Wed, Apr 12, 2017 - Page 12 News List

Day trading transaction tax cut

WORLD FIRST:The cut is expected to reduce state coffers by NT$3.75 billion and NT$10 billion daily turnover will be needed to offset that loss. Some lawmakers backed a bigger cut

Staff writer

The Legislative Yuan yesterday passed a bill to cut day trading transaction taxes by half for one year to boost stock transactions.

Lawmakers went ahead with the bill proposed last year when the local bourse was affected by sluggish trade.

Daily turnover has recovered above the NT$100 billion-level (US$3.26 billion) due to inflows to emerging markets, especially in Taiwan.

The new law, which will cut the stock transaction tax from 0.003 percent to 0.0015 percent, could take effect later this month, Minister of Finance Sheu Yu-jer (許虞哲) said.

The tax cut would reduce the state coffers by NT$3.75 billion a year, the minster said, adding it would require an NT$10 billion increase in average daily turnover on the local bourse to offset the revenue loss.

Taiwan is the first market in the world to cut its day trading tax, he said.

The Executive Yuan introduced the bill and it won support from both ruling and opposition lawmakers, with some suggesting more drastic cuts.

The ministry would review the desirability of the tax cut one year after its implementation, Sheu said

He had earlier frowned on the bill.

Following the tax cut, average daily turnover on the Taiwan Stock Exchange (TWSE) is expected to increase by NT$10.08 billion, and turnover at the Taipei Exchange (TPEX) is expected to increase by NT$5.82 billion, Securities and Futures Bureau Deputy Director Chang Chen-shan (張振山) said.

TWSE day trading shares total turnover is expected to rise from 10 percent to 15 percent, Chang said, adding that the same metric applied to the TPEX is expected to see an increase from 15 percent to 22.52 percent.

Securities transaction tax revenue fell to NT$70.8 billion last year, the lowest in 11 years, amid declining turnover, TWSE data showed.

The data also showed that the share turnover ratio on the nation’s main board — a measure of stock liquidity — last year fell to 64.6 percent, a record low.

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