The Financial Supervisory Commission (FSC) yesterday reiterated its concern over the Cabinet’s plan to tax capital gains on securities investments without providing supporting measures, saying it could further weaken market sentiment, cut stock transactions and put brokerages out of business.
Commission Vice Chairman Wu Tang-chieh (吳當傑) voiced the warning ahead of the Cabinet’s regular meeting on Thursday, when it is likely to finalize the capital gains tax proposal.
The TAIEX shed another 0.35 percent yesterday, with turnover remaining sluggish at NT$72.4 billion (US$2.45 billion).
“As a financial regulator, the FSC has the responsibility to brief the Cabinet about the potential fallout from the proposed tax,” Wu said by telephone.
The Ministry of Finance has proposed imposing a capital gains tax of 20 percent on individual investors who secure a net gain of more than NT$3 million a year. It has also proposed levying a 12 percent tax on domestic institutional investors’ net gains in excess of NT$500,000 a year. Foreign institutional players are exempted from the levy.
The proposal is slowing liquidity and it has weighed on the competitiveness of the local bourse, as evidenced by the falling trading volume in recent sessions, Wu said.
The downward trend in transactions may drive some securities houses to lay off employees or close down their operations, Wu said.
To mitigate its potentially negative impact, the commission has suggested that the government lower the securities transaction tax and scrap the futures transaction levy if it must tax capital gains on futures deals, Wu said, adding that no other country collects taxes on futures transactions.
Wu, who attended a cross-
ministerial discussion on Thursday last week on behalf of the commission, said the Cabinet has yet to reach a consensus on the issue.
He rebutted media reports yesterday that the Cabinet plans to keep the proposed capital gains tax on securities investment as is, but that it might be flexible on the tax on futures transactions.
The Taiwan Securities Association (證券公會) also joined the call for the Cabinet to reconsider the capital gains tax proposal, warning that its members might have to cut their staff by 30 percent or more because of shrinking business as major players flee the market to avoid the tax.
Big players, numbering about 10,000, account for 40 percent of daily transactions, the association said in a statement after calling a second meeting in a week yesterday.
The slowing trading volume suggests that some had already exited the market, with more likely to follow suit if the government pushes ahead with the capital gains tax, association chairman Hwang Min-juh (黃敏助) said.
“A mistaken policy is worse than corruption,” Hwang said.
“The capital gains tax may put securities houses out of business,” he said, adding that this would lower their contribution to the national treasury and would not help the government’s plan to promote social justice.
The association plans to place advertisements to press its case and take to the streets, if necessary, if the government fails to respond positively, the statement said.
Tax revenues from securities transactions dropped 14.8 percent last quarter from the same period last year, it said.
In response to these concerns, Minister of Finance Christina Liu (劉憶如) said late yesterday that a daily turnover of NT$70 billion was “nothing abnormal,” rejecting suggestions that the ministry’s tax proposal had negatively affected stock market transactions.
Citing Taiwan Stock Exchange data from the past 10 years, Liu said that the average daily turnover stood below NT$100 billion most months.
Liu also questioned comments that “no other country in the world levies both a capital gains tax and transaction tax on securities investment.”
South Korea imposes a tax rate of 0.3 to 0.5 percent on securities transactions, as well as a capital gains tax on major individual shareholders and local institutional investors, Liu said.
Additional reporting by Amy Su
BIG BUCKS: Chairman Wei is expected to receive NT$34.12 million on a proposed NT$5 cash dividend plan, while the National Development Fund would get NT$8.27 billion Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday announced that its board of directors approved US$15.25 billion in capital appropriations for long-term expansion to meet growing demand. The funds are to be used for installing advanced technology and packaging capacity, expanding mature and specialty technology, and constructing fabs with facility systems, TSMC said in a statement. The board also approved a proposal to distribute a NT$5 cash dividend per share, based on first-quarter earnings per share of NT$13.94, it said. That surpasses the NT$4.50 dividend for the fourth quarter of last year. TSMC has said that while it is eager
‘IMMENSE SWAY’: The top 50 companies, based on market cap, shape everything from technology to consumer trends, advisory firm Visual Capitalist said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was ranked the 10th-most valuable company globally this year, market information advisory firm Visual Capitalist said. TSMC sat on a market cap of about US$915 billion as of Monday last week, making it the 10th-most valuable company in the world and No. 1 in Asia, the publisher said in its “50 Most Valuable Companies in the World” list. Visual Capitalist described TSMC as the world’s largest dedicated semiconductor foundry operator that rolls out chips for major tech names such as US consumer electronics brand Apple Inc, and artificial intelligence (AI) chip designers Nvidia Corp and Advanced
Saudi Arabian Oil Co (Aramco), the Saudi state-owned oil giant, yesterday posted first-quarter profits of US$26 billion, down 4.6 percent from the prior year as falling global oil prices undermine the kingdom’s multitrillion-dollar development plans. Aramco had revenues of US$108.1 billion over the quarter, the company reported in a filing on Riyadh’s Tadawul stock exchange. The company saw US$107.2 billion in revenues and profits of US$27.2 billion for the same period last year. Saudi Arabia has promised to invest US$600 billion in the US over the course of US President Donald Trump’s second term. Trump, who is set to touch
SKEPTICAL: An economist said it is possible US and Chinese officials would walk away from the meeting saying talks were productive, without reducing tariffs at all US President Donald Trump hailed a “total reset” in US-China trade relations, ahead of a second day of talks yesterday between top officials from Washington and Beijing aimed at de-escalating trade tensions sparked by his aggressive tariff rollout. In a Truth Social post early yesterday, Trump praised the “very good” discussions and deemed them “a total reset negotiated in a friendly, but constructive, manner.” The second day of closed-door meetings between US Secretary of the Treasury Scott Bessent, US Trade Representative Jamieson Greer and Chinese Vice Premier He Lifeng (何立峰) were due to restart yesterday morning, said a person familiar
RSS