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Lawmaker says proposal will not unfairly benefit conglomerates
2010/02/09 15:49:54 |
Taipei, Feb. 9 (CNA) A ruling Kuomintang legislator on Tuesday defended his controversial proposal to lower corporate income tax rates for the world's biggest companies investing in Taiwan, which critics contend would be like giving away money to big local conglomerates.
In a bill to promote industrial innovation, a clause pushed by lawmaker Ting Shou-chung would give the world's 500 biggest multinational companies setting up their Asia-Pacific regional headquarters in Taiwan a preferential corporate income tax rate of 15 percent.
The controversial bill is meant to fill the void left by the expired Statute for Upgrading Industry and pave the way for the country's development over the next decade.
Some, including the opposition Democratic Progressive Party (DPP) , have characterized Ting's clause as a giveaway to big Taiwanese businesses.
"I have become the target of attacks recently for allegedly trying to benefit some local conglomerates," Ting said.
Ting said he made the proposal because he was told that only a few Taiwanese high-tech companies, such as Hon Hai Precision Industry, Quanta Computer, Asustek Computer and Acer Inc., would make it into the top 500 list.
But these high-tech companies already enjoy other tax breaks that drive their real tax rate to between 10-13 percent, even lower than his proposed 15 percent, meaning that there should be no question of giving conglomerates special benefits.
"This is why I have not proposed an exclusion of local manufacturers from the draft bill," Ting argued.
Taiwan's standard corporate income tax rate was recently lowered from 25 percent to 20 percent and will first be applied to income earned in 2010.
The critics have also accused Ting's proposal of being too big of a drain on national coffers, but the lawmaker said a DPP proposal last October to grant the 15 percent corporate tax rate to all foreign companies with headquarters in Taiwan and annual revenues over NT$1 billion would have cost the government NT$18.1 billion.
In contrast, Ting estimates his proposal would cost about NT$500 million.
Regardless of the numbers, the lawmaker feels something must be done. In his main constituency of Tianmu in Taipei City, long a center of the international community, the number of foreign residents has been on the decline as foreign chambers of commerce leave Taiwan.
In the past, the exodus was caused by cross-strait confrontation, but more recently, an uncompetitive tax structure has scared them off, Ting argued.
Citing data from the Investment Commission of the Ministry of Economic Affairs, he said foreign investment has declined from US$15.3 billion in 1997 to US$4.7 billion in 2009.
He argued that his proposal directed at the world's top 500 businesses was an effort to find a way out for Taiwan's economy and truly make it an operational headquarters for the Asia-Pacific region.
(By Justin Su and Lilian Wu) enditem/ls
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