A consensus was reached between the executive and legislative branches of Taiwan’s government Monday on a proposal to prevent double taxation of Taiwanese maritime and aviation companies in Hong Kong and Macau and vice versa.
The consensus forged during discussions on a proposal to revise the “Laws and Regulations Regarding Hong Kong & Macau Affairs” would lay the legal groundwork for the reciprocal tax exemption, which could help boost the competitiveness of Taiwanese companies.
The proposal will be raised at a Cabinet meeting for approval on Nov. 17 before being delivered to the Legislature.
The proposed amendment would enable Taiwan in the future to sign bilateral double taxation avoidance agreements with Hong Kong and Macau based on the principle of reciprocity.
Under the clause, Taiwan would not collect income taxes on income generated by Hong Kong or Macau maritime and aviation companies in Taiwan, and Hong Kong and Macau would not collect income taxes on income generated by Taiwanese maritime and aviation companies in those two territories.
The reciprocal agreement would also apply to sales taxes, according to the proposal.
Cabinet deputy spokeswoman Chang Hsiu-chen (張秀禎) said the proposal will serve as the legal basis for mutual tax exemptions in the maritime and aviation sectors of Taiwan, Hong Kong and Macau.
“It is consistent with tax justice,” she said.
The government hopes the proposal can help boost economic, trade and investment ties and personnel exchanges between Taiwan and Hong Kong and Macau and lure Hong Kong and Macau freight and transportation businesses to Taiwan, Chang said.
The United Daily News cited Mainland Affairs Council officials as saying on Monday that Hong Kong and Macau have signed double taxation avoidance agreements with many countries, putting Taiwanese companies at a competitive disadvantage in those places because of a high tax burden.
The officials said Taiwan and Hong Kong have talked about issues related to taxation in the past when negotiating flight services, but they said relevant authorities are now discussing the signing of a tax agreement with Hong Kong, according to the daily.
Source: Focus Taiwan News Channel