Legislative Yuan Proposes to Cut Securities Transaction Tax Rate to 0.25%

Taipei, May 25, 2012 (CENS)--The legislation bureau of the Legislative Yuan proposed that in line with the resumption of levying securities transaction gains tax, the rate of securities transaction tax should be cut to 0.25%, down from 0.3%, now.

The legislation bureau also calls for extending the period for deduction of individual loss from securities trading to five years; long-term stock holding eligible for preferential tax should be shortened to two years. In addition, the threshold for household transaction income liable to transaction gains tax should be cut to NT$3 million.

Meanwhile, the legislation bureau also opposed that half of the securities transaction tax can be deducted from securities transaction gains tax, since it is tantamount to reduction of securities transaction tax by 50% to 0.15%. The stipulation will greatly benefit major stock investment winners, while slashing the government's securities transaction tax income, which now reaches NT$100 billion a year.

The legislation bureau pointed out that at present, stock sellers must pay 0.1425% of handling fee to securities firms, which plus 0.3% of securities transaction tax amounts to 0.4425% for trading cost. Therefore, it proposed to cut securities transaction tax by 0.05%, in compliance with the principle of fair taxation.

The legislation bureau noted that the number of stock investors capable of gaining NT$3 million of profit a year is quite limited. The raise of the threshold to NT$4 million of investment gains, up from NT$3 million originally, can only help major stock investors reduce their tax payment. Therefore, the threshold should be maintained at NT$3 million.

Many countries regulate that investors are eligible to 50% cut on securities gains tax after holding stocks for more than one year, but in view of the high turnover rate at Taiwan's stock market, the period of shareholding for preferential tax rate can be shortened to two years, down from three years now.