Source： Taiwan Today
By Aaron Hsu
A reform task force under the ROC Ministry of Finance has agreed on several principles concerning the levying of a securities gains tax, a move expected to set the table for future discussions on the issue.
Co-chaired by Minister of Finance Christina Y. Liu and Financial Supervisory Commission Minister Chen Yu-chang, the April 5 meeting was attended by 25 experts in accounting, economics and finance.
The principles include exempting foreign institutional investors (FIIs) from such a tax; calculating its imposition cost in advance; and ensuring the impact on the stock market and government revenues is minimized.
According to the Ministry of Finance, the principles have been drafted with FIIs in mind such as the California State Teachers’ Retirement Fund, which are set up in Taiwan without fixed bases of operation or established agent networks.
“These institutions have already paid taxes in the nations where they are headquartered,” an MOF official said. “The exemption is an international practice to prevent double taxation.”
But members of the task force were divided about whether a new approach should be used in drafting the securities gains tax, or if the same effect can be achieved by adjusting alternative minimum tax.
Alternative minimum tax requires individual investors to turn over a portion of their profits from unlisted stock trading when combined annual income surpasses NT$6 million (US$203,000), according to the MOF.
Task force members Sun Keh-nan, associate professor from the Department of Finance at National Taipei College of Business, and Lee Tsun-siou, professor at National Taiwan University’s Department of Finance, suggest earnings from listed stock trading should be included in the alternative minimum tax.
Sources familiar with the matter believe that under Sun and Lee’s proposal, more people would have to pay alternative minimum tax, achieving the same result as a securities gains tax.
The ministry said no final decision has been reached on the proposed capital gains tax, with further discussions scheduled for the next task force meeting April 9.
The MOF set up the reform task force March 15 to address Taiwan’s national debt and wealth gap problems. Capital gains from securities and real estate were identified as chief taxation targets at its first meeting March 28. (HZW)
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