China's State Council, rebutted speculation in Taiwan that China would use the cross-strait pact on the avoidance of double taxation to recover tax that had gone unpaid by Taiwanese businessmen.
Taiwan and China failed to sign the accord because conditions were not yet ripe, and the matter had nothing to do with the sovereignty dispute, Fan stressed Wednesday in Beijing.
She said the two sides agreed to further negotiate the issue pragmatically and clinch the agreement when the time was right.
The major purpose of the pact is aimed at protecting the rights of Taiwanese businessmen and to enable them to pursue more prosperous development in China, she added.
(By C. K. Huang and Flor Wang)