Taiwan Capital Gains Tax Revisions Delayed by Opposition Party; Lawmakers are weighing a tax cut after stock trading volume declined by as much as 30 percent in the first four months of the year
May 31, 2013 Leave a comment
Taiwan Capital Gains Tax Revisions Delayed by Opposition Party
Taiwanese opposition lawmakers today delayed cutting a controversial capital gains tax on share sales of more than NT$1 billion ($33.3 million) and removing an index price threshold that depressed shares.
Tsai Chi-chang, a Democratic Progressive Party lawmaker, said his party doesn’t support the ruling Kuomintang’s proposals and favors its own plan for a flat tax on all capital gains, which “fits the idea of fairness and justice and increasing government revenue.” The benchmark Taiex index rose 0.5 percent to 8,281.42 as of 11:21 a.m. local time.
Lawmakers are weighing a tax cut after stock trading volume declined by as much as 30 percent in the first four months of the year, according to Credit Suisse Group AG. President Ma Ying-jeou’s administration and legislators argued over about 10 versions of the tax last year, prompting then-Finance Minister Christina Liu to step down. The Taiex lost 13 percent during the period.DPP lawmaker Huang Wei-cher said after a party caucus meeting today the tax bill may be taken up in extra legislative sessions on June 13-27 or in late July.
The ruling Kuomintang has proposed cutting the tax on capital gains on transactions of more than NT$1 billion to 0.1 percent from the 2.25 percent under the original law, according to a May 20 statement from the Ministry of Finance. It has also proposed removing a threshold of an 8,500-point close for the Taiex index before the tax could go into effect. Citigroup Inc. and UBS AG raised their Taiex targets in May on the threshold removal proposals.
Investor Hesitation
“Now that there’s a delay, the 8,500 threshold will still suppress index performance,” Sophie Chang, a fund manager at Prudential Financial Securities Investment, said in a phone interview in Taipei. “Investors will hesitate when the index climbs toward 8,500.”
Taiwanese residents invested more capital overseas in the last two quarters of 2012 from the quarter earlier, Credit Suisse analyst Christiaan Tuntono wrote in a May 20 report, citing the island’s central bank. The government’s transaction tax revenue fell by 24 percent in the first four months of the year, according to Tuntono.
To contact the reporters on this story: Chinmei Sung in Taipei at csung4@bloomberg.net; Weiyi Lim in Singapore at wlim26@bloomberg.net
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