The legislature yesterday approved an amendment to the Income Tax Act (所得稅法) that would drop the 8,500-point TAIEX threshold that automatically triggers the capital gains tax for individual investors, a move expected to boost the stock market.
Under the amendment, individual investors who sell NT$1 billion (US$33.3 million) in shares within the calendar year will be subject to either a 15 percent tax on their capital gains, or a 0.1 percent tax rate on their stock trades that exceed NT$1 billion, effective 2015.
An individual investor in the following categories will be required to pay a 15 percent tax based on actual gains earned from initial public offerings (IPOs): people who sell more than 10,000 shares from IPOs; those who sell more than 100,000 shares in emerging markets; those who sell unlisted companies; and those residing in Taiwan for less than 183 days a year.
Before the amendment was passed, the act required individual investors to pay a capital gains tax of between 0.02 and 0.06 percent on stock trades if the TAIEX hit 8,500 or higher next year and in 2015.
The government imposed the tax on capital gains in July last year, which some say has hurt the stock market since then.
Before the amendment, proposed by the Chinese Nationalist Party (KMT), was voted on, Democratic Progressive Party Legislator Lee Ying-yuan (李應元) demanded that the government apologize first for the “wrong policy.”
KMT caucus whip Lai Shyh-bao (賴士葆) said he did not see the need for the government to apologize “now that we have acted to reverse the policy.”
The Taiwan Solidarity Union proposed that the tax levied on income earned from IPO transactions be delayed for three years to benefit small and medium-sized enterprises, but the motion was voted down by the KMT.
Minister of Finance Chang Sheng-ford (張盛和) told a press conference that the tax would only affect 10,000 investors, but would generate between NT$6 billion and NT$11 billion in annual tax revenue.