The comments came one day after representatives of the two sides said that a tax agreement would not be inked during the fourth round of talks between Taiwan’s and mainland China’s top negotiators this week in Taichung City because of “technical issues.”
Chiang Pin-kung, chairman of Taiwan’s Straits Exchange Foundation, and his mainland counterpart, Association for Relations Across the Taiwan Strait Chairman Chen Yunlin, signed three agreements Dec. 22 on fishing crew collaboration, agricultural inspections and quarantine, and cross-strait cooperation on industrial product standards, inspection and certification. They had also been slated to sign a tax agreement before it was announced at the last minute that it would be shelved for the time being.
Executive Yuan Secretary-General Lin Join-sane stressed that the two sides would continue with negotiations on the contents of the taxation agreement and would sign the pact in the future after they arrive at a consensus on all the articles.
Noting that the agreement will have to be sent to the Legislative Yuan for review after it is inked, Ma said that his administration has adopted an “extremely cautious” attitude in negotiating the details of articles that remain sticking points.
“If we can’t achieve a pact that is based on the principles set out by the government or that is in the interests of Taiwan and the Taiwan people, then it’s better if we don’t sign it,” he said.
High-level government officials stressed Dec. 22 that postponement of the signing of a tax accord is not related in any way to problems concerning sovereignty issues. They noted that the two sides had already reached a tacit understanding on delaying it. They also claimed that the president and the national security authorities had weighed in on the matter ahead of the negotiations.
According to the officials, the president had relayed instructions that there was no need for Taiwan’s negotiators to make last-minute compromises on details of the pact that they could not accept. As such, there was in fact not a breakdown in negotiations as widely believed because of the late announcement of the postponement of the pact’s signing.
High-ranking policy officials noted that before sitting down at the negotiating table, the two sides had arrived at a consensus on shelving controversial issues. Therefore, the negotiators have been able to ink nine agreements, including three pacts during the fourth round of Chiang-Chen talks, they said.
Meanwhile, Legislative Yuan President Wang Jin-pyng revealed that Premier Wu Den-yih had informed the legislature during a visit Dec. 17 that the signing of a pact on tax cooperation and avoidance of double taxation might be delayed. Sources said one of the main reasons for this new development was opposition to the pact expressed by several industry leaders.
According to SEF officials, mainland Chinese negotiators changed their position on a key taxation point during preparatory talks in Fujian Province earlier this month. The two sides had previously agreed that tax on mainland-based Taiwan businesspeople should be levied according to the origins of their investments. However, the mainland side later demanded at the Fujian talks that taxes should be levied based on source of income, which the Taiwan negotiators found to be unacceptable.
The sources said that seven business heavyweights earlier this month called on President Ma to voice their opposition to the signing of a cross-strait tax agreement at this point in time. The names included Terry Gou, chairman of Hon Hai Precision Industry Co., and Morris Chang, chairman of Taiwan Semiconductor Manufacturing Co. Ltd. Their main reason for opposition was that because mainland China’s system of tax laws and regulations is not fully developed, Taiwan businesspeople operating there would be more exposed to preying by tax officials.
Many small and medium-sized enterprises also expressed their aversion to a tax pact through various representative organizations, including the Chinese National Federation of Industries. All these voices of resistance influenced the attitude of Ma, who instructed the Ministry of Finance to take it slow on the issue, according to the sources.
In addition, several political factors contributed to the delay in inking a tax accord. These included concerns raised by several legislators that mainland tax officials might make a grab for Taiwan businesses’ assets once they were required to list all their financial information under the stipulations of the pact.
Paul Wang, secretary-general of the National Association of Small and Medium Enterprises, expressed worries that an accord would increase the tax burden on smaller businesses operating on the mainland or lead to more tax probes.
One legislator affiliated with the KMT camp even said frankly that “among the countries with which Taiwan has signed tax agreements, mainland China is the only one with which the island has political hostilities.” (SB)