Taiwan reintroduces capital gains tax after 24 years

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Taiwan reintroduces capital gains tax after 24 years

taiwan-flag.jpg

Taiwan yesterday amended its Income Tax Act so that capital gains on securities investments will once again be taxable from January 1 2013.

Corporate shareholders will still be subject to the alternative minimum tax (AMT) on capital gains from the sale of shares, but the rate levied will increase from 10% to 12%. The annual deduction, or tax-free threshold, will be reduced from TWD2 million ($65,000) to TWD500,000.

The taxable portion of the capital gain will be reduced by half if the investor holds onto the shares for more than three years.

“Capital losses can be carried forward for five years to offset future capital gains. To encourage long-term holding, only 50% of the capital gain will be taxed where shares have been held for more than three years,” said a Baker & McKenzie alert.

There should be no direct impact on foreign shareholders because they are exempted from the AMT.

“Only foreign companies with a fixed place of business or a business agent in Taiwan are subject to AMT,” said Baker & McKenzie.

However, the increased AMT rate will impact foreign investors who use Taiwan holding companies as part of their structuring. Advisers are therefore recommending that companies thinking about disposing of their Taiwan investments should bring that process forward so as to complete the disposal before the January 1 2013 implementation date.

Finance Minister Chang Sheng-Ford hopes that the tax will raise between TWD6 billion and TWD11 billion each year.

The decision to reintroduce capital gains tax has not been met well by opposition parties. They have criticised the government’s statement that this reform is part of a process to make the tax system fairer.

“I condemn lawmakers for approving the amendments,” said Hsu Chung-Hsin, legislator for the Taiwan Solidarity Union party. “They have defied their professionalism.”

A similar attempt to tax share trading 20 years ago was abandoned after causing the stock market to plunge by more than 35% in a month.

more across site & shared bottom lb ros

More from across our site

Businesses no longer have a choice when it comes to tax technology transformation. Pavlo Boyko of TMF Group says the question is simply: sink or swim?
The firm is hunting for a senior TP manager in its quest to build a full-service practice in Indonesia, A&M Tax’s Jakarta head Jaap Zwaan tells ITR
With a new government in place, the evolving tax landscape presents both opportunities and challenges for taxpayers
Major economies have expressed concerns, with China arguing a US global minimum tax exemption would be a violation of the principle of fair competition – ITR understands
Senator Richard Colbeck told ITR he was concerned by the decision to let PwC Australia tender for government contracts again after a scandal-induced ban
Whether it be due to a fragmented advisory market or a rise in M&A, Italy’s frenetic hiring has not gone unnoticed by ITR’s Talent Tracker
The deal gives Azets 14 new partners and boosts its Swedish revenues to over $100 million; in other news, Svalner Atlas launched in Copenhagen
The tax technology company will be providing a free demonstration of its OTP software and offering best practice advice on whether to ‘buy or build’ on September 8
Johanes Glorinus Saragih of Indonesia’s Directorate General of Taxes outlines the nation’s delicate geopolitical situation, as it sits between a rock and a hard place with the US and pillar two
The law firm’s head of tax, trade and wealth management likens tax legislation to a complex puzzle, recommends a sturdy coffee mug, and explains why acronyms make tax cool
Gift this article