Finance Minister Lin Chuan (林全) yesterday finalized a new taxation scheme that cancels a tax loophole allowing high-income taxpayers to donate property to the government that has been purchased at below assessed values in return for tax deductions.
"The new taxation scheme will take effect next year," Lin said yesterday at a press conference.
The move gives a seven-month grace period to high-income taxpayers, real-estate brokers and potential landlords -- likely to be financially disadvantaged by the new scheme -- to finalize ongoing deals before Dec. 31, Lin said, adding that the new scheme will not be retroactive on taxpayers who previously took advantage of the law.
Lin had previously said that the loophole cost government coffers NT$13 million in tax revenues in 2001, NT$6.7 billion last year and an estimated NT$22.7 billion this year.
As of the end of April, properties valued at NT$8.1 billion were donated by taxpayers to the government in return for a total of NT$3.2 billion in tax deductions this year -- a 34.5 percent increase from one year earlier, according to the finance ministry.
The loophole allows high-income taxpayers to deduct 40 percent of the difference between the assessed value of a property and actual purchase price of the parcel. Government assessed values are often far higher than actual market prices.
Lin, in addition, yesterday said that the government's revenues from business income taxes have increased by NT$30 billion this year, compared to those of last year since the nation saw its worst economic downturn in 2001.
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