TAIPEI: A proposed taxation agreement with the mainland expected to be signed during the fourth round of cross-Straits talks later this month will protect Taiwanese businessmen operating on the mainland, lower the burden on taxpayers and increase the government's tax revenues in the long run, finance chief Lee Sush-der said yesterday.

Lee also gave an assurance that information on neither individuals nor companies will be revealed during tax information exchanges between the two sides, in line with international tax treaty protocols. Such information will only be supplied when there is a specific need for tax inspection in cases of major tax evasion, he added.

He made the remarks at a Legislative Yuan session in which legislators voiced concern that the taxation agreement might enable the mainland to obtain more financial information about Taiwanese businessmen operating there, which could affect their future operations.

Lee said the agreement closely follows guidelines set forth by the Organization for Economic Cooperation and Development (OECD) and the United Nations in their model tax convention documents. Taiwan has signed similar tax treaties with 16 countries.

The taxation agreement will cover issues such as the taxation rights of each government, the avoidance of double taxation and mutual assistance on taxation matters. In recent talks, both sides have reached consensus on most of the contents of the agreement, including tax allocation and exchange of tax information.

Lee said that without the taxation agreement, the two sides can hide their incomes from each other, causing a lot of unfairness.

China Daily/CNA

(HK Edition 12/11/2009 page2)