09.04.2001
Indirect China investments to be tax deductible

• Development: The Cabinet is revising current regulations to allow tax deductions for Taiwanese companies with China investments in order to avoid double taxation.

• Analysis: Taiwanese companies with undeclared investments in China will also be given a five-month grace period to register investments with local authorities. Currently, companies with investments over US$1.0m in the PRC avoid double taxation by investing indirectly through a third tax-free area.

• Primasia View: As Taiwanese companies are already able to avoid double taxation, we are of the view that these measures alone are unlikely to encourage the reporting of mainland investments.