Taipei, Sept. 4 (CNA) The Cabinet expects to submit bills on tax reform to the Legislature for review in mid-October, Finance Minister Sheu Yu-jer (許虞哲) said Monday.

The Ministry of Finance will actively discuss the proposed reform with the public during the month-long review period, which began Monday, Sheu said.

The government is hoping the bills will clear the Legislature by the end of December, he said.

The proposed reforms include eliminating the dividend imputation tax system, raising the corporate income tax rate from 17 percent to 20 percent, lowering the maximum individual income tax rate from 45 percent to 40 percent and increasing three types of deductions for taxable income.

As part of its proposed elimination of the imputation system, the ministry has proposed two alternative tax plans.

Plan A will allow investors to enjoy tax free status on 37 percent of dividends they receive, with the remainder taxed as personal income.

Plan B will include two options: Option 1 will allow equity investors to be taxed on a flat rate of 26 percent, while the second choice will tax all dividend income as personal income, but give taxpayers a tax deduction of up to NT$80,000.

As for foreign investors, the MOF has proposed an increase in the tax rate on dividend income from 20 percent to 21 percent. 

(By Chiu Po-sheng and Y.F. Low) 
Enditem/AW