Economics Minister Ho Mei-yueh (何美玥) said yesterday that tax incentives for high-tech investors should not be restricted after the minimum tax code has been adopted because imposing these two measures at the same time would increase the financial pressure on them.
A government plan to claw back tax incentives for high-tech investors has angered industry leaders, including Chairman Morris Chang (張忠謀) of Taiwan Semiconductor Manufacturing Corp. and Robert Tsao (曹興誠) of United Microelectronics Corp., who lashed out against the government for trying to "take two layers of skin" off them.
They have demanded that the government change the law encouraging people to invest in certain "strategic" industries rather than taking back some incentives by administrative decree. The Ministry of Finance and the Ministry of Economic Affairs have not reached a consensus on this issue.
Under the government plan, investors will be given an option to choose between a five-year tax holiday or a tax exemption on certain amounts of their investment. The minister said these two preferential treatments have stood together for 30 years, and if investors are to choose only one of them, the law should be amended.
She noted that her ministry will put forward an amendment proposal within one year in accordance with a Legislative Yuan request. The "minimum tax" code, which goes into effect next month, requires that a company whose annual earnings exceeds NT$2 million pay between 10 percent and 20 percent in corporate income tax.
Ho said since the new tax code has added tax burden on corporate leaders, the burden will get heavier if the measures on tax holidays and tax deductibles are to be revoked. She suggested that a "right time" be chosen to restrict both tax benefits for businesses that have been lured into making new investments in "emerging" strategic industries because of the government offer.
She admitted that the government has given quite a number of incentives to investors, incentives which she claimed have brought benefits to the country. For example, she said that last year, government revenue went up by NT$130 billion (US$3.93 billion) due in part to a whopping 28 percent increase in private investment. This year, private investment rose only nine percent over last year.