Taiwan, China sign cross-strait agreements

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TAIPEI: The Taiwan Ministry of Foreign Affairs (MOFA) has announced the successful conclusion of the latest round of cross-strait talks with China, which resulted in agreements on flight safety and taxation cooperation.

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The Taipei-based Straits Exchange Foundation (SEF) and Beijing-headquartered Association for Relations Across the Taiwan Straits (ARATS), signed the agreements on August 25 in Fuzhou, China after the 11th round of SEF-ARATS talks, “further advancing mutual trust and reciprocal benefits,” MOFA said in a statement.

SEF Chairman Lin Join-sane said the accords represent the commitment of the two sides to promoting peace and stability. “We expect to make further headway in this regard and continue institutionalized dialogue on the basis of the 1992 consensus.”

According to the new flight operations agreement, carriers operating cross-strait routes can use local facilities and personnel for maintenance services, as well as fit-to-fly and safety inspections.

MOFA explained that currently, only staff approved by the respective authorities, i.e., Chinese regulators for China-based airlines, and Taiwanese officials for Taiwan-based airlines can provide services. “The new measure is expected to significantly reduce operating costs and the risk of flight delays,” MOFA said.

The taxation pact was the culmination of discussions ongoing since 2009, and addresses avoidance of double taxation as well as setting up an improved framework for information exchange and dispute settlement.

An SEF official explained, “Any businesses managed in Taiwan, including those investing in mainland China via a third territory, will be protected by the regulatory framework.” Under the agreement, Taiwanese companies operating in China will be taxed at Taipei’s 17 percent rate rather than the 25 percent tax rate applied by Beijing.

“In addition, the two sides reached an understanding on data use restrictions, nondisclosure of taxpayer information, prosecutions and retroactive assessments,” the official added.

MOFA cited Ministry of Finance estimates that the new agreement would result in additional tax revenues of NT$8.1 billion ($248.3 million) to NT$13.3 billion annually, while reducing the tax exposure of Taiwanese businesses in China by NT$3.9 billion.

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