Gov't to Levy Special Tax on Speculation in Vacant Plots of Land

Taipei, March 4, 2011 (CENS)--The sales of idle plots of land with less than two years of ownership will be subject to a special tax rate of 10-15% starting July 1 at the earliest, according to the draft “Statute for Tax on Special Merchandises and Services” publicized by the Ministry of Finance (MOF) yesterday (March 3).

The proposed tax, also known as “luxury tax,” aims to dampen the hoarding of and speculation in vacant plots of land, which has been a major factor behind the unbridled housing prices. The special tax, also set at 10-15%, will also be levied on sales of non own-use residential units with less than two years of ownership. The draft statute will be submitted to the Executive Yuan (the Cabinet) for approval before being sent to the Legislative Yuan for ratification.

It will dampen frequent turnover of vacant plots of land, which has further fueled realty speculation. Many realty speculators have purchased vacant plots of land and utilized them for such purposes as parking lots, green land, public space, or park, before selling them at opportune time to make a killing.

The proposed tax targets mainly individual speculators or some insurance firms, rather than construction firms, since the latter often keep vacant plots of land for more than two years before the launch of development projects.

Chang Chin-e, professor of the land affairs department, National Chengchi University, noted that many land speculators have purchased vacant plots of land and sold them within one year, thereby evading land-value increment tax, since the government-assed current land value is adjusted only once a year. The curbing of short-term realty speculation will be conducive to the return of the realty market to a healthier state, according to Chang.