Mon, Jan 19, 2009 page12

• Ministry mulls deferring taxes

  CONDITIONS The proposed measure would allow individual and business taxpayers to defer their tax payments, but a number of conditions would have to first be met

  • STAFF WRITER
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  The Ministry of Finance said on Saturday that it was considering allowing the nation’s individual and business taxpayers to delay or pay their taxes in installments this year, local media reported yesterday.

  The proposed measure would enable cash-strapped taxpayers to delay their payments for one to two months, but no later than the end of the year, the Chinese-language Apple Daily quoted Minister of Finance Lee Sush-der (李述德) as saying.

  However, the rich would not be permitted to apply for the tax deferral, and qualified taxpayers would need to apply based on their individual circumstances, Lee said.

  Under the ministry’s plan, applications for individual income tax deferral would be made up of four parts, the paper said. The first would be a bank statement proving substantial investment losses from the purchase of now-bankrupt Lehman Brothers-linked financial products. The applicant must have been laid off after last July and filed for unemployment benefits. The amount of tax due has to be more than NT$50,000 (US$1,490) or exceed the applicant’s monthly income. Finally, the amount of savings must be less than the amount of tax due.

  As to whether one or all four requirements would have to be met, the ministry said no final decision had been made. More details would be discussed at a tax meeting on Wednesday.

  But, investors who incur losses from investing in stocks or funds are not entitled to apply for a tax deferral as the ministry does not consider these losses “substantial wealth losses,” the paper said.

  As for the business income tax, the ministry said businesses would be eligible to apply for the deferral as long as they can provide evidence of a decline in orders as a result of the global financial crisis that forced them to ask employees to take unpaid leave.

  There are also several conditions that must be met. The business must have never been convicted of tax evasion. The business must also have suffered a large decline in profit, making it unable to hold a year-end dinner party or give out bonuses to its employees.

  Companies that support the government’s policy by promising to lay off less than 1 percent of their workforce, will be given first consideration for a tax deferral.

  In response, the Taiwan Federation of Industry (工業協進會) chairman Lee Cheng-chia (李成家) agreed with the ministry’s decision to allow business taxpayers to make deferred payments of income tax.

  “This will definitely be a tremendous help to businesses that are facing cash flow problems,” Lee told the newspaper.

  However, Lee disagreed with the government’s plan for companies that held year-end dinner parties to be left out of the tax deferral program, saying it was a way for business owners to reward employees for their hard work over the past year, and does not mean these companies were profitable.

  Preston Chen (陳武雄), chairman of the Chinese National Federation of Industries (工業總會), also welcomed the government’s move.

  “I think this is a really good thing that can provide help to a number of businesses especially at this time … Many companies will be able to take a breath,” the paper quoted Chen as saying.

  However, Norman Yin (殷乃平), a money and banking professor at National Chengchih University, criticized the new policy as being carelessly planned, suggesting that a tax reduction may be a more appropriate measure.

  The government could also follow a proposal by the administration of US president-elect Barack Obama, which would allow businesses to use their current losses as deductions for future revenues, Yin said.
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