The pact will result in fairer taxation and create a more friendly investment environment for business, an official from the Ministry of Foreign Affairs said in an official press release. t will also further consolidate substantial relations between Taiwan and Germany. ?
Germany is Taiwan's largest trading partner in Europe. Trade between the two jurisdictions totaled US$14.8 billion in 2010, an increase of 43 percent from the previous year. Germany is also Taiwan largest investor, with 250 Germany companies investing a total of USD1.9bn in Taiwan.
Taiwan has a relatively stable financial sector, with finance and insurance services contributing approximately seven percent of gross GDP over the past 10 years.
The island, however, has relatively few tax treaties in place, with only two DTAs in effect with India and Switzerland. Despite attempts to conclude a tax treaty with the mainland, talks have thus far not come to fruition, due to a reported conflict between whether individuals would be taxed based on the residence of the taxpayer or the origin of the income.
Despite this, Taiwan has strong economic ties with mainland China. Between January and November 2011, 98 investment projects from the mainland totaling US$42 million were approved by the Taiwanese Ministry of Economic Affairs and 530 Taiwanese projects, totaling US$3.5 billion, were approved for investment in the Chinese mainland.
This treaty comes on the heels of a recent announcement by Taiwanese Premier Wu Den-yih that Taiwan would be stepping up its creation of free trade zones in an effort to become a ree trade island. Faced with increasingly difficult global challenges, "further trade liberalization is the only way for Taiwan's economy to reach a higher level," Wu is quoted as saying according to an official press release.
According to the plan, several special economic zones would be built around the country five free trade ports, combining urther regulatory easing, more state incentives and higher administrative efficiency.
The recently signed DTA agreement is subject to both governments formal ratification procedures before it will take effect and both sides have expressed optimism about the positive effects of the agreement.
e very much look forward to the growth of bilateral investment after the pact takes effect, Zickerick said
