萬國法律事務所

The Tax Reform Committee of the Executive Yuan held a panel meeting on October 16, 2009 to have discussions on a possible policy that will revive the tax on investors’ earnings from stock transactions. The proposal of abandoning the exemption of capital gains tax by the former Finance Minister, now Chairman of Yuanta Financial Holding Co., Mr. Ching Chang Yen, was under heated discussion among the panel members.

The imposition of capital gains tax has been halted in Taiwan for nearly 20 years. Whether the capital gains tax will be revived has caused turbulence in the market. The Taiex Index shot down over 100 points in the beginning of the session the day after the information of the possible restoration of the capital gains tax was circulated in the market. Vice Premier Eric Chu, in the attempt the mitigate the effects on the stock market, expressed his view before the panel meeting that the existing stock transaction tax has already comprised partially the capital gains tax and that the final decision on the capital gains tax issue will not be abruptly made.

Mr. Ching Chang Yen suggested in the panel meeting that enterprises shall be given the opportunity to opt for the imposition of capital gains tax. In this way, enterprises which suffer losses on the stock market will be able to offset their overall income taxes.

The panel meeting has not reached any conclusion, but a final report is expected to come out in two week’s time.