Taiwan To Raise Local Taxes On Luxury Homes

by Mary Swire, Tax-News.com, Hong Kong

04 February 2010

It has been confirmed by the Ministry of Finance that local governments in Taiwan will be permitted to introduce a tax on luxury houses and apartments, with effect from the second half of next year.

As part of an effort to cool the boom in property prices in Taiwan, the increased taxation will be effected by making the current housing tax progressive, rather than by introducing a new tax which would have required legislative approval.

Owners of homes or apartments classified as “luxury” will pay a higher rate than the current 1.2% rate for all homeowners. The tax increases will be effective from July 2011, with first payments due in May 2012.

Details of how properties will be classified have still to be finally decided. The decision of whether a building should be subject to the new tax will, it was reported, be dependent on a wide range of factors, not only its size or market value, but also, for example, its location, available parking, security protection provided, and the size and number of apartments in the same building.

In addition, reductions in housing tax will be granted for lower-quality housing – for example, owners of properties more than 30 years old and in poorer areas.

It was reported that the Taipei city administration had estimated that there were only around 11,000 apartments in the city that would be re-classified. The higher tax would be up to two times higher than the current tax paid, providing, it was said, an additional tax take for the city of some TWD300m (USD9.4m). The city’s commercial buildings, and the larger houses, that currently already pay a higher housing tax would not be affected.

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