萬國法律事務所

The Executive Yuan finalized its version of capital gains tax on securities transactions on April 26, 2012. The final versions of “Draft of Amendments to Certain Articles of Income Tax Act”(「所得稅法部分條文修正草案」) and “Draft of Amendments to Certain Articles of Income Basic Tax Act”(「所得基本稅額條例部分條文修正草案」), which were revised and passed by The Executive Yuan, are not significantly different from the versions submitted by Ministry of Finance.

For individual investors who are residents of Taiwan, the taxable income threshold for individuals to be subject to capital gains tax on securities transactions is raised from NT$3 million to NT$4 million; and for non-residents, who stays in Taiwan for less than 183 days in a year, the threshold is NT$2 million. The tax rate is lowered from 20% to between 15% and 20%, which will be decided by the Executive Yuan based on the economic conditions. Meanwhile, half of the securities transaction tax can also be deducted from securities income tax. Futures and options transactions are exempted from the new tax.

For domestic enterprises and institutional investors, the current alternative minimum tax system will be kept, and the tax-free threshold on the income is lowered from NT$2 million to NT$500,000 and the tax rate will be raised to from 10% to 12%, while the statutory tax rate is increased from between 10% and 12% to between 12% and 15%.

The amount to be taxed on can be offset by an investor’s losses, while the losses which are not used to offset during the declared year can be used to offset earnings in the following three years.

Minister of Finance Christina Liu (劉憶如) said the tax will affect less than 1% of individual investors, around 10,000 to 20,000 people, which means that very few people will be taxed. Also Ministry of Finance will strive for the passage of the amendments during the next session of the Legislative Yuan and the new amendments are expected to be executed next year.