In a recent lunch meeting with Executive Yuan officials, National Association of Industry and Commerce representatives called on the government to abolish the 5 percent income tax on undistributed corporate earnings — generally known as a retained earnings tax — and said that if the proposal could not be achieved in one go, the government could consider lowering the tax rate to zero in stages.
The association said that the levy on retained earnings is a supporting measure of the imputation taxation system, which the government introduced in 1998 to prevent the double taxation of dividends. After the government stopped implementation of the imputation taxation system in 2018, this supporting measure should have been abolished as well. The government should not punish firms for setting aside capital for future expansion, but should allow firms more financial flexibility to plan upgrades and for other purposes, the association said.
In addition, the association reiterated its demand that the government lower the business tax on the financial industry to at least the 2 percent level implemented before 2014, saying the tax cut would yield cost savings and enhance competitiveness for local financial institutions.
This is not the first time corporate executives have addressed tax issues with high-ranking government officials face-to-face. At different times in the past few years, many executives had repeatedly called on policymakers to make Taiwan’s business environment more friendly, but their proposals often received lukewarm responses from the government, while experts and academics were skeptical.
However, as the national tax revenue continues to rise this year and since the government is likely to meet its tax revenue target for this year as early as this month, with a surplus revenue of at least NT$100 billion (US$3.08 billion) for the whole year based on the Ministry of Finance’s estimate, many executives wanted officials to take note of their plights as many businesses are facing multiple headwinds stemming from falling external demand, supply chain inventory adjustments, post-COVID-19 transformation, and macroeconomic and geopolitical challenges.
Most importantly, corporate executives saw the upcoming presidential and legislative elections as a window of opportunity, and they wanted to take advantage of the meeting with Executive Yuan officials to put forward their tax ideas. In addition, opinions expressed through industrial and commercial groups instead of by individuals tend not to be taken lightly by government officials.
Indeed, the tug-of-war between businesses and the government over tax issues has continued for years, and it is reasonable to see more corporate executives come forward to have their voices heard ahead of elections. To a certain extent, it also highlights the many blind spots of the government’s tax administration which demand improvement and refinement.
For instance, the national tax revenue exceeded the government’s budgetary targets for 12 of the past 16 years, with surpluses almost becoming the norm in recent years. Critics have blamed this on a structural inaccuracy in the government’s tax revenue forecasting model and the fiscal conservatism adopted by the tax administration. Yet what also deserves attention is how much of the surplus tax revenue comes from inappropriate tax categories or deficiencies in the current tax system.
While paying taxes is a basic obligation for all citizens and firms, what is a reasonable level of taxation and how should those taxes be collected? Since tax revenue is the most important source of the nation’s fiscal income, the tax administration should be serious about the persistent inaccuracies in revenue forecasts that are bound to affect policymakers’ planning, the government’s resource allocation and the nation’s long-term development.
In their recent op-ed “Trump Should Rein In Taiwan” in Foreign Policy magazine, Christopher Chivvis and Stephen Wertheim argued that the US should pressure President William Lai (賴清德) to “tone it down” to de-escalate tensions in the Taiwan Strait — as if Taiwan’s words are more of a threat to peace than Beijing’s actions. It is an old argument dressed up in new concern: that Washington must rein in Taipei to avoid war. However, this narrative gets it backward. Taiwan is not the problem; China is. Calls for a so-called “grand bargain” with Beijing — where the US pressures Taiwan into concessions
The term “assassin’s mace” originates from Chinese folklore, describing a concealed weapon used by a weaker hero to defeat a stronger adversary with an unexpected strike. In more general military parlance, the concept refers to an asymmetric capability that targets a critical vulnerability of an adversary. China has found its modern equivalent of the assassin’s mace with its high-altitude electromagnetic pulse (HEMP) weapons, which are nuclear warheads detonated at a high altitude, emitting intense electromagnetic radiation capable of disabling and destroying electronics. An assassin’s mace weapon possesses two essential characteristics: strategic surprise and the ability to neutralize a core dependency.
Chinese President and Chinese Communist Party (CCP) Chairman Xi Jinping (習近平) said in a politburo speech late last month that his party must protect the “bottom line” to prevent systemic threats. The tone of his address was grave, revealing deep anxieties about China’s current state of affairs. Essentially, what he worries most about is systemic threats to China’s normal development as a country. The US-China trade war has turned white hot: China’s export orders have plummeted, Chinese firms and enterprises are shutting up shop, and local debt risks are mounting daily, causing China’s economy to flag externally and hemorrhage internally. China’s
During the “426 rally” organized by the Chinese Nationalist Party (KMT) and the Taiwan People’s Party under the slogan “fight green communism, resist dictatorship,” leaders from the two opposition parties framed it as a battle against an allegedly authoritarian administration led by President William Lai (賴清德). While criticism of the government can be a healthy expression of a vibrant, pluralistic society, and protests are quite common in Taiwan, the discourse of the 426 rally nonetheless betrayed troubling signs of collective amnesia. Specifically, the KMT, which imposed 38 years of martial law in Taiwan from 1949 to 1987, has never fully faced its
RSS