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Taiwan Waivers Over Future CGT On Stock Trading

by Mary Swire,, Hong Kong

06 November 2015

Taiwan's Government has yet to decide whether to proceed with the capital gains tax on share trading, which is due to take effect from January 1, 2018, or whether it should be modified or cancelled.

Currently, a 0.3 percent tax is imposed on all securities transactions. Under the existing plans, "active traders" (defined as those who sell shares worth over TWD1bn (USD30.8m) in a year) will be able to choose between a 15 percent tax imposed on their capital gains or a 0.1 percent additional tax on their share trades in excess of that threshold.

A dilution of the CGT was proposed in August this year by Hung Hsiu-chu, previously the presidential candidate of Taiwan's ruling Kuomintang party (KMT). Under his proposal, the existing tax on securities transactions would be reduced to a rate of 0.25 percent, and active traders would have the option of whether their future trades would be subject to the 15 percent CGT or a 0.05 percent additional securities transactions tax.

Other lawmakers, including the present KMT presidential candidate Eric Chu, and Central Bank Governor Perng Fai-nan, and Financial Supervisory Commission Chairman William Tseng, in recent comments to the Legislative Yuan's Finance Committee, have recommended that the CGT should be cancelled altogether. The threat of a CGT being imposed in the future is seen as a reason for the reduced level of trading on the Taiwan Stock Exchange.

On the other hand, before the same Committee, Finance Minister Chang Sheng-ford opposed cancellation of the tax and recommended Hung's proposal as the best option for a compromise.

TAGS: capital gains tax (CGT) | tax | investment | law | equity investment | Taiwan | ministry of finance | stock exchanges | tax rates | Other

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