The Financial Committee of the Legislative Yuan reviewed a total of seven editions of proposed increase of sales tax on banks and financial institutions. Both Financial Supervisory Commission (FSC) Chairman Tseng Ming-chung and Minister of Finance Chang Sheng-ford expressed objection to the hike on the same day.
Chang attended the committee Wednesday morning and opposed the tax hike proposals, saying if the rate is increased by one percent, the increment of tax revenue might grow merely at NT$9.5 billion while leaving more damages to financial business growth and national competitiveness.
Also, FSC released a report showing that Taiwan is imposing a 2 percent sales tax on banks and financial institutions while most of the other countries in the world do not levy sales tax on traditional financial and insurance service providers. According to the FSC report, sales tax hike would add up the cost of operation, service providers will then be forced to pass the extra cost such as a higher loan interest rate on to the customers.
FSC chief Tseng said that the current sales tax for financial business should remain unchanged as its return on assets and return on net worth has room to improve as compared to China, Hong Kong, and Singapore.