Cabinet Approves Draft ‘Luxury Tax' Statute

Taipei, March 11, 2011 (CENS)--The Executive Yuan (the Cabinet) approved the draft “luxury tax” statute yesterday (March 10), targeting housing speculation and luxury goods, and decided to earmark such tax income for social welfare and relief entirely.

The draft statute, dubbed “Tax Statute for Special Merchandises and Services,” calls for levying 10-15% tax on the sales of non-own use residences with less than two years of ownership and the purchase of commodities worth NT$3 million or more in value, as well as furniture products and golf-club membership certificates worth NT$500,000 or more.

In anticipation of the implementation of the tax, developers have rushed to launch new products and importers of luxury cars have advanced their shipment.

The Executive Yuan will forward the draft statute to the Legislative Yuan for ratification soon. If the law-making procedure proceeds smoothly, the new tax will take effect on July 1, at the earliest, generating some NT$15 billion of extra tax revenue a year.

The statute stipulates that the sales of non-own use residences with less than one year of ownership will be subject to 15% tax, which will drop to 10% for cases with ownership less than two years.

The purchase of luxury goods will all be subject to 10% tax, including some items worth NT$3 million or more, such as autos with less than nine seats, yachts, airplanes, helicopters, ultra-light planes, and others worth NT$500,000 or more, including turtle shell, hawksbill, coral, ivory, fur and its products, furniture, and golf-club membership certificate.

Lee Suh-der, finance minister, noted that great majority of housing owners will not be affected by the proposed tax, as of the 380,000-400,000 housing transactions a year, only 5%, or 20,000, involve houses with less than two years of ownership. Lee stressed that there will be no deadline for the implementation of the luxury tax.

In a rush to avoid the tax, many developers have advanced the launch of new projects. “My Housing” magazine publicized yesterday that total development projects ready for launch during the “March 29” holiday season will top NT$260 billion in total value, a 10-year high for the season, up from the original estimate of NT$150 billion.

A Norwegian auto freighter ship arrived at Taichung Harbor yesterday, carrying 1,297 Benz or BMW autos, worth over NT$4 billion, the second highest ever for a single shipment.