After the legislature yesterday passed amendments to the Income Tax Act (所得稅法) to combine separate taxes on house and land sales, Minister of Finance Chang Sheng-ford (張盛和) said the new property tax should make the taxation system more reasonable and boost property sales now that policy uncertainty over the issue has dissipated.
Taiwan is the only nation in the world with separate land and house levies on property transactions, and under the previous system the government could not collect a sufficient amount of tax revenue from property transactions, Chang said.
The integrated house and land sales tax is set to take effect in January next year, Chang said, adding that the amendment would bring Taiwan into line with the rest of the world on the issue.
“I am grateful for the prompt passage of the tax plans, which would have been impossible without the support of the Cabinet, lawmakers, academics and the general public,” said Chang, who has pushed the tax reform for years.
The latest law revisions subject property transaction gains to income taxes of 45 percent if the houses are resold within one year of purchase and 35 percent for houses sold within two years of purchase.
The revised tax rates are 20 percent for houses sold within 10 years of purchase and 15 percent for those owned more than 10 years.
“The progressive tax rates are lenient on self-occupancy houses but penalize short-term trading in the hope of discouraging property speculation,” Chang said.
The Ministry of Finance (MOF) would set up task forces to draw up supporting regulations, Chang said.
The ministry also plans to train taxation staff, explain details to property brokers and agents, and update computer systems ahead of the implementation of the law on Jan. 1 next year, he said.
The government would use the extra tax revenue to subsidize long-term healthcare and home purchases for first-time buyers, he added.
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