Act Proposed to Offer Tax Breaks to SMEs to Raise Wages

Taiwan's Cabinet has recently approved the revision of the Act for Development of Small and Medium Enterprises, stipulating that SMEs should be entitled to tax breaks upon raising employee wages particularly during tepid economy.

For instance, if a corporate payroll totals NT$1 million and NT$200,000 is added when the island's economic growth falls below 3%, then such addition will be multiplied by 1.3 to total NT$260,000, with the total payroll of NT$1.26 million to be posted on the balance sheet as expenditure that qualifies for tax reduction.

The revision has to be passed by the  Legislature in the upcoming session in  September, with the Cabinet urging the Ministry of Finance (MOF) and the Ministry of Economic Affairs (MOEA) to push lawmakers to prioritize passing the revision.

Passing the revision in the September session enables SMEs to qualify for the tax breaks in the following year.

Vice Economics Minister J. C. Shen believes that the new Act may encourage about 430,000 SMEs to raise wages, also urging the enterprises that have benefited from tax incentives to quickly raise salaries to attract young job-seekers. (JL)