February 2016: The Taiwan Economy in Brief

ASE-SPIL Saga Enters New Phase

Advanced Semiconductor Engineering Inc. (ASE), the world’s largest semiconductor chip packaging and testing company, on December 22 launched an NT$42.35 billion (US$1.28 billion) tender offer for another 24.7% stake in rival Silicon Precision Industries Corp. (SPIL). ASE already acquired 25% of SPIL in September and is looking to increase its stake in anticipation of fully merging the two companies.

The latest offer of NT$55 per share was a 22% increase over its previous tender offer last September and nearly 10% above SPIL’s closing price on the Taiwan Stock Exchange December 23. SPIL has been trying to fend off ASE’s advances and has offered a 25% stake to China’s Tsinghua Unigroup, also at NT$55 per share. If the ASE-SPIL merger goes through upon approval by Taiwan’s Fair Trade Commission, ASE would command a 15% global market share for chip packaging and testing.

Despite Doldrums, Tax Revenues Rise

Despite a slowdown in the economy, increased tax revenues, mostly due to rising income tax payments, indicate that businesses and individuals actually fared better than in 2014, a Ministry of Finance (MOF) representative said. The MOF annual report noted that tax revenues rose 7.2% in 2015, reaching NT$2.12 trillion (US$62.97 billion), 8.8% over budget targets. The increases were mostly due to gains in revenues from corporate income tax, which rose 14.5%, to NT$461.2 billion, and consolidated income tax, which increased 15.1% to NT$472.7 billion.

Revenue dropped in some other tax sectors, including business tax revenue, which declined 2.4% on falling oil prices, to NT$326.9 billion. Securities transactions tax revenues also dropped 7.6% to NT$81.9 billion on declining turnover in the stock market, and luxury tax revenues plunged 24.9% to NT$4.2 billion, the lowest since 2012.

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