Luxury tax to start in July: MOF

The China Post news staff

The China Post news staff — The government is likely to officially implement the “Statute for Special Commodity and Service Tax” on July 1 at the earliest, imposing the so-called “luxury tax” on high-priced goods and services, Vice Finance Minister Chang Sheng-ford said yesterday.

If everything goes smoothly, the tax proposal will be submitted to the Cabinet next week for deliberation, and after gaining approval from the Cabinet, it will be sent to the Legislative Yuan for screening and ratification. “I’m sure that the luxury tax will become effective in the second half of this year,” Chang said,

Chang made the remarks during a meeting with representatives of major local industrial and business associations, construction and development associations, real estate brokers associations, as well as scholars and experts to solicit their opinions about the new tax scheme proposed by the Ministry of Finance (MOF). How the Tax Will Be Levied Under the scheme, those who sell residential units not actually used personally or properties with less than one year of ownership will be subject to a special tax of 15 percent. The tax will be set at 10 percent on sales of such housing units and land lots with less than two years of ownership.

In addition, a 10 percent tax will also apply to sales of automobiles, aircraft and yachts priced at over NT$3 million, as well as furniture, fur, coral, ivory, tortoise shell and other products originating from protected species worth over NT$500,000.

If the products are manufactured domestically, the tax will be imposed on domestic manufacturers based on their sales prices. If the products are imported from abroad, the tax will be levied on importers based on the total of their import prices, import duty and commodity tax.

Finally, sellers of club memberships valued at over NT$500,000, such as golf club memberships, will also be subject to the special tax, with the rate set at 10 percent.

During yesterday’s meeting, Chang, in a bid to calm the nerves of those in the construction industry, assured them the proposed tax will only target short-term property speculators and is designed to force such speculators to become long-term realty investors. Targeting Property Speculators

Chang said that around 68.5 percent of people in Taiwan have only one housing unit, and only 20,000 housing transactions each year fit the taxation criteria. Accordingly, the special tax will only have a negative impact on a limited portion of the real estate sector, he continued.

It’s estimated that the new tax scheme will generate an additional tax revenue of NT$15.1 billion per year for the national coffers, including NT$12.9 billion from realty tax income.

Also yesterday, Premier Wu Den-yih explained to local reporters that the proposed tax will not affect those who do not seek short-term profits from property transactions. He added that the MOF will listen to different opinions on the tax before submitting its final proposal to the Cabinet.