Stock gains tax may begin May ’14: Liu

The China Post news staff

Finance Minister Christina Liu (劉憶如) said yesterday that the capital gains tax on stock investment is very likely to be levied in May 2014 at the earliest if the government decides to resume such a tax. This means that stock investors would be required to list their stock investment gains earned in 2013 when filing income tax statements in May 2014, according to Liu.

Liu made the remarks after the second meeting of the capital gains tax for securities subdivision under the sound finance panel of the Ministry of Finance (MOF) ended yesterday afternoon. The is one of the conclusions winning consensus among participants in the meeting. How the stock gains tax statement should be filed remains to be determined, although some participants in the meeting propose incorporating the tax into the minimum taxation scheme.

At the meeting, the majority of scholars and representatives from securities brokerage houses and investors also shared the view that the cost of shares held by investors can be determined based on the closing prices recorded one day before the stock gains tax is imposed, or can be determined by investors themselves as long as they can show related evidence.

Once the date for calculating the shareholding costs of investors is set in advance, market fears about the imposition of capital gains tax for securities will be completely erased and investors won’t have to sell their shares in a rush just to avoid the tax.

Also yesterday, Hsu Shu-po, chairman of the Life Insurance Association of the Republic of China, said that his association hoped the government would clarify whether the imposition of a stock gains tax is designed to increase government’s tax revenue or to achieve taxation fairness.

Hsu said that if the government is to increase tax revenue, then the goal can be achieved by only raising the stock transaction tax rate to 0.325 percent or higher from the existing 0.3 percent. But if the government is to pursue taxation fairness, then the stock gains tax should be applied to all investors, instead of excluding foreign institutional investors or individual investors whose annual stock gains are under NT$6 million.

The MOF has preliminarily concluded that there is no technical problem for levying capital gains tax for securities on individual investors, but the levying cost and market impact is still unbearable. Therefore, while the levying of the tax on small individual investors is unlikely, it is still uncertain whether the tax will be levied on major individual investors. So far, it has been determined that foreign institutional investors without offices or agents in Taiwan should be exempt from the tax, while companies and foreign institutional investors with offices or agents in Taiwan are likely to be subject to the tax, in compliance with international practices.