The Ministry of Finance yesterday said it planned to submit a draft capital gains tax on stock investments to the Cabinet on Thursday for review.
Despite differing views on how to levy the tax, who should pay and what the rates would be, the consensus of tax and finance representatives was to begin the levy in May 2014, based on investors’ securities income next year, the ministry said.
Nearly 40 representatives — including three individual investors —held a second study group meeting yesterday to discuss the tax, focusing on coming up with a better way of levying the tax on individual investors.
Discussing how to identify investors’ stock income, as well as when to introduce the tax were the two other major points.
“The representatives strongly agreed with the ministry’s plan to start levying the tax from 2014,” Minister of Finance Christina Liu (劉憶如) said after the meeting.
That means the tax would be based on securities income next year, which investors would declare in May 2014.
In order to identify investors’ securities income, the government might have to pick a specific day as the basis for stock prices to help investors determine gains or losses, some representatives said.
A number of representatives also said investors might have to provide proof at what price they bought the securities.
In general, the representatives agreed that investors might choose the way that favored them the most when declaring their income.
However, the representatives failed to reach an agreement on how to tax individual investors.
Some representatives suggested the ministry consider introducing a separate tax rate for individual investors — either a flat rate or a proportional rate.
However, other representatives said it would be better for the government to only include listed companies in the implementation of an alternative minimum tax (AMT) on securities investments.
At present the government only levies the AMT on individual investors in unlisted firms, with the tax deduction limit set at NT$6 million (US$203,500), the ministry said.
Liu said the ministry would review all the advantages and disadvantages of each method and submit a draft proposal on Thursday for the Cabinet’s review.
Some of those attending the meeting said maintaining the status quo might be the best option for individual investors.
“If the ministry introduces an inappropriate policy that hurts the stock market, I might consider joining public protests,” individual investor Lee Jing-tu (李金土) told reporters.
Lai Sian-jheng (賴憲政), a stock analyst, said if the government decides to introduce a securities income tax, it should cut the rate of the securities transaction tax or even cancel it.