Economy

Incentives offered for foreign firms in FTZs

• Publication Date：03/26/2010
• Source： Economic Daily News

Foreign companies that set up operations in Taiwan’s free trade zones for simple processing and warehousing of goods for sale abroad will be exempt from paying the 20-percent business income tax, officials said.

According to the regulations already announced by the Ministry of Transportation and Communications, these foreign firms will also enjoy tax-free treatment on the portion of their business income from sales of these goods within Taiwan that does not exceed 10 percent of their total sales. Income from sales in Taiwan that exceeds the 10-percent threshold will be taxed at the rate of 20 percent.

The Ministry of Finance said that these tax incentives are aimed at attracting more foreign firms to Taiwan as part of efforts to turn the island into a global logistics center.

According to sources, several overseas firms have already expressed an interest in establishing logistics operations in Taiwan. They have been drawn by the potential business opportunities resulting from the establishment of direct cross-strait shipping links, the island’s ideal geographical position, as well as the preferential tax treatment offered by the government.

The new measures are being put in place following the expiration at the end of 2009 of the Statute for Upgrading Industries that had provided preferential tax rates for foreign firms operating within Taiwan’s FTZs.

The MOTC has estimated that the new tax incentives will generate some NT$2.5 billion (US$78.4 million) in revenue for related industries and create more than 10,000 job opportunities. (SB)