The Ministry of Finance will organize a public hearing later this week on the contents of a planned punitive tax that would impose heavy fines on short-term home transfers using dummy accounts, Deputy Minister of Finance Chang Sheng-ford (張盛和) said yesterday.
“The ministry will call a public hearing later this week to build consensus on the issue,” Chang said by telephone. “The government is serious about the levy this time.”
The ministry on Thursday -proposed introducing a special tax on luxury goods and services. The so-called luxury tax would also subject short-term home transfers to a 15 percent tax if ownership lasts one year or less. That rate would stand at 10 percent of transaction values if ownership is longer than one year, but shorter than two years.
The ministry is expected to send the draft bill on luxury tax to the legislature for review by the end of this month, the state-run Central News Agency reported yesterday, -citing unnamed ministry officials. If the draft bill obtains the legislative greenlight in the first half of the year, it will come into effect in the second half at the earliest, Premier Wu Den-yih (吳敦義) said last week.
To close legal loopholes, the ministry aims to impose stiff fines — equaling three times the tax rates — on those who trade homes using dummy accounts to evade the tax, Chang said yesterday.
Property speculation is widely blamed for causing soaring home prices in the Greater Taipei area, while many believe excessive liquidity and low borrowing costs also contributed to the rocketing prices. Surveys by the Ministry of the Interior showed that more than 60 percent of the public consider housing prices unreasonably high.
“Once the measure is passed into law, tax agency staff nationwide will step up efforts to crack down on tax evasion,” Chang said.
To that end, the agency would keep a list of suspected speculators, people who own an unreasonably high number of real-estate properties and investigate potential tax evaders, Chang said, adding that people who provide dummy accounts will also be punished.
The ministry plans to turn the draft over to the legislature for review by the end of this month so that the tax may go into practice as quickly as the second half of the year, Chang said.
Under the draft, a 10 percent tax would be levied on expensive items including private jets, yachts and cars with price tags of NT$3 million (US$100,827) or more. The levy would also target fur products and club membership fees worth more than NT$500,000.
The punitive tax would spare home transactions intended for non-investment purposes, despite the ownership duration, Chang said.
Under current land tax rules, the exclusionary clause applies only to real estate properties owned by married couples and their children.
“The draft will set up clear boundaries after consulting views from different sides,” Chang said.
The deputy minister said actual transaction prices, though not always available, should not pose a concern as dishonest declarations are punished.
Present land and housing values as set by government for tax purposes lag far behind their market worth.
“That is a matter of technicality that can be overcome,” Chang said.
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