Inked during the 11th round of SEF-ARATS talks in Fuzhou, mainland China, the pacts will improve cross-strait aviation while protecting the interests of local businesses operating in mainland China.
SEF Chairman Lin Join-sane said the accords represent the commitment of the two sides to promoting peace and stability. “We expect to make further headway in this regard and continue institutionalized dialogue on the basis of the 1992 consensus.”
Under the flight agreement, carriers operating cross-strait routes can use local facilities and personnel for maintenance services, as well as fit-to-fly and safety inspections.
At present, cross-strait flights can only be serviced by staff approved by the respective authorities. The new measure is expected to significantly reduce operating costs and the risk of flight delays.
The taxation pact, first floated during the fourth SEF-ARATS talks in 2009, comprises avoidance of double taxation and a comprehensive framework for information exchange and dispute settlement.
An SEF official said Taiwan’s taxation rights remain unaffected by the agreement. “Any businesses managed in Taiwan, including those investing in mainland China via a third territory, will be protected by the regulatory framework.”
Such companies’ earnings in mainland China are to be taxed at 17 percent by Taipei and not subject to the 25 percent prescribed by Beijing.
“In addition, the two sides reached an understanding on data use restrictions, nondisclosure of taxpayer information, prosecutions and retroactive assessments,” the official added.
According to the Ministry of Finance, the mechanism is projected to generate tax revenues of NT$8.1 billion (US$248.3 million) to NT$13.3 billion for Taiwan annually, while reducing the tax exposure of local enterprises by NT$3.9 billion.
The accord on taxation cooperation is the 29th Taiwan has signed with its major trading partners, the MOF said. With more in the pipeline for North America and Northeast Asia, the ministry forecasts a significant increase in the number of foreign investors basing cross-strait operations in Taiwan. (YHC-JSM)
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