* Govt plans to raise business income tax to 20 pct from 17 pct
* Aims to raise tax on foreign investors’ cash dividends to 21 pct
* Tax revenue reduction estimated at T$5.9 bln-T$6.9 bln a year
* Plans are subject to cabinet approval (Adds comments, details)
By Faith Hung
TAIPEI, Sept 1 (Reuters) - Taiwan plans to raise taxes on corporate income and those from foreign investors’ share dividends but cut personal taxes as part of broader reforms, the finance ministry said on Friday.
The government plans to raise the business income tax to 20 percent from 17 percent and lower the cap on personal income tax to 40 percent from 45 percent, finance minister Sheu Yu-Jer told a news conference.
Foreign investors’ cash dividends from shares would be taxed at a rate of 21 percent, up from 20 percent now, he said.
The ministry said the changes are intended to achieve a more equitable distribution of the tax burden, as the government has long been criticised for favouring foreign investors over domestic investors, while allowing companies to transfer more of their major shareholders’ income to corporate income.
“Our current business income tax of 17 percent is relatively low compared with other major countries,” the minister said. “We are aiming to build a fair tax system that follows global trends and is more globally competitive, which would be to everyone’s benefit.”
Tax on foreign investors’ cash dividends from shares would be raised as it is much lower than the current 45 percent local investors have to pay, he said.
The tax restructuring, subject to cabinet approval, would result in a net reduction in tax revenue of T$5.9 billion to T$6.9 billion ($196.08 million - $229.32 million) annually, the minister said.
$1 = 30.0890 Taiwan dollars Editing by Jacqueline Wong