The government is considering changes to the rules of the so-called “luxury tax” following two years of the levy, Minister of Finance Chang Sheng-ford (張盛和) said last week.
“Current rules have flaws, for example, we are unable to tax those deep-pocket investors, who can wait for more than two years to sell properties,” Chang said in a briefing on Friday.
In addition, the current tax rules do not apply to land located on non-urban zoning areas and those reserved for industrial use, leaving room for speculators and developers to manipulate prices, Chang said.
Changes may also include a levy on buyers of properties, he added.
The special sales tax on selected goods and services was imposed on June 1, 2011, in a bid to curb speculative property transactions and soaring property prices in major metropolitan areas.
The government imposed a 15 percent tax on properties resold within one year of purchase and a 10 percent tax on those resold within two years of purchase. A 10 percent tax also applies on sales of luxury goods such as yachts and airplanes worth at least NT$3 million (US$100,300), and furs and furniture valued at NT$500,000 or more.
The changes in taxation will focus on real estate rather than other luxury items, Chang said.
The government in May lowered its official forecast for GDP growth this year to 2.4 percent from 3.59 percent amid weakening global recovery, which would affect the nation’s exports and cause pressure on private consumption.
Chang attributed the weakening private consumption partially to people’s relatively large investment in real estate, leading to less spending elsewhere.
The Ministry of Finance will discuss with the industry and experts next month before drawing a blueprint for the luxury tax, he said.
On July 17, Taxation Agency Deputy Director-General Hsu Tzu-mei (許慈美) said the ministry is scheduled to release its review of the tax by the end of this month. The ministry will host a public hearing next month before moving to revise the tax, she said.
The government may seek approval in the Legislative Yuan’s next session starting September, according to Chang.