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兩稅合一制下調降營利事業所得稅率與股利發放之研究
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Association between Corporate Income Tax Rate Reduction and
Dividend Payouts in an Integrated Tax System
1. Purpose/Objective
In 1998, the Taiwanese government implemented an integrated income tax system to
ease the double taxation of dividends, thereby allowing corporate income taxes to offset
personal income taxes paid by shareholders on their dividends. However, an additional 10%
surtax on undistributed retained earnings was levied to prevent corporations from retaining
their earnings.
After the Statute for Upgrading Industries expired, Taiwan reduced the corporate
income tax rate from 25% to 17% in 2010, but maintained the additional 10% surtax on
undistributed retained earnings. This amendment broadened the difference between corporate
and personal income tax rate from 7.5% to 14.7%. Some people criticized that the unchanged
surtax rate would encourage corporations to retain their earnings and distort their dividend
policies. The Legislative Yuan, however, maintained its decision.
Various theories on corporate motivations for distributing dividends have offered
inconsistent conclusions regarding the effect of tax reforms on corporate dividend payments.
Tax Preference Theory purports that the impact of taxes on dividend policy depends on the
relative taxation of dividends and capital gains. A preference for capital gains would exist
whenever the tax rate on capital gains is lower than that on income from dividends (Allen et
al., 2000). Under the traditional view as proposed by Harberger (1962), if a corporation
relied primarily on external equity financing, then higher dividend taxation would typically
result in decreased dividend payments and vice versa. In contrast, under the new view (or
Tax Capitalization View) on dividend taxation proposed by King (1974) and Bradford
(1981), dividends are paid with residual income; adjusting dividend taxes would thus be
irrelevant to corporate dividend policies.
The United States government reduced its dividend tax rate in 1986 and 2003. In
addition, China’s government reformed its dividend taxation laws in 2005. Many empirical
studies have shown that tax reforms lead to dividend payment adjustments, which is
consistent with Tax Preference Theory or the traditional view (Sterk and Vandenberg, 1990;
Papaioannou and Savarese, 1994; Chetty and Saez, 2005; Brown et al., 2007; Nam et al.,
Ching-Chieh Lin
, Assistant Professor, Department of Accounting, National Pingtung University
Wen-Chih Lee
, Professor, Department of Wealth and Taxation Management, National Kaohsiung
University of Applied Sciences