Taiwan's Department of Taxation under the Ministry of Finance is planning to ease tax regulations to allow foreign enterprises that do not have a base of operations or branch offices in Taiwan to claim deductions on costs and expenses for “business income” earned in the country. The American Chamber of Commerce in Taipei has for years complained that Taiwan lumps together all income earned in the country by foreign companies into a single category and taxes it at a rate of 20 percent. Noting that these overseas firms are also required to pay taxes on the income in their home countries, AmCham has argued that Taiwan's method of taxation results in some of the highest tax rates anywhere in the world and is extremely unreasonable. Under the planned relaxation of the tax regulations, all foreign companies that meet the conditions in Article 8, Paragraph 9 of the Republic of China's Income Tax Act will be able to claim deductions on their operating costs and expenses for “business income.” They will be subject to a 20 percent taxation based on net income. Accountants pointed out that the National Tax Administration currently classifies service income earned in Taiwan by offshore firms as “other income” and taxes it at 20 percent. “Business income,” “other income,” and “service income” are easily confused under the current regulations, often leading to major disputes and controversy. Clearly defining the category of “business income” is seen as an important element in the MOF's move to relax tax regulations. According to scholars, under the Income Tax Act, most corporate revenues not earned from royalties, dividends or interest can be placed under the category of “business income.” The DOT will invite representatives of AmCham, the European Chamber of Commerce Taipei, and the Certified Public Accountants Association, ROC to a meeting slated for later this month to clarify the definition of “business profits.” Meanwhile, Hon Hai Precision Industry, Cathay Life Insurance, CPC Corp., Formosa Petrochemical, Quanta Computer, and Asustek Computer have made into the Fortune 500 again this year. Most of the companies are ranked higher than last year. Hon Hai jumped from 132nd to 109th, followed by Cathay Life (291), CPC (306), Formosa Petrochemical (323), Quanta (342) and Asustek (436). Royal Dutch Shell tops Fortune Magazine's list of the 500 largest companies in the world this year. For the first time in 10 years, a company not based in the US occupies first place, and the number of US corporations on the list has dropped to 140.
