Mon, Jan 01, 2018 page15

• Average daily turnover of bourse hits six-year high

  INCENTIVES: The Taiwan Stock exchange attributed the increase in part to the transaction tax for day trading being cut by half. The number of stock accounts has risen sharply

  • Staff writer, with CNA
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  Average daily turnover on the local bourse last year hit a six-year high, as the TAIEX posted substantial gains and remained above 10,000 points in the second half of the year, according to Taiwan Stock Exchange (TWSE) figures.

  Aside from the rise in share prices, cutting the transaction tax for day trading by half starting in April also boosted turnover, the exchange said.

  Average daily turnover last year rose 35 percent to NT$104.87 billion (US$3.51 billion), up from NT$77.52 billion the previous year, the exchange said.

  Last year’s figure was the highest since 2011, when the market registered average daily turnover of NT$106.06 billion.

  The TAIEX last year rose 15.01 percent, ending the year at 10,642.86, after hitting a closing high of 10,854.57 on Nov. 23.

  The one-year cut in the transaction tax on day trading from 0.003 percent to 0.0015 percent also helped attract investors back to the market and boosted turnover, the exchange said.

  The Financial Supervisory Commission is considering extending the tax cut, but the Ministry of Finance has reservations about the move’s potential effect on the state’s coffers.

  Although the exchange did not provide any day trading year-on-year comparisons, it said that daily turnover of more than NT$100 billion became commonplace in the second half of last year, hitting a high of NT$178.97 billion on Nov. 22.

  The number of stock accounts reached 3.11 million at the end of the year, up sharply from 2.76 million the previous year, indicating a rising interest in trading stocks, the exchange said.

  Meanwhile, the tax rate on stock dividend income made by foreign institutional investors is scheduled to rise to 21 percent from today as part of the government’s efforts to overhaul the tax system.

  While a tax reform bill is still pending in the Legislative Yuan, the ministry said it has the authority under the existing tax law to issue an administrative order raising the tax rate on stock dividend gains posted by foreign institutional investors from 20 to 21 percent.

  Taiwan’s tax rate for foreign institutional investors remains lower than in other markets such as South Korea (22 percent), Germany (26.375 percent) and the US (30 percent), the ministry said.

  The move to raise the tax rate for foreign institutional investors’ stock dividend income would narrow the difference between the tax payments of local investors and their foreign counterparts, the ministry said.

  Local investors’ dividend income is calculated as part of their personal income and is taxed at up to 45 percent.

  Under the ministry’s tax reform bill, local investors would have two options to pay their dividend income tax: The first would allow investors to be taxed at a flat rate of 26 percent, while the second would tax all dividend income as personal income tax, but give taxpayers a deduction of up to NT$80,000.

  According to the tax reform bill, the maximum personal income tax would be lowered, from 45 to 40 percent.
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