`The Business Income Tax in Taiwan: Introduction to Taiwan’s Profit-Seeking
Enterprise Income Tax*
Steve Waicho Tsui
Professor
Department of Public Finance
National Chengchi University
Taipei, Taiwan ROC
I. Foreword
The income tax system in Taiwan ROC consists of Individual Income Tax (IIT)and Profit-seeking Enterprise Income Tax (PEIT). The former is meant to be acomprehensive tax on personal income from all sources, including capital gains,while the latter is a levy on the income of a profit-seeking enterprise. A further
examination of the unique Land Value Increment Tax (LVIT), a capital gains tax
from land transactions, will also classify it as an additional and special type ofincome taxes in Taiwan, according to international standard (IMF, 2001).
Different from the existing company or corporate income tax systems in othercountries, Taiwan’s PEIT subjects corporations, companies, limited or unlimited,sole proprietorships, partnerships, and other forms of business organizations as
taxpayers. For tax-liable entities in the form of sole proprietorships and partnerships,
individual income tax is levied on operation surpluses of individual proprietors andpartners after paying the PEIT in the “firm” level. For the over 500,000 registeredsole proprietorships, partnerships, and small businesses, the great majority of them
have reported a business income below the minimum taxable level, which will be
explained later on this paper, and is not taxable in Taiwan’s business income tax.
The PEIT ranked as the second or the third most important revenue sources forthe government, following the business taxes and some years the IIT. For a long
period of time, since the mid-1950’s when income taxes were introduced by thegovernment, a classical system had been maintained such that dividend income
from stock-holdings as well as business operation surpluses from businessownerships other than company and corporation, will be taxed twice, though thedegree of double taxation, especially on small shareholders, was much reduced by
tax-empted treatment for interest and dividend income in IIT.
After a long discussion which can be traced back to the recommendation by the
first Tax Reform Commission in 1971, aiming at improving the tax environment toencourage more investment activities from domestic and foreign sources, thegovernment decided to eliminate double taxation by implementing the “integrated* Information on Profit-seeking Enterprise Income Tax, and other taxes, in Taiwan are available in Guide to ROC
Taxes 2007, while tax statistics are obtained from Yearbook of Tax Statistics Republic of China 2007 and otherissues. Both publications are published by the Ministry of Finance, Taipei, Taiwan ROC.

1

income tax system” from January 1st, 1998. By adopting the imputation credit
prototype to fully integrate the income taxes, shareholders are allowed a tax credit
for the PEIT paid on profits against their IIT liability.
However, since the needed adjustment on equalizing, or at least narrowing the
gap between the marginal rates of the two income taxes were not also made,enterprises naturally have an incentive to save the earnings in the firm. To neutralize
the effect, a provision was added that undistributed earnings are subject to an
additional 10% profit-seeking enterprise income tax.
The current system eliminates double taxation and reduces the tax burden on
dividend incomes by deducting the PEIT already paid for from individual income
tax and reducing the top effective tax rate on investment income from the potential
highest 55% to 40%. However, it in turn involves a cost of making the administrationof the PEIT much more complicated just by the requirement of keeping track ofdividends paid and the amount of tax credits adhered.
Tax incentives provided to encourage investments in chosen industries, or
specific activities has a long history in Taiwan’s tax policy decisions. After a thirty
year period of the Statute for Encouragement of Investment which authorized thegovernment to grant tax holidays and other forms of tax breaks, covering a wild
range of taxes, for investors, the current incentive scheme is stipulated in the Statutefor Upgrading Industries which is presently under critical review since a sun-set
clause is provided in the law that the effectuation of the Statute will come to an end
at year 2010. Tax reductions and exemptions claimed by the taxpayers given in the
two Statues were tax savings in income taxes at the largest extent, since the 1990’s.
Various policy options suggested by the Ministry of Finance and Ministry of
Economic Affairs to maintain or advance Taiwan’s tax environment for investments
after the expiration of the Statute for Upgrading Industries have major differences inproposed changes in income tax system, the IIT and the PEIT.
The purpose of this report is twofold. The first is to give a brief introduction of
the income tax on business earnings in Taiwan such that elements as taxpayers, tax
rates, the imputation system, the special 10% added-on tax, and total annual
collection in absolute terms and its shares will be given. Discussions on the twodifferent tax incentive statutes, the estimated amount of cost to the government interms of tax losses, and some suggestions on its reform will be given in the second
part of the paper.
II. Elements of the Profit-seeking Enterprises Income Tax
2.1 Taxpayers and Tax Bases
All profit-seeking enterprises operating within the territory of the ROC are liable
for the PEIT, except where exemptions are provided.
2

The tax scope of taxation of the profit-seeking enterprise tax can be classified asfollows:
1. Where a profit-seeking enterprise has its head office located within the territory of
the ROC, worldwide income of the entire enterprise shall be subject to tax.
However, if the enterprise has already paid any income tax on its origin source
income abroad in accordance with the tax laws of the source country, foreign
income tax will be credited against its total PEIT.
2. Where a profit-seeking enterprise has its head office located outside Taiwan, but
having established all or part of its subsidiaries or any of its business agents within
the ROC territory, PEIT shall be levied on that part of the business profits derived
from operating within Taiwan, unless otherwise provided for by the income tax
laws.
3. Where a profit-seeking enterprise has no permanent establishment or businessagent within the territory, but has income derived from sources in the country, thetax payable shall be withheld at the respective sources at a rate prescribed by therelevant regulations and the withholding tax will be final such that no filing of PEIT
will be necessary.
Taxpayers for PEIT in Taiwan include sole proprietorships, partnerships,
companies and cooperative organizations. In addition, not-for-profit educational,
cultural, public welfare, hospitals, and charitable organizations and institutions, mustalso file a tax return and pay tax under the tax law unless they are eligible for
exemption.
The term “profit-seeking enterprise” refers to industrial, commercial, agricultural,
forestry, fishing, animal husbandry, mining, or metallurgical profit-seeking
enterprises operated by public, private or join public and private interests having abusiness title or place of business with profit-making as its purpose and organized in
the form of a sole proprietorship, partnership, company, or any other form oforganizations. Of these, the principal taxpayers are companies. Where the head officeof a profit-seeking company is located within the territory of the ROC, the income ofits branches shall be combined with that of the head office when filing a return for the
PEIT. Hence, the head office shall be the one having the obligation to pay the tax.
Where a company has its head office located outside the Taiwan, but has a permanentestablishment or a business agent within the territory, the permanent establishment
or the business entity agent shall bear the obligation to pay the tax and file the tax
return.
An individual as a sole proprietor aiming at making profit and having a businesstitle or place of business shall be regarded as a profit-seeking enterprise. The sole
proprietor is required by law file a tax return and pay PEIT. Similarly, a partnershipof two or more persons is a profit-seeking enterprise, which by law shall file a tax
return and pay the tax.
Cooperative organizations are also required to file the PEIT return and pay the tax
liable, except for consumers’ cooperatives which do not engage in transaction with
non-members.
3Other organizations which are referred to as “educational, cultural, public welfare,charitable organizations and institutions” are confined to such organizations or
institutions organized in accordance with the General Principles of the Civil Coderelating to public welfare organizations and consortiums or in accordance with theprovisions of other relevant laws and ordinances are required to file their tax returns,
and when criteria for tax exemption set by the Executive Yuan are met, no income tax
shall be levied, otherwise, PEIT is still payable, even though they are considered as
not-for-profit organizations.
2.2 Tax Rates
Table 1 gives the changes in PEIT rates over the past 50 years in Taiwan. A four
rate structure from zero to 25% was used when the income tax system wasintroduced to Taiwan in 1956. The multi-rate system was applied since then and thelowest non-zero rate was 5% in some periods, while the highest tax rate of 35% wasused in 1974 to 1984. Currently, the minimum taxable amount, tax brackets, and tax
rates are as follows:
1. No PEIT is collected on enterprises with an annual taxable income less than TWD(New Taiwan Dollar) 50,000.
2. 15% on enterprises with an annual taxable income below TWD 100,000, but theamount of tax payable shall not exceed half of the amount of the taxable income inexcess of TWD 50,000.
3. 25% on taxable incomes when taxable income is over TWD 100,000.
In addition to filing a final tax return, certain items of income derived by a profitseeking enterprise are subject to a withholding tax as shown on Table 2. For profitseeking enterprises with no permanent establishment and business agent in Taiwan,
the withholding tax is final.
2.3 Exemptions
Generally speaking, there are two classes of exemptions in Taiwan’s PEIT. The
first relates to the taxpayers and the second regards the types of income excluded.
1. Tax-Exempt Organizations and Institutions
The following organizations are exempted from PEIT：
A. Educational, cultural, public welfare, charitable organizations and institutions suchas private schools, hospitals, nursing homes, asylums, etc., and also theirsubsidiaries, provided the criteria set by the Executive Yuan are met.
B. Consumers’ cooperatives which, by law, are required to limit their transactions tomembers only, such as consumers’ cooperatives for the staff and students of aschool.
C. Governments at all levels and public-owned utilities and enterprises such as thewater department, city and county bus service, port authorities, and railway
4

administrations.
D. Foreign enterprises engaged in international transportation, provided thatreciprocal treatment is accorded by the foreign country concerned to aninternational transport enterprise of the ROC operating in its territory.
2. Items Not Included in Taxable Income
A. Proceeds from land sales.
B. Income from securities transactions.
C. Income from transactions of futures on which the futures transactions tax has
imposed.
D. Property acquired from donations by an individual. To prevent double taxation on
donations, property donated by an individual is not considered as income of theenterprise receiving the donation since no deduction is allowed for the individual
donator in filing his or her IIT return. However, to prevent possible non-arm’s
length transactions, property donated by other profit-seeking enterprises shall betreated as income for the recipient enterprise.
E. Income from a transaction of property disposed of for the purpose of war
stockpiling in accordance with government regulations.
F. Royalty paid to a foreign enterprise for the use of its patent rights, trademarks, and(or) various kinds of special licensed rights in order to introduce new production
technology or products, improve product quality, or reduce production cost withthe approval of the government, as well as remuneration paid to a foreign
enterprise for its technical services rendered in construction of a factory for an
important productive enterprise approved by the competent authority.
G. Income, except for interest from loans to individuals, juristic persons or financialorganizations within the territory of the ROC, or the ROC government, derived byoffshore banking branches; interest derived by foreign governments orinternational financial organizations for economic development from a loan madeto the ROC government or a juristic person within the territory of the ROC andinterest derived by foreign organizations from the financing of a financialorganization within the territory of the ROC.
H. Inter-company dividends. When a domestic company invests in another domestic
profit-seeking enterprise, net income from dividends or earnings received by thecompany are excluded from its taxable income.
2.4 Tax Payments and Returns
1. Provisional Filing and Final Tax Return
PEIT taxpayers are required to make a provisional payment within the month of
September and the provisional payment shall be equivalent to half of the PEIT
reported on the final tax return for the previous year. For those companies keeping
sound accounting records, file blue returns (as will be explained later) or entrust a
Certified Public Accountant to certify and duly file a provisional tax return, they may
5base their provisional return on income amount to business revenue for the first half ofthe current year.
Enterprises exempted from filing a provision return and making a provisional
payment of tax include: taxpayers pay withholding PEIT, PEIT-empted entities such asprivate schools, not-for-profit hospitals, public welfare and charity organizations, andfinally small-scale profit-seeking enterprises.
If a profit-seeking enterprise fails to make its provisional payment within the time
limit, but before the end of October, additional interest payment will be charged.
The last date for PEIT return filing is May 31st. There are various approaches to file
the return, which include：
A. Ordinary Returns: To be used by profit-seeking enterprises in general.
B. Blue Returns: Provided especially for encouraging honest reporting by profitseeking enterprises and used only with the approval of the collection offices, theNational Tax Administration.
C. Simplified Returns: To be used by small-scale profit-seeking enterprises such aslegally registered street vendors and those with an average monthly turnover ofless than TWD 200,000.
D. Report of the final accounts of a non-profit organization including educational,
cultural, public welfare, charitable organizations and institutions as well as theiroperational organizations.
2. Imputation Credit AccountTo make the imputation system work, corporations are required to set up an
imputation credit account, and record the amount of PEIT paid. When the earnings are
distributed, the company shall calculate the imputation credit available to its
shareholders.
The withholding tax on dividends eliminated on dividends paid to resident
shareholders. The credit available to shareholders is calculated by multiplying the net
dividend received by a creditable ratio, which is the maximum credit available forcompanies to allocate to shareholders. The creditable ratio and imputation tax credit
are shown as:
Creditable Ratio =Balance of Imputation Credit AccountAccumulated Retained Earnings since 1998

Imputation Credit =Net Dividend X Creditable Ratio
The balance of the imputation credit account in turn is determined by the amount of
PEIT paid by the company, plus the amount of credit passed on from dividends
received from domestic investments, and other designated items. However, such a ratio
should not exceed:
A. 33.33% if the accumulated retained earnings have not been subject to a 10% surtax.
B. 48.15% if all the accumulated retained earnings are subject to a 10% surtax.
6

C. [33.33% X A]+[48.15% X (1-A)] if only part of the accumulated retained earnings are
subject to a 10% surtax. In the formula, A is:
Undistributed Earnings Which Have Not Been Charged the 10%
Surtax As a Ratio to Accumulated Retained Earnings since 1998
As we can see, the ratio may vary from company to company depending on thecompany’s tax liability.
3. Settlement of the Surtax on Undistributed Earnings
A profit-seeking enterprise shall, within the period from May 1st to May 31st of theyear, file a report regarding its undistributed earnings for the year before the last year.
The definition of “undistributed earnings”, beginning 2005, shall denote the amount ofincome after tax as calculated by a profit-seeking enterprise in accordance with theCommercial Accounting Act. After such calculation adjustments should then be made,which include consideration of certain deductible items such as make-up of the losses
in previous years and the next-year-loss which have been duly audited and certified bya Certificated Public Accountant; net dividends or net earnings which have been
distributed from the earnings gained in the current year; other reserve funds or
payment funds set aside according to the relevant laws; bonus or remuneration paid to
directors, governors and employees from the surplus earnings in accordance with theprovisions of the Articles of Incorporation of the company or cooperative, and otheritems permitted by the Ministry of Finance.
In the case where the financial statements in the current year of a profit-seeking
enterprise were duly audited and certified by a Certified Public Accountant, the term“income after tax” shall be based on the amount which was assessed by such certified
public accountant.
After the surtax is paid, the retained earnings can be accumulated without any
limitation and the restrictions on retained earnings shall no longer apply to profits
generated, beginning from 1998.
4. Deduction of Losses during the Preceding Years
Generally, there will be no losses incurred during the preceding years may be
deducted from the profits for the current year. However, in the case where a company
which keeps sound accounting records, files blue returns, or entrusts a Certified Public
Accountant to certify and file a return on its behalf in both of the loss and reporting
years and duly files a tax return within the time limit, the tax administration is
authorized, before making assessment on its tax payable, deduct the losses incurred
during the preceding five years from net profits for the current year.
III. PEIT Revenues
Table 3 gives the revenues from PEIT and IIT collection in Taiwan over the last ten
years. All data are adjusted for the changes in definition of the “Fiscal Year” in 2000.
Before that, fiscal year began six months ahead of the calendar year. For example, fiscal
7

year 1995 began in July 1st, 1994 and ended in June 30th, 1995. The two years merged in
2000. To adjust for the change, a special fiscal year second half of 1999 and 2000 was
implemented, which covered a period of 18 months. In going through the government
finance data released by the Ministry of Finance, statistics for this special year must be
viewed with caution especially when comparisons among years are made. Tax
collection on LVIT, the land value increment tax is also provided in Table 3, in order todraw a more complete picture on income taxes revenues in Taiwan.
In the ten year period covered by Table 3, both PEIT and IIT collection suffered froma sudden drop in year 2002, reflecting the lagged effect of the un-precedential negative
rate of growth in 2000. PEIT revenue fell by 40% of the preceding year’s level while the
IIT decreased by about 7%. In the following years, PEIT collections steadily picked up
while the IIT was further reduced for 2003, an unavoidable result of the bad 2002 year
in PEIT revenue, then bounced back in the coming years. In some years, thegovernment collected more in PEIT while in some other years, IIT contributed more to
the treasury. We did not find any evidence on a definite dominating role of thepersonal income tax as compared to corporate income tax in most of the OECD member
countries. Taiwan’s situation, in terms of relative importance of the business income tax
and personal income tax, is close to that of South Korea. More details are given in thefollowing tables, Tables 4 to 9.
Table 3 again reminds us the fact that Taiwan has been a “low tax” country as
discussed in Professor T.A. Chen’s earlier paper. National tax burden, total tax
collection as a percentage of GDP, reached a 11.57% and 11.60% in 2002 and 2003. Evenin 2006, the 13.09% was still relatively low when compared to other countries with thesame level of income. With these low tax burden ratios, even the ratios of total taxes
from PEIT and IIT combined were above the OECD averages in 2005 and 2006, thepercentage of PEIT and IIT to GDP exceeded 5% only in the same two years. In 2004,
the OECD average was 12.5%, Japan at 8.5%, and Korea at 6.9%. Slovak Republic, thecountry with the lowest percentage of income tax revenue to GDP, was 1.6% higher
than Taiwan.
Factors often discussed causing the seemingly low collection of PEIT in Taiwan
include the competence of the tax administration, worsening investment conditions,and most important, the generous tax concessions and preferential tax benefits
provided in the incentive scheme, which is the theme of the second part of this paper.
Finally, Table 10 shows that over half of the PEIT taxpaying units, over 450
thousand taxpayers each year from 2002 to 2004 were subject to the 10% surtax onretained earnings, while the temporary collection of additional tax declined from
16.22% of the base PEIT payments to 9.0%. Administration and compliance costs canboth ne reduced if the surtax is removed.
IV. Investment Incentives in the Statute for Upgrading Industries
4.1 The Statute for Encouragement of Investment
During the 1950s, Taiwan’s economic development was in its very primary andearly stage. National saving level was low and industrialization was just beginning to8

launch. In order to encourage savings to provide funds for domestic investment
activities, attract foreign investment, and improve the investment environment, after
amendment of the Income Tax Law was passed in 1955, aiming at speeding up
economic growth, in 1960, our government enacted the Statute for the Encouragementof Investment to provide preferential tax treatments for new and replaced industrial
investment spending. Tax preferential treatment had changed from industry-specific tofunction-specific over the years and after thirty years, 1990 marked the conclusion ofthis Statute.
The remarkable achievement of economic development during the thirty years of“investment encouragement” period in Taiwan was known as an “economic miracle.”
Empirical evidences on the contribution of the tax incentive schemes was inconclusive.
Part of the findings reported that tax concessions for savings and investment spending
has successively pushed Taiwan through the take-off stage and the4 government was in
the same time able to secure sufficient revenue to maintain a sound fiscal stance. On theother hand, there are findings questioning the efficiency and equity aspects of the
incentive policy. Should a “lower rate and broader base” policy be adopted, more
efficient and reasonable allocation of investment funds would be reached which would
certainly make Taiwan be more prepared when facing the challenges emergent sincethe 1990’s.
In the 1990’s, Taiwan’s economy has changed considerably due to the nature of theinternational and domestic environments. Growth rates of both investment and grossnational product have slowed down. Furthermore, government finances had
deteriorated and caused a rapid accumulation of public debts. Under thesecircumstances, the Statute for the Encouragement of Investment was considered nolonger suit to the changing economy. For further and sustained development, theeconomic structure needed to be transformed with the top priority being the upgrading
and advancing of the industrial sector. The ROC government promulgated the Statutefor Upgrading Industry on January 1st, 1991 for ten years to replace the previous statute.
This new Statue was effective until December 31st, 1999. After 2000, due to thecontinued need for economic structural transformation and the promotion ofinternational competitiveness, the tax incentive applications of this statute wereamended and the effective period of the statute was extended to the end of 2009. Also,in accordance with the implementation of the income tax integration system, some of
the tax incentives are limited to selected enterprises.
4.2. Tax Benefits for the Encouragement of Investment
1. Accelerated Depreciation for Upgraded Equipment
The serviceable life of instruments and equipment purchased by a company for
exclusive use for R&D purposes, experiments, and/or inspection of quality, or
machinery and equipment purchased by a company and used for energy saving
purposes or employing new and clean energy, may be accelerated by two years;
however, if there is any post-depreciation residual value during the accelerated
serviceable life, asset depreciation may continue over one year or several years within
the serviceable life of such assets as specified in the Income Tax Act, until permissible
depreciation is fully made.
92. Tax Credits for Upgraded Equipment
To meet the requirements of industrial upgrading, a company may credit 5% to 20%of the amount of funds disbursed for any of the following purposes against the amountof PEIT.
A. Spending in equipment for automation or production technology;
B. Spending in equipment or technology used for reclamation of resources and/ or
pollution control;
C. Spending in equipment or technology used for employing new and clean energy,
energy saving, or recycling of water for industrial use;
D. Spending in equipment or technology used for the reduction of greenhouse gas
emissions or the enhancement of energy efficiency;
E. Spending in purchases of hardware or software or technology used for the internet,
television functions, enterprise resource planning, communications andtelecommunications products, electronics, television-video, digitized content
production, etc. to enhance the efficiency of digital information.
A company may credit up to 35% of the amount of funds invested for R&D andpersonnel training against the amount of PEIT payable within five years starting fromthe then current year. In the case that the R&D and/or personnel training expenditureof the then current year is greater than the average R&D expenditure of the preceding
two years, 50% of the excess amount may be credited against the amount of PEIT.
3. Credit for the Encouragement of Regional Balance
In order to promote a balanced development of industries in various geographicalareas, if a company invests a specific amount of capital or employs a specific number of
employees in specific industries in a county or township area with scanty natural
resources or with slow development, it may credit up to 20% of the total amount of its
investment against the amount of PEIT payable within five years starting from the thencurrent year.
4. Encouragement of Newly Emerging, Important, and Strategic Enterprises
In order to encourage the incorporation or expansion of newly emerging, important,and strategic industries which are of high risk, worthy of support, and helpful for
economic development, an investor, being a profit-seeking enterprise or an individual,
who subscribes or underwrites the registered stock issued by such industries and has
held for three years or longer, may be granted credit against the PEIT or IIT within five
years starting from the then current year:
A.A profit-seeking enterprise may credit up to 20% of the price paid for acquisition ofsuch stock against the PEIT in the then current year.
B. An individual may credit up to 10% of the price paid for acquisition of such stock
against the IIT payable in the then current year. However, the deductible amountshall be limited to not more than 50% of the IIT payable in the then current year for
the individual, with the exception that this limitation shall not apply to the
deductible amount in the last year of the said four-year period. Finally, the tax credit
rate for individuals shall be reduced by 1% every two years beginning January 1st,
10

2000.
A company of a newly emerging, important, and strategic industry may, within two
years from the beginning date for payment of the stock price by its shareholders selectthrough the approval of its shareholders meeting, an application for the investment
incentive in the form of exemption from PEIT for a period of five consecutive years andthe waiver of shareholders investment credit against payable IIT. Once the selection is
made, no change shall be allowed.
Where a company selects the tax exemption approach, during the exemption period,
the equipment shall still be subject to depreciation according to the serviceable life of
fixed assets as provided for in the Income Tax Act.
5. Encouragement to Import Machinery and Equipment not Produced by the ROC
From January 1st, 2002, machinery and equipment imported from abroad bycompanies in scientific industries for their business operations shall be exempt fromimport tax and business tax provided that corresponding machinery and equipment
has not been manufactured and produced by ROC companies and such import has
been specifically approved by the Ministry of Economic Affairs.
6. Encouragement of Investment in Manufacturing and the Technical Services Industry
From 2002 to 2003, companies which are newly incorporated or have undergone an
expansion by capital increase shall be exempted from PEIT in accordance with thefollowing provisions:
A. In the case of a newly incorporated company, it shall be exempted from PEIT for aperiod of five consecutive years from the date on which it begins to sell its products
or to render services.
B. In the case of the expansion of an existing company by capital increase, the company
shall be exempted from profit-seeking enterprise income tax liable on the increased
income derived as a result of such expansion for a period of five consecutive years
from the date that the newly added equipment starts to operate or the rendition ofservices begins.
7. Encouragement of Enterprises to Invest Abroad
For outward investments made, in response to government policy, by a company
with the government approval of the government, an amount of up to 20% of the total
amount of such outward investment may be set aside as the reserve for loss in outward
investment so as to cover the investment loss upon its occurrence.
8. Encouragement of Investment by Non-Resident Individuals or Non-Resident
Enterprises
Where a non-resident individual or a non-resident profit-seeking enterprise, having
been approved to make investment in the ROC under the Statute for Investment by
Overseas Chinese or the Statute for Investment by Foreign Nationals, receives
dividends distributed by a company located in the ROC or profits distributed by apartnership in the ROC, the income tax payable thereon by such individual orenterprise shall be withheld at the time of payment at the rate of 20%of such11

distribution, and annual return will be exempted.
9. Exemption for Income Tax on Salaries of Foreign Personnel Dispatched to the
Republic of China by a Foreign Profit-Seeking Enterprise
Where a foreign profit-seeking enterprise, having been approved to makeinvestment in the ROC under the Statute for Investment by Overseas Chinese or the
Statute for Investment by Foreign Nationals, has dispatched its directors, managerial
officers, or technical personnel to the ROC to perform temporary work, such as
investment making and plant construction, or market survey, and has had them residein the ROC for a period or periods of less than 183 days aggregate in a tax year, theirsalaries paid outside the ROC by the said profit-seeking enterprise shall not be
considered as income sourced in the ROC.
10. Exemption for Profit-Seeking Enterprises Income Tax of Logistics-distribution
Centers in the ROC
Logistics distribution centers established in the ROC by foreign profit-seeking
enterprises or their branch offices in the ROC, whether operated by themselves or byother domestic enterprises through commissioning arrangements, solely for storage,
simple processing, and delivery to their domestic customers, shall be exempted fromprofit-seeking enterprise income tax.
4.3 Tax Benefits for Operational Headquarters
In order to encourage companies to manage worldwide resources for international
operations, an operational headquarters that is established in the territory of the ROC,
and that has reached a certain economic scale and is expected to create a significant
effect on the economy, is exempt from PEIT on the following incomes:
A. Income received from the provision of management services or R&D activities for its
foreign-associated enterprises.
B. Royalties received from its foreign-associated enterprises.
C. Dividends and capital gains received from its foreign-associated enterprises.
4.4. Other Tax Benefits
Where a patent right legally obtained by a national of the ROC from his or her own
creation or invention is provided or sold to a company in the ROC for its use, with theapproval of the authority-in-charge of the end enterprise concerned, 50% of the royalty
paid by the company for use thereof, or the proceeds derived from selling such right tothe company for its use, shall be excluded from the amount of his or her consolidated
income for taxation purposes.
Additional concessions and exemptions in other types of taxes, such as house tax,
LVIT, deed tax and stamp tax are also provided for encouragement of specific activities.
However, losses in revenues in these taxes are relatively minor, usually less than 10% of
the total cost, as compared to income tax losses. Detailed data are available in Yearbook
12

of Tax Statistics Republic of China, 2006 and previous issues.
4.5 Tax Costs of the Incentive Schemes
In the last decade, tax costs to the government due to the implementation of thetwo incentive schemes are overwhelmingly in the form of income tax concessions. Thisis especially true in the case of the Statute for Encouragement of Investment which has
expired in 1999 and tax reductions due to its implementation were because some of themeasures provided in the Statute had durations for several years. As regards the
Statute for Upgrading Industries, which was effectuated since 1991, in addition toconcessions in PEIT and IIT, LVIT, stamp tax, and deed tax were also included in thelist of applicable tax reductions and exemptions. However, income taxes again had thelargest share, over 90% in the last decade, among all items of preferential treatments
provided taxes. Table 10 gives the figures of annual income taxes reduction given in the
two Statutes from 1997 to 2006. The income tax cost in the table combined both PEIT
and IIT together and no separate estimation on the two income taxes were released by
the Ministry of Finance. Given the functioning of the incentive scheme as explained inthis section, a large share of the total tax reduction would be attributed to losses in PEIT.
The 2000 year data actually covered a period of 18 months, hence significant
increases from previous years were showed.
The second part of this table reported annual income tax losses provided in the
incentive scheme as a percentage to PEIT and income taxes collection. The figures
exceeded 20% except in 1997 when PEIT was used as the base for comparison and werehigher than 11% except in 1997 and 1998 when total income taxes were the base. In thelast five years, while the effect of the Statute for Encouragement of Investment had
almost completely faded out, tax losses given in the Statute for Upgrading Industries
ranged from 8.795 to 18.47% from the beginning to the end of this sub-period. In
absolute amount, it was TWD 34.5 billion to TWD 119.3 billion.
Data obtained from the 2004 PEIT returns file reported in Yang (Yang, 2007)
showed that the following industries benefit most from the Statute for Upgrading
Industries: petroleum and gas industry, water, power and fuel industry, transportation,
docking, and communications industry, chemical material manufacturing industry, andelectronic parts industries. However, significant variations exist among firms in thesame industry in terms of benefit distribution of tax reduction which has attracted
discussion on the equity issue of the incentive scheme.
V. Conclusion
A popular issue in Taiwan regarding the tax system is the third wave ofcomprehensive tax reforms. Twenty years after the establishment of the second Tax
Reform Commission which operated from 1987 to 1989, domestic and international
economic conditions both experienced tremendous changes. For the business income
tax, several aspects are frequently touched as directions of reform in the PEIT.
1. A change in the coverage of taxpayers is proposed to make the PEIT a corporate tax
by exempting sole proprietorships and partnerships from paying the PEIT. To
13

remove the discrimination against the owners or partners of these two types ofbusiness organizations in PEIT and IIT, it would only cause minimum tax losses, ifany, since even in the current format, PEIT revenues from non-company taxpayers
are insignificant at all simply because no owner or partner will be willingly to bear
the double burden of PEIT and IIT. Given that PEIT payments on sole
proprietorships and partnerships are not credited against IIT to owners andpartners, adjustments made in management expenses or labor cost increases will bea nice and regularly used loophole. To remove these types of taxpayers from PEIT
imposition, a much simpler and efficient tax administration will be expected.
2. Another simplifying change concerns the removal of the 10% surtax on retained
earnings. This measure was originally taken as a complementary tool to recover partof the revenue losses of the imputation system. However, both the government andthe taxpayers fully understand that the surtax is kind of an advance payment of
PEIT, or, a loan by the government from the businesses with unpaid dividends.
Credits will be claimed once the company distributes the retained earnings. As theliquidity problem of the government becomes much less serious, or even not a
problem at all, reduction in administration and compliance costs by removing thesurtax should no longer be ignored

3. The most important topic in reforming the PEIT is what changes should be
introduced after 2009 when the Statute for Upgrading Industries is expired. Thereexist three different suggestions to meet the situation:
A. Complete removal of all incentive measures;
B. The Ministry of Finance’s scenario: Elimination of all tax holiday and tax
reduction provisions, except investment tax credits for research anddevelopment expenses, and investment in personnel trainings;
C. The Ministry of Economic Affairs’ scenario: Removal of the five year tax
holiday or investment credits provided to new shareholders of newly emerging,important, strategic industries, but in the proposed Statute for Industrial
Innovations and Value-added, investment tax credits for as long as ten years
will be provided for industries characterized as long research and development
period (over ten years), high risk “research-and-development intensive
industries”. In addition, investment tax credit provided for automation will be
restricted on high-tech equipments and the optional five year tax exemption
will also be maintained.
With all three scenarios, a complementary measure is to lower the PEIT rate by
5 % or even 7%, making the tax rate comparable or lower than the corporate
income tax rate in Singapore, and close to the profit tax rate in Hong Kong, the two
major competitors for Taiwan in attracting international investment.

14

Reference
International Monetary Fund (2001), Government Finance Statistics Manual 2001, 2ndedition, Washington D.C.: International Monetary Fund.
Ministry of Finance (2007), Guide to ROC Taxes 2007, Taipei: Ministry of Finance
Ministry of Finance (2007), Yearbook if Tax Statistics Republic of China 2006, and otherissues, Taipei: Ministry of Finance
Yang, C.C. et al. (2007), An Overall Review of the Tax Incentive Scheme in the Statutefor Upgrading Industries, Integration, and Alternative Minimum Tax System, report ofa project commissioned by the Taxation Agency, Ministry of Finance.

15

Table 1: Tax Rates in Taiwan’s PEIT
PeriodRates

1956-1960

0%,5%,10%,25%

1961-1964

0%,6%,12%,18%

1965-1966

0%,8%,14%,18%

1967-1973

0%,8%,14%,18%,25%

1974-1984

0%,15%,25%,35%

1985

0%,15%,25%,30%

1986-2006

0%,15%,25%

Source: Yearbook of Tax Statistics Republic of China 2006, p.218-219

Table 2: Withholding Rates for Various Incomes

Source: Ministry of Finance (2007), Guide to ROC Taxes 2007, p.33.

Table 3: Income Taxes Collection and Shares

Unit：TWD Million

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

GDP

8,610,139

9,238,472

9,640,893

10,032,004

9,862,183

10,293,346

10,519,574

11,065,548

11,454,727

11,889,823

PEIT

151,784

193,327

188,189

213,280

233,677

165,758

213,682

241,088329,357

311,887

IIT

219,740

219,301

240,544236,576

244,958

227,180

197,404

214,824

296,449

334,330

LVIT

141,758

114,52188,08579,53442,26147,90061,04081,276

81,66476,547

PEIT＋IIT

371,524

412,628

428,733

449,856

478,635

392,938

411,086

455,912625,806

646,217

PEIT＋IIT＋LVIT

513,282

527,149

516,818

529,390

520,896

440,838

472,126

537,188

707,470

722,764

Total Taxes

1,309,645

1,314,044

1,279,079

1,296,272

1,200,277

1,190,873

1,220,116

1,353,409

1,531,296

1,556,651

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

PEIT/GDP

1.76%

2.09%

1.95%

2.13%

2.37%

1.61%

2.03%

2.18%

2.88%

2.62%

IIT/GDP

2.55%

2.37%

2.50%

2.36%

2.48%

2.21%

1.88%

1.94%

2.59%

2.81%

LVIT/GDP

1.65%

1.24%

0.91%

0.79%

0.43%

0.47%

0.58%

0.73%

0.71%

0.64%

(PEIT＋IIT)/GDP

4.31%

4.47%

4.45%

4.48%

4.85%

3.82%

3.91%

4.12%

5.46%

5.44%

5.96%

5.71%

5.36%

5.28%

5.28%

4.28%

4.49%

4.85%

6.18%

6.08%

15.21%

14.22%

13.27%

12.92%

12.17%

11.57%

11.60%

12.23%

13.37%

13.09%

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

PEIT/Total Taxes

11.59%

14.71%

14.71%

16.45%

19.47%

13.92%

17.51%

17.81%

21.51%

20.04%

IIT/Total Taxes

16.78%

16.69%

18.81%

18.25%

20.41%

19.08%

16.18%

15.87%

19.36%

21.48%

LVIT/Total Taxes

10.82%

8.72%

6.89%

6.14%

3.52%

4.02%

5.00%

6.01%

5.33%

4.92%

28.37%

31.40%

33.52%

34.70%

39.88%

33.00%

33.69%

33.69%

40.87%

41.51%

39.19%

40.12%

40.41%

40.84%

43.40%

37.02%

38.70%

39.69%

46.20%

46.43%(PEIT＋IIT＋
LVIT)/GDP
Total Taxes/GDP(PEIT＋IIT)/Total
Taxes(PEIT＋IIT＋
LVIT)/Total Taxes

Source：1. Taxes: Yearbook of Tax Statistics Republic of China 2006
2. GDP: Directorate General of Budgeting, Accounting and Statistics. http://www.dgbas.gov.tw/ct.asp?xItem=14616&CtNode=3566

Table 4：Taxes on Corporate Income as Percentage of GDP: OECD Countries
Year

1995

2000

2003

2004

Canada

2.9

4.4

3.2

3.4

United States

2.9

2.6

2.0

2.2

Australia

4.2

6.3

5.1

5.7

Japan

4.3

3.7

3.4

3.8

Korea

2.4

3.3

3.9

3.5

New Zealand

4.4

4.1

4.7

5.5

Austria

1.4

2.0

2.2

2.3

Belgium

2.7

3.6

3.3

3.6

Czech Republic

4.6

3.5

4.6

4.8

Denmark

2.3

3.3

2.8

3.2

Finland

2.3

6.0

3.4

3.6

France

2.1

3.1

2.5

2.8

Germany

1.0

1.8

1.3

1.6

Greece

2.0

4.5

3.2

3.3

Hungary

1.9

2.2

2.2

2.2

Iceland

0.9

1.4

1.5

1.3

Ireland

2.7

3.7

3.7

3.6

Italy

3.5

2.9

2.8

2.8

Luxembourg

6.6

7.0

7.4

5.8

Netherlands

3.0

4.0

2.8

3.1

Norway

3.8

9.0

8.0

10.0

Poland

2.8

2.5

1.9

2.0

Portugal

2.4

3.9

2.9

2.9

2.8

2.8

2.5

MexicoSlovak Republic
Spain

1.7

3.1

3.1

3.4

Sweden

2.8

4.0

2.5

3.2

Switzerland

1.8

2.8

2.5

2.5

Turkey

1.5

2.4

2.6

2.3

United Kingdom

2.8

3.6

2.8

2.9

OECD Total

2.8

3.7

3.3

3.4

OECD America

2.9

3.5

2.6

2.8

OECD Pacific

3.8

4.4

4.3

4.6

OECD Europe

2.6

3.6

3.2

3.3

EU 19

2.7

3.5

3.1

3.1

EU 15

2.6

3.8

3.1

3.2

Unweighted average:

Source: Revenue Statistics of OECD Member Countries 1966-2005.

Table 5：Taxes on Personal Income as Percentage of GDP: OECD Countries
Year

1995

2000

2003

2004

Canada

13.4

13.1

11.7

11.7

United States

10.0

12.5

9.0

8.9

Australia

11.7

11.8

12.2

12.6

Japan

6.0

5.7

4.5

4.7

Korea

3.7

3.4

3.2

3.4

New Zealand

16.5

14.5

14.4

14.6

Austria

8.6

9.5

9.9

9.7

Belgium

14.2

14.0

14.0

13.8

Czech Republic

4.8

4.6

4.9

4.9

Denmark

26.2

25.5

25.3

24.7

Finland

14.2

14.6

13.8

13.5

France

4.9

8.0

7.5

7.4

Germany

10.2

9.4

8.5

7.9

Greece

3.8

5.5

4.8

4.8

Hungary

6.8

7.2

7.2

6.8

Iceland

9.7

13.3

14.4

14.3

Ireland

10.0

9.5

7.6

8.2

Italy

10.4

10.5

10.5

10.4

Luxembourg

8.0

7.2

6.6

6.7

Netherlands

7.6

6.0

6.6

6.1

Norway

10.7

10.3

10.6

10.4

Poland

8.5

7.5

4.4

4.1

Portugal

5.7

5.7

5.5

5.5

3.3

3.3

2.8

MexicoSlovak Republic
Spain

7.6

6.4

6.4

6.2

Sweden

16.1

17.5

15.7

15.8

Switzerland

10.1

10.6

10.1

10.2

Turkey

4.9

7.2

5.2

4.6

United Kingdom

10.0

10.9

10.2

10.3

OECD Total

9.8

9.8

9.2

9.1

OECD America

11.7

12.8

10.4

10.3

OECD Pacific

9.5

8.8

8.6

8.8

OECD Europe

9.7

9.7

9.3

9.1

EU 19

9.9

9.6

9.1

8.9

EU 15

10.5

10.7

10.2

10.1

Unweighted average:

Source: Revenue Statistics of OECD Member Countries 1966-2005

Table 6：Taxes on Income and Profits as Percentage of GDP: OECD Countries
1995

2000

2003

2004

Canada

16.5

17.8

15.2

15.6

Mexico

4.1

5.0

5.0

4.7

United States

12.8

15.1

11.1

11.1

Australia

15.9

18.1

17.4

18.2

Japan

10.3

9.4

7.9

8.5

Korea

6.2

6.8

7.1

6.9

New Zealand

22.4

20.1

20.5

21.7

Austria

10.9

12.2

12.7

12.5

Belgium

16.9

17.6

17.4

17.4

Czech Republic

9.4

8.2

9.5

9.7

Denmark

30.1

29.8

28.6

29.5

Finland

16.5

20.6

17.3

17.1

France

7.0

11.1

10.0

10.1

Germany

11.3

11.2

9.7

9.5

Greece

7.0

10.2

8.2

8.2

Hungary

8.8

9.4

9.4

9.0

Iceland

10.7

15.5

17.0

17.0

Ireland

12.7

13.2

11.3

11.8

Italy

14.2

14.0

12.9

12.9

Luxembourg

14.6

14.1

13.9

12.6

Netherlands

10.6

10.0

9.4

9.2

Norway

14.4

19.2

18.6

20.3

Poland

11.3

9.9

6.2

6.1

Portugal

8.1

9.6

8.5

8.3

7.1

6.8

5.7

Slovak Republic
Spain

9.4

9.7

9.7

9.8

Sweden

18.9

21.5

18.2

19.0

Switzerland

12.0

13.4

12.6

12.7

Turkey

6.4

9.5

7.8

6.9

United Kingdom

12.8

14.6

13.0

13.2

OECD Total

12.5

13.5

12.4

12.5

OECD America

11.2

12.7

10.4

10.4

OECD Pacific

13.7

13.6

13.2

13.8

OECD Europe

12.5

13.5

12.6

12.5

EU 19

12.8

13.4

12.3

12.2

EU 15

13.4

14.6

13.4

13.4

Unweighted average:

Source: Revenue Statistics of OECD Member Countries 1966-2005

Table 7: Taxes on Corporate Income as Percentage of Total Taxation
Year

1995

2000

2003

2004

Canada

8.2

12.2

9.5

10.3

United States

10.3

8.7

7.9

8.7

Australia

14.8

20.2

16.7

18.2

Japan

15.9

13.8

13.0

14.2

Korea

12.3

14.1

15.3

14.3

New Zealand

11.9

12.4

13.6

15.5

Austria

3.5

4.8

5.1

5.4

Belgium

6.2

8.0

7.5

8.0

Czech Republic

12.2

9.8

12.3

12.4

Denmark

4.8

6.6

6.0

6.5

Finland

5.0

12.5

7.7

8.1

France

4.9

6.9

5.7

6.3

Germany

2.8

4.8

3.5

4.5

Greece

6.3

12.1

8.9

9.4

Hungary

4.5

5.7

5.8

5.8

Iceland

3.0

3.7

3.9

3.3

Ireland

8.5

11.7

12.9

11.9

Italy

8.7

6.9

6.6

6.9

Luxembourg

17.7

17.8

19.3

15.3

Netherlands

7.5

10.1

7.6

8.2

Norway

9.2

20.8

18.7

22.6

Poland

7.7

7.6

5.3

5.8

Portugal

7.5

11.4

8.3

8.3

8.3

8.9

8.1

MexicoSlovak Republic
Spain

5.4

8.9

9.0

9.8

Sweden

5.8

7.5

5.0

6.3

Switzerland

6.6

9.0

8.5

8.6

Turkey

6.7

7.3

8.0

7.3

United Kingdom

8.0

9.8

7.9

8.1

OECD Total

8.1

10.1

9.3

9.6

OECD America

9.2

10.5

8.7

9.5

OECD Pacific

13.7

15.1

14.7

15.6

OECD Europe

6.9

9.2

8.4

8.6

EU 19

7.0

9.0

8.1

8.2

EU 15

6.8

9.3

8.1

8.2

Unweighted average:

Source: Revenue Statistics of OECD Member Countries 1966-2005

Table 8：Taxes on Personal Income as Percentage of Total Taxation
Year

1995

2000

2003

2004

Canada

37.5

36.8

34.8

35.1

United States

35.8

41.9

35.2

34.7

Australia

40.6

37.8

39.8

40.2

Japan

22.4

21.1

17.5

17.8

Korea

19.2

14.6

12.7

13.6

New Zealand

45.0

43.1

41.9

41.0

Austria

21.0

22.2

23.0

22.7

Belgium

32.6

31.2

31.3

30.6

Czech Republic

12.8

12.9

13.1

12.7

Denmark

53.7

51.8

53.1

50.7

Finland

31.1

30.6

31.0

30.5

France

11.4

18.0

17.5

17.0

Germany

27.5

25.3

23.9

22.8

Greece

12.0

14.7

13.3

13.8

Hungary

16.1

18.6

18.9

17.8

Iceland

31.1

34.6

38.1

36.9

Ireland

30.7

29.9

26.5

27.4

Italy

26.0

24.8

25.1

25.4

Luxembourg

21.7

18.3

17.2

17.8

Netherlands

18.9

15.1

17.9

16.4

Norway

25.9

23.9

24.7

23.5

Poland

22.9

23.0

12.5

12.0

Portugal

18.0

16.7

15.9

15.9

10.1

10.6

9.3

MexicoSlovak Republic
Spain

23.6

18.6

18.6

17.7

Sweden

33.5

32.7

31.3

31.4

Switzerland

36.3

34.9

34.3

34.8

Turkey

21.6

22.2

15.7

14.9

United Kingdom

28.6

29.3

28.8

28.7

OECD Total

27.1

26.0

25.0

24.6

OECD America

36.7

39.4

35.0

34.9

OECD Pacific

31.8

29.1

28.0

28.2

OECD Europe

25.3

24.3

23.6

23.1

EU 19

24.6

23.4

22.6

22.1

EU 15

26.0

25.3

25.0

24.6

Unweighted average:

Source: Revenue Statistics of OECD Member Countries 1966-2005

Table 9：Taxes on Income and Profits as Percentage of Total Taxation
Year

1995

2000

2003

2004

Canada

46.4

50.1

45.3

46.5

Mexico

24.9

27.3

26.5

24.6

United States

46.1

50.7

43.1

43.4

Australia

55.4

58.0

56.6

58.4

Japan

38.3

34.8

30.6

32.0

Korea

31.9

28.8

28.0

27.9

New Zealand

61.3

60.0

59.6

61.1

Austria

26.6

28.7

29.6

29.4

Belgium

38.9

39.3

38.9

38.6

Czech Republic

25.0

22.7

25.3

25.1

Denmark

61.7

60.3

60.0

60.3

Finland

36.1

43.1

38.7

38.6

France

16.3

24.9

23.2

23.3

Germany

30.3

30.1

27.4

27.3

Greece

22.3

27.3

22.6

23.5

Hungary

21.0

24.3

24.7

23.6

Iceland

34.1

40.4

44.9

44.0

Ireland

39.1

41.6

39.4

39.3

Italy

35.3

33.1

30.9

31.4

Luxembourg

39.4

36.1

36.5

33.2

Netherlands

26.3

25.2

25.5

24.6

Norway

35.1

44.8

43.5

46.2

Poland

30.6

30.6

17.8

17.9

Portugal

25.5

28.0

24.2

24.2

21.3

21.9

18.8

Slovak Republic
Spain

29.2

28.3

28.2

28.2

Sweden

39.3

40.2

36.3

37.7

Switzerland

43.0

43.9

42.9

43.4

Turkey

28.3

29.5

23.7

22.1

United Kingdom

36.7

39.1

36.7

36.8

OECD Total

35.3

36.4

34.4

34.4

OECD America

39.1

42.7

38.3

38.2

OECD Pacific

46.7

45.4

43.7

44.9

OECD Europe

32.7

34.0

32.3

32.1

EU 19

32.2

32.9

30.9

30.6

EU 15

33.5

35.0

33.2

33.1

Unweighted average:

Source: Revenue Statistics of OECD Member Countries 1966-2005

Table 10 Surtaxes on Retained Earnings
2001-2004
Year

2001

2002

2003

2004

Number of BIT
Filing Unit

807,080825,040

850,370

815,841

Total BIT Payable(Not including theSurtax)221,182249,862275,020

286,208

Number of Taxpayers
Liable to the 10%
Surtax－456,552(55.33%)*

488,051(57.39%)457,655(56.10%)

Surtax Payment－

35,877(16.22%)32,405(12.97%)25875(9.0%)

Source: Yearbook of Tax Statistics Republic of China 2006.
Note: Figures in parentheses are percentages to number of total filing units and total
PEIT collection.

Table 11: Costs in Taiwan’s Tax Incentive Scheme

Unit：TWD million

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

4,435

6,515

4,160

668

602

166

-

172

216

283

B.Tax Reductions Due to
Implementation of Stature
for Upgrading Industries

25,22433,24544,941

81,34861,04334,557

54,83652,314

83,299119,356

A+B

29,65939,76049,10182,016

61,64534,72354,83652,486

83,515

119,639

C. PEIT Revenue
D.PEIT＋IIT Revenue

151,784

193,327

188,189

213,280

233,677

165,758

213,682

241,088329,357

311,887

371,524

412,628

428,733

449,856

478,635

392,938

411,086

455,912625,806

646,217

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

A/C

2.92%

3.37%

2.21%

0.31%

0.26%

0.10%

0.00%

0.07%

0.07%

0.09%

B/C

16.62%

17.20%

23.88%

38.14%

26.12%

20.85%

25.66%

21.70%

25.29%

38.27%

A+B/C

19.54%

20.57%

26.09%

38.45%

26.38%

20.95%

25.66%

21.77%

25.36%

38.36%

A/D

1.19%

1.58%

0.97%

0.15%

0.13%

0.04%

0.00%

0.04%

0.03%

0.04%

B/D

6.79%

8.06%

10.48%

18.08%

12.75%

8.79%

13.34%

11.47%

13.31%

18.47%

A+B/D
7.98%
9.64%
11.45%
Source：Yearbook of Tax Statistics Republic of China 2006.

18.23%

12.88%

8.84%

13.34%

11.51%

13.35%

18.51%A.Tax Reductions Due to
Implementation of Staturefor Encouragement of
Investment