Two legislators yesterday accused five business groups of using charitable trusts to avoid taxes, spending less than 1 percent of their trust assets on charity work.
The five are Formosa Plastics Group, Hontai Construction, HTC Corp, Chi Mei Group and Hermes-Epitek Corp, the parent of Hermes Microvision Inc, Democratic Progressive Party Legislator Kao Chia-yu (高嘉瑜), New Power Party (NPP) Legislator Chiu Hsien-chih (邱顯智) and independent journalist Yao Hui-chen (姚惠珍) told a news conference at the Legislative Yuan in Taipei.
From 1996 to 2020, 258 charitable trusts, with a market value of more than NT$120 billion (US$4.07 billion), were approved under the Trust Act (信託法), Kao said.
Photo: Liu Hsin-te, Taipei Times
Ten trusts set up by the five groups accounted for 80 percent of the market value, at NT$99.68 billion, she added.
Citing figures from Yao’s investigation over the past two years, Kao said the five groups had enjoyed more than NT$20 billion in reduced taxes and tens of billions of New Taiwan dollars in tax-free cash dividends since the 10 trusts were established.
However, accumulated donation made by the five business group totaled less than NT$6 billion, she said, adding that their annual charitable spending accounted for only 0.65 percent of their total trust assets in a given year.
Kao said that 48.9 percent of the charitable spending was questionable, as the funds were donated either to foundations or public interest groups set up by family members of the trust’s establisher.
To solve these problems and provide a better mechanism to supervise charitable trusts, Kao proposed amending the law to stipulate that the annual spending of a charitable trust should be at least 5 percent of its total assets or 60 percent of its annual income.
“Charitable trusts should do charity work,” Chiu said, adding that charitable trusts should be supervised by a single competent authority instead of different agencies, and a minimum amount of donation should be required.
League for Persons with Disabilities secretary-general Hung Hsin-ping (洪心平) said that the organization used a minimum of 90 percent of the donations that it received for charitable causes.
The use of the donation is examined by accountants and compiled in public reports, she said.
“An honest charitable organization should be open about how it uses the donation,” she added.
The Ministry of Justice drafted an amendment to the law in 2018 and the Executive Yuan sent it to the legislature for review in April, the ministry’s Department of Legal Affairs section head Huang Wang-yu (黃王裕) said.
The draft stipulates that charitable spending should be at least 2 percent of the total assets of a trust or 60 percent of its spending in a given year, he said.
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