The Executive Yuan yesterday approved draft amendments to the Act for Development of Small and Medium Enterprises (中小企業發展條例) that would give tax breaks to small businesses if they increase employee wages.
The changes are expected to benefit more than 10,000 workers nationwide if passed.
The draft amendments were forwarded to the Legislative Yuan for review yesterday.
Photo: CNA
In addition to existing tax reduction measures for workers aged 24 or younger — standing regulations state that employees aged 24 or younger can file to have 50 percent of their wages deducted from their income for that year — the draft would extend tax waiver or reduction benefits to those aged 45 to 65.
The draft also sets the wage increase deduction rate at 150 percent and states that the wage reduction rates can be applied for up to 10 years.
The draft would also remove threshold requirements for implementing tax waiver benefits, such as unemployment rates higher than 3.78 percent for six consecutive months.
Ministry of Economic Affairs Small and Medium Enterprise Administration Deputy Director-General Wu Chia-ying (吳佳穎) said that removing the threshold could potentially create 4,000 vocational opportunities.
Under the draft, limited partners can also file for tax waivers via research and development for up to 10 years, and companies that adopt intellectual property for company stock would not be taxed immediately to encourage small to medium-sized (SME) enterprises to continue to grow research and development capabilities.
However, the draft also stipulates that if SMEs already enjoy tax waivers or tax discounts on certain items according to other acts, they might not enjoy the benefits of the draft act and must choose which law they wish to observe.
The draft also prohibits SMEs from receiving tax waivers provided by the draft act if they have been found to have contravened environment protection, labor or food safety laws within the past three years.
Wu also said that the policy would not cause the nation’s tax revenue to dip into the red, adding that it would instead see a net benefit of NT$10 million (US$308,871) by hiring new employees and NT$7 million in net benefits if companies increase employees’ wages.
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