The Executive Yuan yesterday approved amendments to the Income Tax Act (所得稅法) that would, if passed by the Legislative Yuan, slap a 45 percent income tax on individuals or legal entities selling real estate before owning it for two years.
The amendments would crack down on real-estate speculation, in the hope of realizing housing justice, Premier Su Tseng-chang (蘇貞昌) told a meeting of the Executive Yuan.
The existing act levies a 45 percent income tax on the sale of a property owned for less than one year, and a 35 percent income tax on the sale of a property owned for more than one year, but less than two.
Photo: CNA
In the act, the sale of a property owned for more than two years, but less than 10 is taxed at 20 percent, while a property owned for more than 10 years is taxed at 15 percent.
For residents of Taiwan, the amendments approved by the Cabinet apply the 45 percent income tax to the sale of properties owned for less than two years, not one, and apply the 35 percent income tax to the sale of properties owned for two to five years, rather than two to 10 years.
For those living abroad, the amendments apply the 45 percent income tax to the sale of properties owned for less than two years, but then apply the 35 percent income tax to the sale of properties owned for two or more years, rather than limiting it to 10 years.
Taiwan-based for-profit companies that sell a property owned for less than two years would pay a 45 percent income tax, while they would pay a 35 percent income tax on the sale of a property owned for two to five years.
Such companies would pay a 20 percent income tax on the sale of a property owned for more than five years.
However, the first-time sale of a building constructed by the company, as well as the plot of land it sits on, would be subject to a 20 percent income tax, the amendments say.
For-profit companies not based in Taiwan would pay a 45 percent income tax for the sale of all properties owned for less than two years, and a 35 percent income tax for the sale of all properties owned for more than two years.
Democratic Progressive Party Legislator Wu Ping-jui (吳秉叡), a member of the Legislative Yuan’s Finance Committee, voiced his support for the bill, saying that it is appropriate for investors who stand to benefit from real-estate speculation to pay higher income taxes.
Chinese Nationalist Party (KMT) Legislator William Tseng (曾銘宗), who is the committee’s convener, said that a unified income tax on buildings and land has been in effect since 2016, but that is has clearly been ineffective, as evidenced by the increasing number of sales involving properties owned for one or two years.
Tseng also urged the Executive Yuan to expedite a draft act that is to serve as a legal basis for taxing owners of multiple properties so that real-estate speculation can be curbed.
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