Taiwan proposes inheritance tax cut in bid to lure back investors

Taiwan currently slaps a maximum 50 percent inheritance tax, compelling the rich to move their funds and assets abroad.

The Cabinet approved a flat 10 percent inheritance tax to slow the capital outflow, according to a government statement. The proposal is expected to be approved by the legislature soon.

Taiwanese invested an estimated NT$1.2 trillion (US$37 billion) abroad last year, much of which made by the rich to evade the high inheritance tax. Many have parked their money in Hong Kong and Singapore, Asia's tax havens, officials say.

Business people have long urged the government to cut the inheritance tax, but government leaders feared such a move could be criticized for helping the rich to get richer.

Vice Premier Paul Chiu said the government could lose up to NT$20 billion (US$615 million) in tax revenues a year because of the tax cut, but could gain as much in per capital income with an expected slowdown in capital outflow.

Chiu said the Cabinet is also considering cutting the current 25 percent income tax on financial institutions, part of tax reforms aimed at turning the island into the financial hub in Asia.

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