The government yesterday said that decisions regarding tax reductions on local capital markets would be deferred until next year, as securities brokerages raised concerns about the waning turnover on the local bourse.
“Taiwan is the only example in the world where dividend income is taxed under the personal income tax category,” Taiwan Securities Association (TSA, 證券公會) chairman Chien Hung-wen (簡鴻文) said at a news conference following a meeting between financial industry representatives, Premier Lin Chuan (林全) and other members of the Cabinet.
Brokerages hope to see a tiered taxation system for dividend income, so that investors with less earnings would bear a smaller burden, Chien said.
Investors have been facing penalties on two fronts regarding the 20 percent tax on dividend income, as the share price of the stocks faces a price correction following the dividend payout, leaving the total value of their portfolios unchanged, he said.
In addition, the number of brokerages has fallen by 123 to just over 800 since 2011, while anemic turnover on the local bourse might have begun to compromise local businesses’ ability to raise funds, he said.
Taiwan Stock Exchange (金融總會) chairman Shih Jun-ji (施俊吉) said the government should assess capital market tax changes from a “wholistic” perspective and begin the decisionmaking process in April or May, when it has finished gathering findings from academics and experts.
Tax reductions would be dependent on whether the Taiwan Stock Exchange and brokerages can come up with effective measures to boost turnover, he said citing Lin.
Despite the tax impasse, the government promised other more immediate changes.
The Ministry of the Interior has agreed to allow banks to play a greater role in providing capital for urban renewal by amending laws specific to urban renewals, as opposed to amending the Banking Act (銀行法).
The ministry said it would also help insurers combat crime by bolstering a registration system for recovered stolen vehicles that would curb illegal profiteering.
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