Minister of Finance Chang Sheng-ford (張盛和) said yesterday that Jimmy Lai (黎智英) would have to pay income tax on the sale of the Taiwanese media outlets of Hong Kong-listed Next Media Group (壹傳媒集團).
Although Next Media is a Hong Kong-based company, Chang said the group has to pay 20 percent tax from its income of selling its Taiwanese outlets.
“The profit Next Media made by transferring its ownership and operation rights would be looked at as income from the transaction of property in Taiwan, which would be liable for income tax,” he said in a legislative question-and-answer session.
Chang’s remarks came after Next Media confirmed on Wednesday in a filing to the Hong Kong Stock Exchange that it had signed a memorandum of understanding (MOU) with Chinatrust Charity Foundation chairman Jeffery Koo Jr (辜仲諒), who has agreed to purchase all the group’s media outlets in Taiwan for NT$17.5 billion (US$597.9 million).
While the filing did not specify if Koo Jr had asked Formosa Plastics Group (台塑集團) chairman William Wong (王文淵) to join him in the bid for the outlets, the issue still raised concerns with Chinese Nationalist Party (KMT) Legislator Lai Shyh-bao (賴士葆) and other lawmakers about whether the Hong Kong group has to pay income tax on the deal.
Joining Chang in the legislative question-and-answer session, Taxation Agency Director-General Sheu Yu-jer (許虞哲) said the deal may also involve the levy of a business tax, business income tax and the securities transaction tax.
Sheu said the tax administration would need to clarify the details of the deal before it could make a rough estimate of the total amount of tax that Lai needs to pay.
Separately, in response to questions by KMT Legislator Lu Shiow-yen (盧秀燕) on the ministry’s stance toward land and house taxes, Chang said the ministry was still mulling the implementation of a capital gains tax on property based on real values in the future.
However, imposing a tax on real transaction prices would only operate in the transaction taxation system, not in the holding taxation system that includes the current land value tax and the house tax, Chang said.
In other words, the government intended to keep both house and land taxes — based on government assessed prices of the value of land and property — as low as possible because the government deems property and land ownership a long-term investment, Chang said.
The remarks were aimed to ease the public’s concerns that the government might begin levying real- estate taxes based on actual prices, since a new measure that requires registration of actual transaction prices began on Aug. 1.
However, Chang did not specify when the ministry would start discussing the issue of levying a capital gains tax on real property prices.
Also during the legislative session, Chang confirmed that Ting Hsin International Group (頂新集團) chairman Wei Ying-chiao (魏應交) would serve as president of Taipei Financial Center Corp (TFCC, 台北金融大樓公司), which owns the Taipei 101 skyscraper.
Wei is currently the vice chairman of TFCC. He will serve as president concurrently once the company’s board of directors gives its approval by the end of next month.
“I have requested him [Wei] to be the company’s president based on the principle of co-management between the official and private shareholders,” Chang said.
Ting Hsin holds about a 37 percent stake in TFCC, while state-owned funds and enterprises remain the biggest stakeholders with 44 percent.