1. Personal exemptions:
Tax payer and wife are each entitled to approximately £70 per year and approximately £60 per year for each dependant living with the tax
payer.
2. Deductions:
Deductions are allowed for: taxes paid, certain donations, life insur- ance, medical expenses, wedding and funeral expenses, losses due to natural disasters.
3. Other Exemptions:
The tax payer is allowed the cost of the purchase of the original issue of registered stocks or corporate bonds with 3/4 years maturity, issued by corporations in a number of basic industries. This is allowed for a three year continuous holding, providing such deduction does not exceed 25% of the income for that year.
An interest on saving deposits for two or more years is also exempt from tax.
The rates of income tax on taxable income vary from under £30 per year (6% of the taxable income) to £1,000 per year but under £2,000 per year (£217 + 15% of excess over £2,000); £8,000 per year but under £10,000 (£2,072 + 44% of excess over £8,000); up to and over £20,000 per year (£8,102 + 60% of excess over £20,000).
In addition, partners in an undertaking would pay 5% of the net profit distributed; shareholders would pay 5% of the dividends distributed but a non-resident alien or foreign enterprise in Taiwan would pay 10% of the dividends.
Business Income Tax
The Business Income Tax is levied on a net income of all profits in enter- prises and the tax is based on the net profit of the tax payer.
A productive enterprise conforming to the appropriate statutes is exempt from Business Income Tax for a period of five years from the starting date of this operation and where an enterprise has made a plant extension of 30% or more in its production capacity, it is entitled to a five year Tax exemption in respect of the income derived from that expansion.
Undistributed profit retained in a company and actually used for expansion is tax exempt to the extent of 25% of the company's total income.
Premiums realised from the issue of stocks, set aside as reserve, are tax
exempt.
The gain on the sale of stocks or Government bonds held for more than one year is tax exempt.
A reserve against a loss of foreign currency debt exchange to the extent o 7% of the unpaid balance is allowed each year for an enterprise incurring such a debt for the purchase of equipment.
Certain public utilities are allowed a 10% reduction in Tax.
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