Proposed amendments to Taiwan’s Income Tax Act and Enforcement Rules of the Income Tax Act were passed by the Legislature July 25, clearing the way for the reinstatement of a securities gains levy from 2013.
“We believe the bills will bring Taiwan closer to achieving fair taxation while boosting the island’s economic development and tax revenues,” Finance Minister Chang Sheng-ford said.
Around 10,000 individual investors will be subject to the tax, with annual revenues estimated at between NT$6 billion (US$199 million) and NT$11 billion, according to the Ministry of Finance.
The legislation has generated heated debate since it was approved by the Cabinet in late April, with investors citing it as a reason for the local bourse’s lackluster performance.
“The passage of these amendments will put these concerns to bed and help restore the market to good order,” Chang said.
Under the amendments, the tax will be implemented in two stages. From 2013 to 2014, individuals will be levied between 0.2 percent and 0.6 percent of their securities transactions if the benchmark TAIEX index runs at 8,500 or above.
ROC residents with securities gains from trading unlisted stocks above 10,000 shares in an initial public offering, and over 100,000 shares of emerging stocks listed on the Gretai Securities Market, will be taxed at 15 percent on their annual profits. The same rule applies to nonresidents as well.
Starting 2015, all individuals will be taxed 15 percent on their securities gains. Rates for corporate investors are set between 12 percent and 15 percent with an exemption of NT$500,000.
Individual and corporate investors with gains from securities held for one and three years, respectively, will have their tax rate slashed by 50 percent. This measure is expected to encourage positive investment and minimize market fluctuations.
But not everyone is pleased with the Legislature’s greenlighting of the bills. Some lawmakers and social groups claim the legislation is different from the version passed by the Cabinet four months ago, describing it as a compromise pandering to interested parties.
In response, Cabinet Spokesman Hu Yu-wei said the amendments incorporate suggestions from the public, corporate sector and academics, adding that the government’s determination to pursue fair taxation has never wavered.
