萬國法律事務所

Taiwan’s Ministry of Finance (MOF) plans to propose a bill by the end of 2010 to levy a windfall profits tax on real estate transactions at a rate of up to 30%. According to the MOF, if the purchase and sale of the real estate, including pre-construction real estate, happens in the same year, the income from the transaction will subject to the windfall profits tax.

The current Land Appreciation Tax is calculated based on the present value announced by the government every year. However, if the purchase and sales of the real estate happen at the time between the announcements of the present value each year, no Land Appreciation Tax will be levied because the present value remains the same even if the actual price of real estate has arisen dramatically. Therefore, MOF plans to levy a special tax, i.e. the windfall profits tax, in order to prevent opportunism and unfair tax avoidance.

An exception for the windfall profits tax exists. As the purpose of this new tax is to prevent speculation in real estate transactions, if the transaction is proved to be for and is registered for self-use, it will not subject to the windfall profits tax.