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Taiwan Presidential Candidate Proposes CGT Reform

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

20 August 2015


The presidential candidate of Taiwan's ruling Kuomintang party (KMT), Hung Hsiu-chu, has proposed reforms to replace the delayed capital gains tax (CGT) on share trading.

Under the plans, in addition to the current 0.3 percent tax on securities transactions, "active traders" (defined as those who sell shares worth over TWD1bn (USD31m) in a year) will be able to choose between a 15 percent tax imposed on their capital gains or a 0.1 percent tax on their share trades in excess of that threshold.

The CGT was due to be imposed from January 1 this year, but it was agreed in December last year to postpone it until January 1, 2018.

Despite the delay, the threat of a CGT being imposed in the future is still seen as a reason for the reduced level of trading on the Taiwan Stock Exchange. Hung has therefore proposed her reforms in the hopes of allaying traders' concerns.

Under her plans, the existing tax on securities transactions would be reduced to a rate of 0.25 percent. Active traders are expected to be allowed to choose whether their future trades will be subject to the 15 percent CGT or a 0.05 percent additional securities transactions tax.

Further, she has proposed that the provision exempting foreign stock investors from CGT would be cancelled, so that there would be tax parity between domestic and foreign traders.

The measures are to be proposed by the KMT in the Taiwanese legislature this year, rather than after the 2016 presidential election.

TAGS: capital gains tax (CGT) | tax | investment | capital markets | equity investment | Taiwan | stock exchanges | tax rates

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