The Executive Yuan yesterday finalized its version of a capital gains tax on securities transactions after making several major revisions to the initial proposal submitted by the Ministry of Finance two weeks ago.
“We hope the finalization will help stabilize the market and soothe investors’ fears,” Minister Without Portfolio Kuan Chung-ming (管中閔) told a press conference held to unveil the draft, seen by some analysts as a trigger for a recent plunge on the stock market.
Under the proposal, individual investors who earn a net NT$4 million (US$136,054) or more annually from trading shares, initial public offerings and beneficiary certificates of private equity funds would be taxed at rates of between 15 percent and 20 percent, with the rate decided by the Executive Yuan based on the economic conditions.
Minister of Finance Christina Liu (劉憶如) said the tax would affect only 1 percent of individual investors, fewer than 20,000 people, dismissing what she called a “biased” claim by business leaders that 160,000 individuals would be subject to the new tax.
Compared with the ministry’s initial proposal, the new proposal raises the threshold for taxable income from NT$3 million, lowers the tax rate from 20 percent and exempts futures and options transactions from the new tax.
Transaction tax paid can also be deducted from securities income, as opposed to the ministry’s proposal that the 0.3 percent tax be listed as a deductible expense from income.
The amount to be taxed can be offset by an investor’s losses, while the losses which are not offset during the declared year can be used to offset earnings in the following three years, as the ministry initially suggested.
The new proposal states that individual investors who hold stock investments in excess of three years would see their tax burden cut in half, rather than the five years the ministry proposed.
For domestic enterprises and institutional investors, the Cabinet approved the ministry’s initial proposal to keep the current alternative minimum tax system, under which firms are taxed on certain forms of tax-exempt income and gains arising from investments in securities and futures transactions.
The approved proposal lowers the tax-free threshold on the income from NT$2 million to NT$500,000 and raises the tax rate to 12 percent, from 10 percent, while the statutory tax rate is increased to between 12 percent and 15 percent, from between 10 percent and 12 percent.
Institutional investors and domestic enterprises have been granted the same tax incentives as individual investors to encourage long-term investment.
Foreign institutional investors, defined as an institutional investor from or registered in a country outside of Taiwan without a fixed place of business or business agent in Taiwan, would be exempt from the capital gains tax.
Liu expects the new taxes to generate about NT$10 billion in revenue annually.
In response to media inquiries into the reasons for the changes to the ministry’s proposal, Liu said the government took some advice from the Financial Supervisory Commission when the policy was reviewed by Kuan at a Cabinet meeting.
The commission was of the opinion that if a capital gains tax was to be imposed, it should have a minimal impact on the stock market, and that was the reason the threshold was increased to NT$4 million, Liu said.
“Even when the economy is performing at its peak, at most only 20,000 individual investors will have to pay the tax. It’s not easy to earn in excess of NT$4million,” she said.
The reason futures and options investments were removed from the scope of the tax was that investors generally enter the futures market to hedge against securities investment rather than to create income, Kuan said.
“Trading a zero-sum game is not taxable,” he said.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
CHINA POLICY: At the seventh US-EU Dialogue on China, the two sides issued strong support for Taiwan and condemned China’s actions in the South China Sea The US and EU issued a joint statement on Wednesday supporting Taiwan’s international participation, notably omitting the “one China” policy in a departure from previous similar statements, following high-level talks on China and the Indo-Pacific region. The statement also urged China to show restraint in the Taiwan Strait. US Deputy Secretary of State Kurt Campbell and European External Action Service Secretary-General Stefano Sannino cochaired the seventh US-EU Dialogue on China and the sixth US-EU Indo-Pacific Consultations from Monday to Tuesday. Since the Indo-Pacific consultations were launched in 2021, references to the “one China” policy have appeared in every statement apart from the
More than 500 people on Saturday marched in New York in support of Taiwan’s entry to the UN, significantly more people than previous years. The march, coinciding with the ongoing 79th session of the UN General Assembly, comes close on the heels of growing international discourse regarding the meaning of UN Resolution 2758. Resolution 2758, adopted by the UN General Assembly in 1971, recognizes the People’s Republic of China (PRC) as the “only lawful representative of China.” It resulted in the Republic of China (ROC) losing its seat at the UN to the PRC. Taiwan has since been excluded from