The tax reform plan proposed by the Ministry of Finance is to encourage more local retail investors to enter the equity market and facilitate the development of the bourse, analysts and academics said.
The plan aims to ease equity investors’ financial burden by cutting their taxes on dividends they receive from investments in locally listed companies, Capital Securities Corp (群益證券) president Chao Yung-fei (趙永飛) said.
Once the dividend income tax is lowered, the local equity market is to become more attractive to retail investors, who will be more willing to raise their equity holdings, Chao said.
That could boost daily turnover in the local bourse, Chao said, adding that as long as turnover increases, securities brokerages will also benefit.
As part of the government’s efforts to make the nation’s tax system more equitable, the ministry on Friday proposed the elimination of the imputation tax system.
Ratified in 1998, the system awards local investors who receive dividends from credits for taxes paid by the company.
However, the system was revised in 2015, halving the tax credits and angering local investors who then had to pay higher taxes than the 20 percent foreign institutional investors have to pay on their dividend income.
With such an uneven dividend income tax system, many major local players who trade more than NT$500 million (US$16.58 million) in equities in a single quarter have left the trading floor.
As a result, the local equity market has been dominated by foreign institutional investors.
In addition to eliminating the imputation system, the ministry has proposed two alternative tax plans.
Plan A would allow investors to enjoy tax-free status on 37 percent of dividends they receive, while the remaining dividends would be counted as personal income tax.
Plan B would include two options: Option one would allow equity investors to be taxed at a flat rate of 26 percent, while the second choice would tax all dividend income as personal income taxes, but would give taxpayers a deduction of up to NT$80,000.
As for foreign investors, the ministry has proposed a 21 percent tax on their dividend income, up from 20 percent.
If the government adopts the first plan, retail investors would see their tax rate cut to about 25.2 percent, which would come closer to foreign institutional investors’ 21 percent, National Taipei University of Business professor Sun Keh-nan (孫克難) said.
The second plan would be good for high-income earners if they choose to pay a flat rate of 26 percent, Sun added.
To pursue a fairer tax system, the government should consider raising the tax rate for foreign investors to 25 percent, while under Plan A for local investors, the tax deduction ceiling should be raised to 40 percent from the proposed 37 percent, he said.
Chien Hung-ming (簡宏明), chief secretary of the Securities and Futures Bureau of the Financial Supervisory Commission, said that he has faith that the dividend income tax reform would pave the way for more retail investors to buy equity and improve the local equity market.
DAMAGE REPORT: Global central banks are assessing war-driven inflation risks as the law of unintended consequences careens around the world, spiking oil prices Central banks from Washington to London and from Jakarta to Taipei are about to make their first assessments of economic damage after more than two weeks of conflict between the US and Iran. Decisions this week encompassing every member of the G7 and eight of the world’s 10 most-traded currency jurisdictions are likely to confirm to investors that the specter of a new inflation shock is already worrying enough to prompt heightened caution. The US Federal Reserve is widely expected to do exactly what everyone anticipated weeks ahead of its March 17-18 policy gathering: hold rates steady. The narrative surrounding that
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) share of the global foundry market rose to almost 70 percent last year amid booming demand for artificial intelligence (AI), market information advisory firm TrendForce Corp (集邦科技) said on Thursday. The contract chipmaker posted US$122.54 billion in revenue, up 36.1 percent from a year earlier, accounting for 69.9 percent of the global market, TrendForce said. Its share was up from 64.4 percent in 2024, it said. TSMC’s closest rival, Samsung Electronics, was a distant second, posting US$12.63 billion in sales, down 3.9 percent from a year earlier, for a 7.2 percent share of the global market. In the
At a massive shipyard in North Vancouver, Canadian workers grind metal beams for a powerful new icebreaker crucial to cementing the country’s presence in the increasingly contested arctic. Icebreakers are specialized, expensive vessels able to navigate in the frozen far north. And “this is the crown jewel,” said Eddie Schehr, vice president of production at the Seaspan shipyard. For Canadian Prime Minister Mark Carney, who heads to Norway next Friday to observe arctic defense drills involving troops from 14 NATO states, Canada’s extreme north has emerged as a strategic priority. “Canada is and forever will be an Arctic nation,” he said ahead of
Chinese entrepreneur Frank Gao used to spend long hours running his social media accounts but now outsources the chore to artificial intelligence (AI) agent tool OpenClaw, which is taking China by storm despite official warnings over cybersecurity. OpenClaw, created in November by an Austrian coder, differs from bots such as ChatGPT because it can execute real-life tasks such as sending e-mails, organizing files or even booking flight tickets. “Since January, I’ve spent hours on the lobster every day,” Gao said in an interview, referring to OpenClaw’s red crustacean mascot. “We’re family.” After downloading OpenClaw, users connect it to artificial intelligence models of their
RSS