A modification to the Statute for Developing Small- and Medium-Sized Enterprises (SMEs) in Taiwan, which will provide corporate income tax breaks to those businesses raising wages for their lower-level employees, has passed its first committee review in Taiwan’s Legislative Yuan.
If Taiwan’s rate of unemployment is above a certain level, the legislative amendment would offer a 130 percent tax deduction for SMEs against corporate income tax. The deduction would be allowed relative to the increase in payroll expenses for existing, domestic, entry-level employees.
However, it would not take into account wage increases as a result of a rise in the statutory minimum wage, and employees at supervisory, managerial, and higher levels will be excluded.
The Government expects that the amendment will encourage about one-third of SMEs, or 430,000 businesses, to increase salaries. The 1.3m SMEs in Taiwan, which represent almost 98 percent of businesses in the country, employ 8.5 million workers or 78 percent of all employees. They are an important driver of economic growth and employment. It is hoped that the measure will tackle stagnant wage growth and help Taiwan retain skilled persons, while also raising domestic consumption and overall growth in the economy.
