As a member of the international organizations such as WTO and APEC, Taiwan is highly free in economic activities. It follows the international practices and has a healthy system to protect property rights. According to the "2017 Index of Economic Freedom" published by the Heritage Foundation (a United States think tank) and the Wall Street Journal, Taiwan was ranked 11th among the 180 countries in the world. The ranking was Taiwan's best performance in the index to date. Taiwan was ranked 5th in the Asia-Pacific region, only behind Hong Kong, Singapore, Australia, and New Zealand, ahead of Japan, South Korea and China.
The index comprises 12 categories - property rights, government integrity, judicial effectiveness, tax burden, fiscal health, government spending, business freedom, labor freedom, monetary freedom, trade freedom, investment freedom and financial freedom. Based on its aggregate score, each of 180 countries graded in the 2017 index was classified as "free" if it scored 80 or higher; "mostly free" if scoring between 70-79.9. In this year's report, Taiwan scored 76.5 in economic freedom, which was rated as a "Mostly Free" economy and showed improvement in the areas of property rights, government integrity, government spending, business freedom, labor freedom, and monetary freedom.
Looking into the future, Taiwan government will continue to improve its business law, promote market openness and facilitate market competition to maintain the momentum for Taiwan's economic growth and reform.
Taiwan provides an investment environment with competitiveness. The ratio of government tax revenue to GDP is lower than Japan, South Korea, and most of the developed European and American countries. Beginning from 2018, the tax rate for profit-seeking enterprise income tax has been raised to 20% from 17%. In line with our industrial policy, we have provided proper tax incentives resulting in an effective tax rate of profit-seeking enterprise income tax of approximately 13%~14%. Taiwan has signed with many countries the agreements for avoidance of double taxation. As of 31 December, 2017, Taiwan has signed comprehensive income tax treaties with 32 countries, and 13 treaties on international transportation income tax agreements.
The global financial crisis has hit the world severely. Taiwan's healthy economy makes it more worthy of long-term investment than other emerging countries. The banking system is abundant of liquid capital and the country has huge foreign exchange reserves, a current account surplus, and low foreign debt and average debt, which contributes to Taiwan’s outstanding macroeconomic performance as well as the resistibility amid financial crisis. According to the statistics of the International Monetary Fund, Taiwan has more than USD4 trillion of foreign exchange reserves, which is ranked 5th in the world. The ratio of foreign debt to GDP for Taiwan is 31.7%. This indicates that Taiwan has a securer economy. Taiwan has large current account surpluses, which make the country resistible to the impact of capital outflow and help reduce the risk of confidence crisis. During the global economic recession, Taiwan can still work on preparing for the next wave of economic growth. Taiwan's economy is healthier than other emerging countries. With improved cross-strait relations, Taiwan is expected to have new growth momentums after recovery from the recession.
Taiwan's economic environment is stable. It has four major advantages to become the financial center in the Asia-Pacific region.
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Department of Investment Services, Ministry of Economic Affairs, R.O.C.
Department of Investment Services, Ministry of Economic Affairs, R.O.C.