萬國法律事務所

Overseas income will no longer be exempt from taxation starting from January 2010. Local people with annual incomes exceeding NT$ 6 million will be subject to a 20% minimum tax for any amount of overseas income in excess of NT $1 million. Similarly, OBU accounts with deposit interests exceeding NT $1 million will also be subject to a 20% minimum income tax.

According to this new standard, the tax will be applicable to only a small number of people earning very high-incomes. Most people, including retail investors, will not be affected. That said, this news has caused panic among some investors. Some investment consultants have predicted that the taxation will more than likely lead to investment redemption. Taiwan’s Securities Investment Trust & Consulting Association (SITCA) has thus formed an ad hoc group for minimum taxation, actively educating financial advisors, investors and the media, trying to prevent unnecessary investment redemption.

The new taxation will directly impact the business of overseas funds in Taiwan, which business reaches approximately NT$ 1.4 trillion in scale. To lessen the impact, the Ministry of Finance (MOF) is currently considering the adoption of the non-retroactive principle, treating the book value of funds as the costs of investors, an arrangement that is tantamount to a tax exemption for yields of overseas funds prior to the end of 2009.