The Cabinet today approved amendments to a free trade zone (FTZ) law that Premier Sean Chen said would improve efficiency and services at FTZs around Taiwan and bring about diversely innovative models of operation.
The revisions to the Act for the Establishment and Management of Free Trade Zones will help reform Taiwan's port system and while meeting the zones' operation and management needs, Chen said. These changes would also bring Kaohsiung Port closer to certification as a London Metal Exchange delivery location.
The proposed amendments will be submitted for the Legislature's review. The premier instructed the Ministry of Transportation and Communications (MOTC) to clearly explain the benefits of the proposal to win backing from legislative caucuses.
The act was promulgated on July 23, 2003 and amended on July 8, 2009. According to MOTC officials, six FTZs are presently operational—at the ports of Keelung, Taipei, Suao, Taichung and Kaohsiung, as well as at the Taoyuan international airport.
Amendments to the act are summarized as follows:
1. In accordance with the principle of separation of administrative and business functions, the port authority responsible for preliminary review of applications from entities wishing to operate in the FTZ shall be changed, to one that handles primarily administrative matters. (Revision to Article 7)
2. Following the aforementioned principle, the act will specify only those duties of the FTZ authority that involve government power. This will also maintain flexibility for assigning responsibilities in the future. (Revision to Article 9)
3. New enterprises in the FTZ, after receiving establishment permits, shall be eligible for tariff reduction, exemption or refunds on machines and equipment transported into the FTZ. (Revision to Articles 21 and 24)
4. Income from sales of metal commodity futures by foreign or mainland Chinese (including Hong Kong and Macau) for-profit businesses shall be exempt from taxation and declaration. A sunset clause will also be added in compliance with the Tax Collection Act, which requires tax incentives to provide a definite implementation period. (Revision to Article 29)
5. In connection with amendments to Articles 21 and 24, an enterprise whose establishment permit has been annulled or revoked by the FTZ authority shall make supplemental payment of tariffs, or within six months transport those machines and equipment out of the FTZ. (Revision to Article 31)