government subsequently increased this amount to NT$5 billion through incremental annual
appropriations to strengthen theCDIC’s capital and increase risk tolerance. By the end of 1999,
theCDIC’s capitalizationhad increased toNT$10billion.
Since its establishment, the CDIC has been required under the enforcement regulations of
the
Deposit Insurance Act
to set aside deposit insurance payout special reserves each year in an
amount not less than 60% of that year’s premium income. The proportion was increased, first
to 80% and later to 90%, with approval from theMOF tomore quickly strengthen the CDIC’s
ability tomeet claims.With the enactment of the Financial Restructuring Fund in July 2001 and
strengthening of the CDIC’s ability to fulfill its insurance responsibilities, portions of
theDeposit
InsuranceAct
were amended to require the full amount of any surpluses remaining at the endof
eachbusiness year tobeadded to thedeposit insurancepayout special reserves.
Under the amended
Value-Added andNon-Value-Added Business Tax Act
passed in June 1999,
the business tax rate for the banking and insurance industries was reduced from 5% to 2%, with
the stipulationanamount equal to the threepercentagepoint reductionbeused towriteoff non-
performing loans or make provisions for doubtful accounts. The CDIC also received approval
from theMOF in July 1999 to reduce its business tax rate to 2% in line with the rate applied to
the banking and insurance industries. Revenues equal to the 3% difference in the business tax
ratewere paid in todeposit insurance payout special reserves (such provisions were terminated
in July 2014 following the amendments toArticle 11 of
the Value-Added andNon-Value-Added
BusinessTaxAct passed
inMay that year).
24
Central Deposit Insurance Corporation 30Years inRetrospect
