Gov't Will Resume Comprehensive Tax Rebates for Exports

Taipei, July 25, 2012 (CENS)--To bolster export, the Ministry of Economic Affairs (MOEA) plans to resume comprehensive tax rebate for export, removing the existing threshold of 4.3% tariff for commodities eligible for tax rebate and enabling exporters to apply for tax rebates, so long as they meet the necessary conditions. Exporters will enjoy at least NT$435 million from the benefits of tax rebates a year, with those in the fields of chemicals and electric machinery being major beneficiaries.

Tax rebate is a common preferential measure of various countries, with the aim of lowering the production cost of manufacturers and boost their product competitiveness.

Taiwan instituted tax rebate system back in 1955, according to which tariff and commodity tax for imported materials can be rebated following the export of finished products.

The Ministry of Finance (MOF) noted that exporters mostly rely on processing of imported materials before export and many key components and parts also depend on import. To help exporters cope with the impact of global economic downturn and compete in the world market, the MOF supports the expansion of the application scope for tax rebates for exports.

The monthly financial and economic meeting of the Presidential Office will take place tomorrow (July 26). Shih Yen-shiang, economic minister, will put forth an innovative program for bolstering export at the meeting, which will include short-, medium-, and long-term measures.

For the short term, the MOEA will propose comprehensive resumption of tax rebate for export. For the medium-term, it will push export of turn-key plants, aiming especially at such emerging markets as Burma (Myanmar), Cambodia, and Laos. In the long term, the MOEA will seek the transformation of industrial structure and enhance the export of non-intermediary goods.

The MOF first put forth the expansion of export-oriented tax rebate in 2008 during the global financial tsunami. Subsequently, to cope with the impact of the free trade agreement between the U.S. and Korea, the government further expanded the scope of export-oriented tax rebate to those goods with over 4.3% tariff. The practice has been in effect for near one year, covering some 1,200 items.

The comprehensive export-oriented tax rebate to be proposed by the MOEA will affect chemicals, electric machinery and electronic products, plastics and plastic products, textile and textile products, precision equipment, metal products, and auto parts.