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

Wim Wuyts, who had been head of the specialist tax network since 2017, is moving on to a new role with WTS’s Belgian member firm
MNEs are increasingly using algorithmic tools in TP. Sahasranshu Dash argues that data ethics should therefore plug directly into the TP design process
The Institute of Chartered Accountants in England and Wales also queried whether HMRC resources could be better spent scrutinising larger entities
Grant Thornton’s Austria tax head likens his practice to an escape room, shares his football coaching ambitions, and explains why tax is cool
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 EMEA Tax Awards
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 Asia-Pacific Tax Awards
The fates of pillars one and two hang in the balance after the US successfully threw its weight around in G7 and Canadian negotiations
Rafael Tena tells ITR about the ‘crazy’ Mexican market, ditching the hourly rate, and refusing to grow his fledgling firm in an ‘unstructured way’
It should be easy for advisers to be transparent about costs, Brown Rudnick partner Matthew Sharp said in response to exclusive ITR in-house data
The sprawling legislation phases out Joe Biden-era green tax incentives for businesses; in other news, the UK will reportedly maintain its DST despite US pressure
Gift this article