Inheritance tax rate may be cut to 10 percent or under

The China Post news staff

TAIPEI, Taiwan — The Cabinet is expected to announce sharply reducing the inheritance tax rate to 10 percent or under from the existing highest progressive rate of 50 percent next Thursday at the earliest, based on a proposal raised by the financial and economic consultancy panel headed by Vice President Vincent Siew.

Participants in a panel meeting chaired by Siew on Tuesday shared the view that in order to attract Taiwanese investors abroad to remit their funds back to Taiwan, the government should move to slash the inheritance tax rate to under 10 percent, if not zero. They opined that if the tax rate is cut to 10 percent, then as much as NT$5 trillion worth of funds held by Taiwanese investors would be attracted back to Taiwan.

After the meeting, Wang Yu-chi, spokesman of the Presidential Office, told reporters that the consensus would be granted to the Cabinet for reference.

Informed sources said that the Presidential Office, the Cabinet and top officials of the ruling Kuomintang have reached an agreement over the inheritance tax rate, at around 10 percent, and the Cabinet would soon amend the Inheritance Tax Act to legalize the rate cut, and send the revisions to the Legislative Yuan for ratification.

The sources said most lawmakers would like to see the inheritance tax rate slashed to the range of between 10 percent and 20 percent.

But the Tax Reform Committee headed by Vice Premier Paul Chiu earlier reached a conclusion that the legacy tax rate would be reduced to the level of over 10 percent and under 30 percent.

Members of the committee will meet next Monday to discuss the inheritance tax cut, and may finalize the reduction size in mid-October.

Sun Ke-nan, a committee member, said the tax reform committee is designed to overhaul the entire tax system, and therefore it can not become a tool for endorsing any pre-set policies on tax reduction.

Chien Hsi-chieh, another member and concurrently spokesman of the Fair Tax Reform Alliance, said if the inheritance tax rate is directly reduced to under 10 percent, then the Tax Reform Committee had better be dissolved. F inance professor Ing Nai-ping commented that the 10 percent inheritance tax rate still pales against the zero percent in Hong Kong and Singapore, and therefore won’t work well to solicit Taiwanese overseas funds back to the island, and instead, would undermine the taxation fairness. But Liu Yi-ju, a former lawmaker of the People First Party and an economist, said that reducing the inheritance tax rate goes in line with the international trend, but has nothing to do with attracting Taiwanese investors to remit back their assets from abroad.