Taiwan investors in China keen to repatriate earnings: FSC data

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(Image/Pixabay)

(Image/Pixabay)

Taiwanese investors in China moved more earnings back to Taiwan ahead of Beijing's implementation of the Common Reporting Standard (CRS) to prevent tax evasion, according to data released by the Financial Supervisory Commission (FSC).

The data shows that combined earnings repatriated back to Taiwan by listed companies on the local main board and over-the-counter market (OTC) totaled NT$4,226 billion (US$137.2 billion) or 17.73 percent of their accumulated investments in China, valued at NT$2.38 trillion as of the end of June, a record high, according to the data.

Taiwanese investors in electronics component and rubber/related products were the major sources for the fund repatriation from China, the FSC said.

The ratio was higher than 16.90 percent recorded at the end of 2017, when listed companies repatriated NT$3,914 billion in earnings to Taiwan, compared with accumulated investment of NT$2.32 trillion, the data indicated. The Investment Commission first lifted the ban on China-bound investments in 1991.

The FSC, the top financial regulator in Taiwan, said local investors appeared keen to repatriate their earnings from China before Beijing implemented the CRS in early September.

The CRS, developed by the Organization for Economic Co-operation and Development (OECD) in 2014, serves as an information standard for the automatic exchange of information (AEOI) regarding bank accounts on a global level between tax authorities. The CRS aims to help a country's tax authorities prevent tax evasion.

International media has reported that Chinese tax authorities are expected to intensify their efforts to collect taxes from investors starting in 2019, when new personal income rules come into effect.

While Taiwan is scheduled to implement the CRS in 2019, information exchange with countries that have signed a taxation agreement with Taipei will not start until 2020.

Although Taiwan and China signed a cross-strait taxation agreement in August 2015, the accord is pending approval by the Legislative Yuan, which has provided Taiwanese investors in China with breathing space in terms of tax levied by the Chinese authorities.

As of the end of June, a total of 662 companies listed on the main board and 523 listed on the OTC market had invested in China, making up 75.24 percent of the total listed on the two exchanges, according to the FSC.

The data shows these listed companies posted NT$119.8 billion in earnings in China in the second quarter, up NT$13.2 billion from the end of June 2017, and listed companies accounted for more than 97 percent of combined earnings.

The 662 listed firms on the main board saw their second quarter earnings in China rise NT$16.1 billion from a year earlier, partly due to soaring cement prices, while the 523 OTC listed firms suffered a decline of NT$2.9 billion in earnings due to higher operating costs, the FSC said.