Fri, Jun 10, 2005 - Page 10 News List

No taxes on stock gains planned: Lin

REFORM MEASURES The finance ministry is not considering taxing capital gains from stocks in its proposed minimum-tax scheme for individuals

By Amber Chung  /  STAFF REPORTER

Minister of Finance Lin Chuan (林全) said yesterday that the ministry is not considering including levies on capital gains from stock investments in the proposed minimum-tax scheme for individuals, which is part of the government's tax reform efforts.

"The minimum-tax plan for individuals aims to improve the overly low tax burden borne by high-income individuals, who take advantage of tax exemptions or deductions," Lin told a press conference yesterday.

Levies on capital gains from stock investments wouldn't just apply to high-income individuals, especially given that most investors in the TAIEX are individuals, he added.

"We might not include taxation on capital gains in the minimum-tax scheme for individuals," Lin said.

The ministry is also still discussing whether to impose taxes on individuals' overseas income and employee stock bonuses, as well as non-cash donations made to public institutions -- items that are often used by high-income earners to reduce taxes, the minister said.

The ministry will reveal the proposed minimum tax rates when it puts forth the detailed proposal next Tuesday or Wednesday for public review, before submitting the finalized plan to the Executive Yuan next month, according to Lin.

The promotion of the minimum-tax scheme is part of the government's tax-reform plan, with Taiwan facing a growing budget deficit, which expanded over 60-fold to NT$337.3 billion (US$10.8 billion) this year from NT$5.1 billion in 1990.

The finance ministry extended the application of the scheme to high-income individuals in a bid to make taxation more equal, Lin said.

He noted that only five of the nation's top 40 high-income earners in 2003 -- who earned a combined NT$27 billion and were subject to the highest marginal income-tax rate of 40 percent -- had paid the full amount of taxes. Eight of the 40 paid nothing, and the remaining 15 people paid taxes equivalent to less than 1 percent of their income after using non-cash donation measures to reduce their taxes.

As the ministry plans to define high-income individuals as those having gross income of over NT$5 million, the imposition of minimum-tax schemes is expected to affect around 10,000 households, versus the roughly 5 million households that are liable to pay tax this year, the minister said.

Similarly, the proposed minimum-tax plan on companies could impact about 10,000 firms after implementation, he added.

Comparing the rate with other nations in the region -- for example Singapore's highest marginal income-tax rate for individuals of 20 percent, and Hong Kong's 17.5 percent -- Taiwan's 40 percent is much higher, which could trim the nation's competitiveness, Lin said.

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