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(Dec 29, 2009) The Tax Reform Committee (TRC) of Taiwan's Executive Yuan (Cabinet) reached agreement on December 22, 2009, to maintain "for the time being" the system of tax-free capital gains for individuals and corporations. However, the TRC decided that the Ministry of Finance should in the mid- to long-term consider taxation of corporate capital gains to replace the current securities transactions tax. Vice Premier Eric Liluan Chu contends that the transactions tax does take into account capital gains and that the MOF has been required to make public the relevant data, but he acknowledged that the tax would "probably be changed" to a tax on capital gains that would allow for capital losses to be offset by the gains. The TRC recommended that in the initial stages of implementing a change, corporations be given the option of whether to shift to the capital gains tax system. (Lin Ye-fong & Y.F. Low, Taiwan Decides Not to Tax Gains on Securities Investment for Now, TAIWAN NEWS, Dec. 22, 2009, available at http://www.etaiwannews.com/etn/news_content.php?id=1138989&lang=eng_
The Securities Transaction Tax Act (STTA) of September 12, 1946, as amended on July 30, 1993, provides for the levying of a securities transaction tax on the "trading of bonds (excluding those issued by the government), shares, corporate bonds and any other securities." (Country Analyses, Taiwan, IBFD online subscription database, http://ip-online.ibfd.org/tiap/ (last visited Dec. 23, 2009).) In general, sellers of the securities must pay a transaction tax for each transaction at a rate of 0.3% of the transaction price for "shares or share certificates embodying the right to shares issued by a company" and at a rate of 0.1% of the transaction price for a transaction in corporate bonds and other government-approved securities (with the exception of government-issued bonds). (Art. 2, STTA [in English], Taiwan Ministry of Finance website, http://english.etax.nat.gov.tw/wSite/ct?xItem=24088&ctNode=11631 (last visited Dec. 23, 2009).)
The TRC was formally inaugurated on June 30, 2008, to carry out, within one year, an in-depth review of Taiwan's taxation system and tax reform issues, with a view to "establishing a fair and reasonable taxation environment that can effectively promote economic development." Its mandate was to focus on three main aspects of reform: "increasing of efficiency, broadening of the tax base, and simplification of tax administration." (Executive Yuan Inaugurates Tax Reform Committee, Council for Economic Planning and Development website, Aug. 11, 2008, available at http://www.cepd.gov.tw/encontent/m1.aspx?sNo=0010543.)
|Author:||Wendy Zeldin More by this author|
|Topic:||Taxation More on this topic|
|Jurisdiction:||Taiwan More about this jurisdiction|
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Last updated: 12/29/2009