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Taiwan Tax Reform Committee Decides Against CGT On Securities

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

30 December 2009


Taiwan’s tax reform committee has decided not to propose that the government reintroduces a capital gains tax on transactions in securities, which have been exempted from tax since the beginning of 1990.

The committee had been studying whether the government should resume levying capital gains tax, as part of efforts to increase the country’s tax base. However, each time the matter has been raised recently, the government has denied the prospect, largely due to its possible damaging effect on the local stock market.

However, while agreeing to maintain the present general non-taxation of securities’ gains, the committee did suggest that the government should consider a future change whereby companies could elect to be taxed on their net overall gains from stock investments in any year, rather than being taxed on single transactions.

Under that system, losses on securities transactions could be offset against gains, and net losses would be deductible from corporate profits. Under a transactions tax, single transaction gains are subject to capital gains tax, while losses are disregarded.

It was further suggested that, at the start of a new system, companies would be able to choose to be taxed on their overall net gains or losses, or remain under the old system.

A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp

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