The legislature has approved several tax reform measures aimed at reducing the income gap in Taiwan.
Amendments to the Income Tax Act passed Friday night give average taxpayers a break by allowing them to claim higher deductions. That will reduce the amount of their taxable income. In addition, the special deduction on salary and for people with disabilities will be raised.
The higher deductions and other tax breaks will cost the government an estimated NT$15 billion (about US$500 million) in revenues. That will be partially offset by an increase in the top marginal tax rate.
Also passed on Friday was an amendment to raise business tax rate on banks and insurers from 2% to 5%. The government estimated that all the above amendments will raise an additional NT$65 billion (about US$2.2 billion) annually.
The income tax adjustments will take effect on Jan. 1, 2015. The increase in business tax on financial institutions could take effect in July at the earliest.