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(Mar 04, 2011) It was reported on February 25, 2011, that Taiwan's Ministry of Finance (MOF) is drafting a proposed "luxury tax" bill, the draft Statute for Special Commodity and Service Tax (T'e-chung huo-wu chi lao-wu shui t'iao-li), with a view to narrowing a widening gap in wealth and curbing real estate speculation. In its current form, the bill would impose a 10% tax on purchases of luxury items such as cars, yachts, and private jets valued at more than NT$3 million (about US$101,600); fur and leather products and designer furniture valued at NT$500,000 (about US$16,860) or more; and business and golf club memberships worth more than NT$500,000.
It also targets speculative property transactions, imposing a tax of 15% on the actual sales price of real estate (including land and non-self-use housing units) sold within less than one year of purchase and a tax of 10% on properties held for at least two years. In addition, it was reported, there is a provision in the bill that would authorize the Cabinet to suspend the tax during an economic recession. (Lee Joo Fong, Proposed Luxury Tax, TAX NEWS SERVICE (Mar. 1, 2011), International Bureau of Fiscal Documentation online subscription database; Luxury Tax Revenue Assessed at NT$15 Bil. per Year:Official, THE CHINA POST (Mar. 2, 2011); Meg Chang, Ministry of Finance Widens Luxury Net, TAIWAN TODAY (Mar. 2, 2011).)
In describing the luxury tax, Deputy Minister of Finance Chang Sheng-ford indicated that it is a "selective sales tax" and would "only affect the roughly 5 percent of the population at the top of the consumer pyramid." He added that "the data on property transactions in the past three years shows there were only around 20,000 non-self-use housing units and 40,000 plots of land that changed hands within two years of their purchase during that time." (THE CHINA POST, supra.)
Chang stated that the measures are expected to add NT$15 billion (about US$508 million) to the treasury, funds that would be allocated to social welfare programs. The MOF plans to submit it to the Cabinet for approval by March 10, so that the legislature may be able to begin deliberations on it before the end of March. (Meg Chang, supra.) According to Premier Wu Den-yih, "[w]hile the policy has been decided, details still have to be fleshed out and legal procedures have to be completed before the new tax can be imposed," and so implementation of the tax may not occur until the second half of the year. (Taiwan to Introduce LuxuryTax in Last Half of 2011, ASIAONE (Feb. 26, 2011).)
Taiwan President Ma Ying-jeou, who has expressed his support for the proposed tax, remarked that the government should strive to jointly develop public land in cooperation with the private sector, instead of selling the land outright, and should augment the value of individual public plots by integrating them for large-scale development. He stated that the government could establish a fund for such purposes. (Philip Liu, President Ma Lends Support to Luxury Tax, CENS.com (Feb. 25, 2011).)
|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: 03/04/2011