Wed, Apr 18, 2012 - Page 12 News List

Planned capital gains tax fail-safe: Liu

BEEFING UP:The Ministry of Finance wants to amend the Income Tax Act to give tax authorities the power to audit accounts with suspected of irregular activities

By Amy Su  /  Staff reporter, with CNA

Minister of Finance Christina Liu (劉憶如) said yesterday that Taiwan already has a law in place that is designed to prevent the existence of false accounts created by those trying to avoid tax payments.

Liu made the remarks in response to market speculation that more false accounts would be created by investors once the Ministry of Finance’s proposal to tax investors on capital gains obtained through securities and futures transactions goes into effect.

The proposal was sent to the Cabinet for review on Thursday and it needs to clear the legislative floor before it can take effect as scheduled. The ministry said earlier it would begin levying the new tax in May 2014, based on investors’ securities investment gains made in the previous year.

Liu said she had visited members of the legislature’s Finance Committee in the past few days to seek their support for the ministry’s draft proposal.

Chinese Nationalist Party (KMT) Legislator Lu Shiow-yen (盧秀燕), who is the convener of the committee, said the ministry’s proposal might be approved by the Cabinet tomorrow at the earliest or by the end of next week at the latest under current administrative customs.

“That means the draft may be sent to the Finance Committee for review in the middle of next month at the earliest,” Lu told reporters yesterday.

If other lawmakers plan to submit their own alternative proposals for the tax, they should also send their draft plans to the committee by the middle of next month, Lu said, adding that this would allow the committee to review all the related drafts at the same time.

Under the Income Tax Act (所得稅法), a taxpayer who declares income that is less than the actual amount can be fined no more than twice the taxable shortage.

For those who fail to declare, a fine three times the value of the taxable amount can be imposed, according to the law.

The ministry said the Estate and Gift Taxes Act (遺產及贈與稅法) also helps prevent individuals from giving away their income as gifts to avoid paying tax.

In addition to the existing law, the ministry has also proposed an amendment to the Income Tax Act that would help its efforts to crack down on dummy accounts.

The amendment would give the National Tax Administration the authority to inspect individual accounts that have suspected irregular activities, such as frequent and high-volume transactions.

Once the accounts are deemed false, the owners can be fined according to the existing law, the ministry said.

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