Identifier
Created
Classification
Origin
06TAIPEI2817
2006-08-16 22:14:00
UNCLASSIFIED
American Institute Taiwan, Taipei
Cable title:
Foreign Portfolio Investment Exempt from AMT
how-toVZCZCXRO2335 RR RUEHGH DE RUEHIN #2817 2282214 ZNR UUUUU ZZH R 162214Z AUG 06 FM AIT TAIPEI TO RUEHC/SECSTATE WASHDC 1656 RUEATRS/DEPT OF TREASURY WASHDC INFO RUCPDOC/USDOC WASHDC RUEHBK/AMEMBASSY BANGKOK 3380 RUEHBJ/AMEMBASSY BEIJING 5542 RUEHUL/AMEMBASSY SEOUL 8020 RUEHGP/AMEMBASSY SINGAPORE 6575 RUEHKO/AMEMBASSY TOKYO 7939 RUEHML/AMEMBASSY MANILA 9779 RUEHJA/AMEMBASSY JAKARTA 3909 RUEHKL/AMEMBASSY KUALA LUMPUR 3546 RUEHHI/AMEMBASSY HANOI 3115 RUEHBY/AMEMBASSY CANBERRA 4285 RUEHWL/AMEMBASSY WELLINGTON 1543 RUEHHK/AMCONSUL HONG KONG 6756 RUEHGH/AMCONSUL SHANGHAI 0315 RUEHGZ/AMCONSUL GUANGZHOU 9495
UNCLAS TAIPEI 002817
SIPDIS
SIPDIS
STATE PLEASE PASS USTR
STATE FOR EAP/RSP/TC, EAP/EP
USTR FOR ALTBACH
USDOC FOR 3132/USFCS/OIO/EAP/WZARIT
TREASURY FOR OASIA/LMOGHTADER
TREASURY PLEASE PASS TO OCC/AMCMAHON
TREASURY ALSO PASS TO FEDERAL RESERVE/BOARD OF
GOVERNORS, AND SAN FRANCISCO FRB/TERESA CURRAN
E.O. 12958: N/A
TAGS: EINV EFIN ECON PINR TW
SUBJECT: Foreign Portfolio Investment Exempt from AMT
UNCLAS TAIPEI 002817
SIPDIS
SIPDIS
STATE PLEASE PASS USTR
STATE FOR EAP/RSP/TC, EAP/EP
USTR FOR ALTBACH
USDOC FOR 3132/USFCS/OIO/EAP/WZARIT
TREASURY FOR OASIA/LMOGHTADER
TREASURY PLEASE PASS TO OCC/AMCMAHON
TREASURY ALSO PASS TO FEDERAL RESERVE/BOARD OF
GOVERNORS, AND SAN FRANCISCO FRB/TERESA CURRAN
E.O. 12958: N/A
TAGS: EINV EFIN ECON PINR TW
SUBJECT: Foreign Portfolio Investment Exempt from AMT
1. Summary. The Ministry of Finance (MOF) recently announced it
will exempt foreign institutional investors (FIIs) from Taiwan's 10%
alternative minimum tax (AMT) if the investment capital comes from
offshore. The MOF decision is designed to attract foreign portfolio
investment and has interagency endorsement. End Summary.
2. On August 14, the MOF issued an administrative order to exempt
almost all of foreign portfolio investment from Taiwan's new 10%
AMT. The exemption is retroactive to January 1 of this year when
the AMT was implemented. According to the order, FIIs without fixed
offices or agents in Taiwan are not required to pay the 10% AMT for
capital gains earned from securities trading in Taiwan, even if the
investment capital is the FIIs' own funds. Taiwan securities firms
or other entities contracted by qualifying FIIs to do securities
trading are also not required to pay nor withhold the 10% AMT.
3. FIIs having fixed offices or agents in Taiwan are not required
to pay or withhold the 10% AMT for capital gains from securities
trading in Taiwan, if the investment capital comes from offshore and
is not their own funds. According to the MOF, mutual funds
organized by these FIIs' offshore headquarters are not subject to
the 10% AMT because the owners are the offshore fund holders, rather
than the FIIs which only serve as fund managers. Funds that
offshore customers contract FIIs to trade in Taiwan are also not
subject to the 10% AMT.
4. However, FIIs having permanent offices or agents in Taiwan are
required to pay the 10% AMT on capital gains from securities trading
in Taiwan when they use their own funds, even if those funds come
from offshore.
Results
--------------
5. An MOF Department of Taxation official told AIT/T that the
administrative order is retroactive to January 1, 2006 when the AMT
was implemented. He also estimated that as a result of the order,
99% of foreign portfolio investment in Taiwan will be exempt from
the 10% AMT. A Financial Supervisory Commission (FSC) official told
us that the MOF order is designed to attract FIIs to Taiwan's
securities markets, and that the FSC and Taiwan's Central Bank of
China have both endorsed the MOF move.
YOUNG
SIPDIS
SIPDIS
STATE PLEASE PASS USTR
STATE FOR EAP/RSP/TC, EAP/EP
USTR FOR ALTBACH
USDOC FOR 3132/USFCS/OIO/EAP/WZARIT
TREASURY FOR OASIA/LMOGHTADER
TREASURY PLEASE PASS TO OCC/AMCMAHON
TREASURY ALSO PASS TO FEDERAL RESERVE/BOARD OF
GOVERNORS, AND SAN FRANCISCO FRB/TERESA CURRAN
E.O. 12958: N/A
TAGS: EINV EFIN ECON PINR TW
SUBJECT: Foreign Portfolio Investment Exempt from AMT
1. Summary. The Ministry of Finance (MOF) recently announced it
will exempt foreign institutional investors (FIIs) from Taiwan's 10%
alternative minimum tax (AMT) if the investment capital comes from
offshore. The MOF decision is designed to attract foreign portfolio
investment and has interagency endorsement. End Summary.
2. On August 14, the MOF issued an administrative order to exempt
almost all of foreign portfolio investment from Taiwan's new 10%
AMT. The exemption is retroactive to January 1 of this year when
the AMT was implemented. According to the order, FIIs without fixed
offices or agents in Taiwan are not required to pay the 10% AMT for
capital gains earned from securities trading in Taiwan, even if the
investment capital is the FIIs' own funds. Taiwan securities firms
or other entities contracted by qualifying FIIs to do securities
trading are also not required to pay nor withhold the 10% AMT.
3. FIIs having fixed offices or agents in Taiwan are not required
to pay or withhold the 10% AMT for capital gains from securities
trading in Taiwan, if the investment capital comes from offshore and
is not their own funds. According to the MOF, mutual funds
organized by these FIIs' offshore headquarters are not subject to
the 10% AMT because the owners are the offshore fund holders, rather
than the FIIs which only serve as fund managers. Funds that
offshore customers contract FIIs to trade in Taiwan are also not
subject to the 10% AMT.
4. However, FIIs having permanent offices or agents in Taiwan are
required to pay the 10% AMT on capital gains from securities trading
in Taiwan when they use their own funds, even if those funds come
from offshore.
Results
--------------
5. An MOF Department of Taxation official told AIT/T that the
administrative order is retroactive to January 1, 2006 when the AMT
was implemented. He also estimated that as a result of the order,
99% of foreign portfolio investment in Taiwan will be exempt from
the 10% AMT. A Financial Supervisory Commission (FSC) official told
us that the MOF order is designed to attract FIIs to Taiwan's
securities markets, and that the FSC and Taiwan's Central Bank of
China have both endorsed the MOF move.
YOUNG