The Executive Yuan Council today approved a draft amendment to the Act for Development of Small and Medium Enterprises, proposing tax breaks that will encourage small and medium-sized enterprises (SMEs) to raise salaries for entry-level employees.
Lifting workers' salaries is an issue that has received much attention from the public. Aside from using moral suasion to influence companies, the government can also use policy tools to create more incentives for firms to increase their workers' wages, Premier Jiang Yi-huah said.
SMEs have always been an important contributor to the country's economic growth, Jiang said. Currently SMEs account for 1.3 million or 97.67 percent of all enterprises in Taiwan, and employ 8.5 million or 78 percent of the country's workers.
Promoting higher levels of employment and pay are among the government's priority policies, the premier reiterated, and the addition of Article 36-2 to the act would advance these efforts considerably. He thanked the Ministry of Economic Affairs (MOEA) and the Ministry of Finance (MOF) for drafting the amendment in such a short time, and as the amendment will be forwarded to the Legislative Yuan for deliberation, he also asked the MOEA to enhance communication with businesses or industry groups and gain support from legislators.
The proposed amendment is summarized as follows:
1. When national economic indicators reach a certain level, an SME that voluntarily raises the average salary for its base-level employees shall be entitled to additional tax deductions on its corporate income for the year. That is, the portion of the salary increase that is voluntarily paid (not the portion mandated by minimum wage rules) to Taiwanese base-level employees shall qualify for tax credits of up to 130 percent.
2. The central competent authority and the MOF shall jointly prescribe regulations on the economic indicator levels, applicable periods, scope of base-level employees, methods for calculating average salary, supervising agencies, application deadlines, application procedures and other related matters.