Taiwan moves to raise tax on corporations, lower Amusement Tax

Taipei, Aug. 8 (CNA) The government is considering raising the minimum rate on profits of corporations from 12 to 15 percent and has agreed to lower aspects of Taiwan's Amusement Tax, Finance Minister Chuang Tsui-yun (莊翠雲) said on Wednesday.

The corporate tax rise would bring Taiwan in line with a Global Minimum Tax (GMT) policy introduced by the Organisation for Economic Cooperation and Development (OECD) which has set a proposed rate of 15 percent on profits made by multinational companies.

The formulation of supplementary measures, including preferential taxation plans, will be further discussed to avoid any planned tax reform from impacting small and medium sized enterprises, emphasized Chuang.

The OECD's GMT policy is aimed at ensuring that large multinational enterprises with revenues above 750 million euro (US$820 million, or NT$26.75 billion) are subject to a 15 percent effective minimum tax rate regardless of where they operate.

Chuang said that many countries are taking steps to implement the GMT on corporate income and Taiwan aims to keep "on track."

The minimum taxation component, known as the Pillar 2 Directive, has been part of OECD reform of international taxation since around 140 countries in the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) struck a landmark agreement in October 2020.

The finance minister noted, however, there is difference between the calculation methods of the GMT system and Taiwan's basic tax regime for private enterprises.

If Taiwan wants to be in line with international tax standards, it must "comply with the OECD's GMT norms and use the same standards," Chuang added.

The Ministry of Finance is therefore "collecting international data" and "developing relevant proposals," according to Chuang.

If Taiwan joins the OECD global tax deal, Taiwanese companies with consolidated revenues exceeding NT$26.75 billion would be eligible for the new 15 percent tax rate, she said.

The ministry estimates there are currently about 100 enterprises that would be affected by the new tax rules.

To avoid impacting small and medium enterprises, Chuang said domestic companies with revenues of less than the NT$26.75 billion amount are expected to continue to be subject to the current 12 percent tax rate.

Aside from changes to the corporate tax rate, Chuang also said on Thursday that during a meeting on July 10 the ministry and local governments reached an agreement to lower aspects of Taiwan's Amusement Tax, which stipulates maximum rates on entertainment-related commercial activities within which local governments can levy taxes in line with local conditions.

The Amusement Tax maximum rate of no more than 30 percent for entertainment venues, facilities or activities including professional singing, story-telling, dancing, circuses, magic shows, acrobatics shows and night club performances will be lowered to no more than 15 percent.

In addition, the maximum 60 percent Amusement Tax levied on tickets sold by cinemas and 30 percent for Chinese language films will both be adjusted downward to a maximum of 15 percent.

The Amusement Tax of up to 20 percent levied on tickets or fees charged by golf courses will remain unchanged.

Moreover, the government decided to extend a tax cut on day-trading transactions through the end of 2027.

The cut -- which reduces taxes on traders buying stock and selling it later in the same session from 0.3 percent to 0.15 percent -- had been set to expire on Dec. 31 this year.