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Taiwan To Hike CGT On Short-Term Property Purchases

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

28 August 2015


Taiwan's National Taxation Bureau (NTB) has confirmed that the present luxury tax on the sale of properties will be cancelled on the same date as a new property capital gains tax (CGT) comes into operation.

Under the luxury tax, the owner of a property suffers a 15 percent tax if a property is sold within one year of its purchase, falling to 10 percent if sold during the second year. The taxable amount is based on the property's final sale price rather than the capital gain made by the owner.

In its announcement on August 26, the NTB stated that the luxury tax was introduced from June 1, 2011, in order to cool down speculative behavior in Taiwan's housing market. It also noted that, after implementation of the tax, "short-term real estate transactions diminished drastically."

However, the NTB confirmed that, after four years of the luxury tax, "the Taiwanese Government has reviewed the tax's suitability and is currently drafting legislation for a new tax, to be known as the Combination of Building and Land Tax."

Under the proposals, which were approved by the Legislative Yuan on June 5, 2015, a 45 percent CGT will be levied on the proceeds from any property sale that occurs within one year of purchase.

Properties held for longer periods before being sold will be subject to lower taxes of 35 percent if the property has been held for a period of between one and two years; 20 percent if held for between two and 10 years; and 15 percent if held for more than 10 years.

As the new CGT will be in effect from January 1, 2016, the NTB confirmed that the luxury tax will cease to be in effect from the same date.

TAGS: capital gains tax (CGT) | tax | property tax | law | real-estate | luxury tax | Taiwan | legislation | tax rates | Tax

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