20% technical investment postpones levy of income tax for five years. Limited number of shareholders, Ministries of Finance and Economic Affairs opinions differ.

In terms of levying income tax on trading stocks with technology, the Ministries of Finance and Economic Affairs have come to a consensus on the benefit of postponing levy for five years as long as shareholders acquire 20% interest in the invested company. However, opinions vary in limiting the number of 20% interest shareholders. The Ministry of Finance plans to agree releasing the sole shareholder to three, as the Ministry of Economic Affairs hopes no limits to be set.

 

The two Ministries are still consulting about the article of trading assets for stocks and gaining five years of postponing levy. Before the Ministry of Economic Affairs finishes amending “Statue for Upgrading Industries,” the levy of income tax concerning trading assets for stocks will be executed along the administrative regulations announced by Ministry of Finance last September, which means, starting from January 2204, occurred trading assets for stocks will be levied income tax.

 

The Ministry of Finance believes that to invest in a company by trading patent and special skills to obtain 20% interest in the important tactic industries, so long as the number of shareholders does not exceed three people, the profit made from selling skills as an investment will be postponed taxing. If in five years stocks are not transferred, the income will be taxed in the sixth year. If stocks are transferred within five years, taxes will be levied the contemporary year. During the period of time of holding shares in the invested company, if any behavior of “trade” takes place, taxes will be levied in the same year of trading. The definition of “trade” other than transferring also includes merging, liquidating, giving and so on changes of ownership. (2004.06)

CYJ/CHT