Tax on imported films, entrepreneurs wish to hold it.

The Ministry of Finance originally intended to impose a 20% tax on the royalty from film imports, but since the opinions hold are vary, the Government Information suggested postpone the idea of imposing the tax till 2007.  The domestic film companies contended that once the tax is imposed, it will not be possible to shift 20% of the tax, thus the Ministry of Finance agreed to discuss with film companies regarding the time for bringing it to practice and the way to levy the tax before implementation.

 

The Ministry of Finance promulgated an Administrative Ordinance in 1979 that “For-profit organizations are not entitled to produce duplicates of film imports; with films that are only provided to organizations for a certain period of time, the fees disbursable shall not be deemed as royalty; tax shall be exempted for the said fees received by foreign enterprises”.  This Administrative Ordinance guarantees an over 25-year tax-exempt premium to films hold by the largest 8 film companies in the U.S..

 

The Ministry of Finance held that, the definition made during the year 1979 is in favor of foreign film companies and has evidently gone against the principle of the taxation law.  According to an estimate, once the idea of taxing foreign films is put into practice, our tax revenue may increase NT$3 hundred billion/year.  All film companies such as movie channels of satellite TV, cable TV, the largest eight U.S movie companies and the Central Motion Picture Corporation for example will be affected.

 

Owing to the fact that the fees that are to be paid for the imported films are deemed as royalty and taxed, the Ministry of Finance pointed out that, in the future, whenever the domestic film companies import films from foreign countries, a 20% of the tax shall be imposed on domestic film companies according to the fees payable, and no exemption is allowed if the foreign film companies do not have a business representative or a fixed branch in Taiwan. (2004.08)

                                                                                                         CYJ/SH