Thu, Oct 10, 2013 - Page 13 News List

Luxury tax will not be imposed on pre-sale homes

‘BUYING RIGHTS’:The Ministry of Finance said it would strengthen oversight of the taxes paid instead. Meanwhile, the ministry plans to tax cosmetic medical treatments

By Amy Su  /  Staff reporter

Although the Ministry of Finance will not tax pre-sale homes in its revised version of the luxury tax, it will strengthen its supervision of tax related to pre-sales homes to curb speculative housing transactions, Minister of Finance Chang Sheng-ford (張盛和) said yesterday.

The ministry is set to unveil its revised draft of the luxury tax in the middle of next month, Chang added.

“Buying a pre-sale home is buying a kind of right, instead of buying real estate,” Chang said in a question-and-answer session at the legislature, adding that the luxury tax focuses only on purchases of real estate and superficies rights.

However, pre-sale home sales are taxed up to 40 percent of the overall prices, much higher than the 15 percent luxury tax the government imposes on properties resold within one year of purchase and the 10 percent tax on those resold within two years of purchase, Chang said.

Chang said the ministry would reinforce tax inspections on pre-sale homes to curb speculative housing transactions and raise tax revenue.

After some people complained that state-run banks gave a relatively low loan-to-value (LTV) for small apartments, Chang said the ministry would discuss the issue with the eight state-owned banks.

However, in general, the ministry will not involve itself in banks’ terms and conditions of mortgages, Chang added.

In response to legislators’ questions about the possibility of state-owned banks setting up joint ventures in China with Chinese banks, Chang said establishing a wholly owned bank in China may be more convenient for state-run banks in Taiwan.

It has been reported that Mega International Commercial Bank (兆豐國際商銀) and Taiwan Business Bank (台灣企銀) would apply to the ministry, while First Commercial Bank (第一銀行) and Taiwan Cooperative Bank (合作金庫銀行) have already filed applications.

In related news, the government plans to impose a tax on cosmetic medical treatments, with the plan set to be unveiled by the end of this year.

Chang said the ministry has discussed with Ministry of Health and Welfare about how to determine the scope of treatments.

Currently, cosmetic medical treatments are all tax-free, but the legislature has questioned their tax-free status.

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