Taipei, May 19, 2008 (CENS)--The Ministry of Finance is considering to postpone the implementation of the minimum tax burden on overseas income by one year to 2010, rather than the original schedule of 2009, so that the new administration can have time to review the propriety of the measure.

The postponement will be based on the flexibility of the statute on minimum income tax authorizing the Executive Yuan to extend the implementation of the tax on overseas income by one extra year, on top of the original three-year grace period. The statute was enacted in 2005.

Under the scheme, local people will be subject to the 20% minimum tax on their overseas income exceeding NT$1 million, when their combined domestic and overseas income tops NT$6 million.

Li Shu-teh, minister-designate of finance, confirms that the ministry will take into account opinions from various parties on the minimum income tax burden, adding that tax reform must be viewed from an overall angle and comply with the three principles of taxation fairness, social justice, and contribution to economic development.

Many financial-market insiders have expressed concerned about the minimum tax burden on overseas income, alleging that it may trigger massive redemption by investors of overseas mutual funds, to the tune of some NT$1 trillion, by the end of this year. As a result, many high-assets clients may transfer their funds to countries with lower tax rates, such as Hong Kong and Singapore.

Some experts, though, opposed to the revision of the minimum tax burden on overseas income, which has facilitated massive fund outflow among local people for investing in overseas mutual funds in recent years. They noted that the tax scheme was enacted with support from both the DPP and KMT legislators, adding that most countries in the world also tax their citizens` overseas incomes, except Hong Kong, Singapore, and some European nations.

(by Philip Liu)