Legislature passes NT$50K tax credit for car trade-ins

By Enru Lin, The China Post

TAIPEI, Taiwan — Starting next year, car owners who discard or export their used vehicles are eligible for a NT$50,000 discount off the commodity tax when purchasing a new one. The Legislative Yuan on Friday passed a revision to the Commodity Tax Act (貨物稅條例) that grants tax credits for trading in used vehicles. Car owners are eligible for the benefit if they purchase and license a new car in the six months before or after trading in an old one. Scooter owners, who had been excluded in initial proposals, can receive a commodity tax cut of NT$4,000 when buying a new one. The tax reduction scheme will be available for five years and is scheduled to start in 2016. Eligibility According to the program, which passed its third reading in the Legislature on Friday, used vehicles including sedans, trucks and dual-purpose vehicles are eligible if owned for at least a year and manufactured at least six years prior to the trade-in date. Used scooters are eligible if their engine size is 150 cubic centimeters or less, and if they were owned for at least one year and manufactured at least four years before trade-in. During cross-party negotiations, lawmakers agreed to allow spouses and close relatives to also be beneficiaries of the credit.

Lawmakers agreed that the tax cut can be applied to new car purchases by the old vehicle’s registered owner as well as relatives including children, grandchildren or siblings who share the owner’s household registration. The trade-in tax credit is part of the Executive Yuan’s short-term economic stimulus package aimed at giving a 0.32-percentage point increase to gross domestic product growth in the fourth quarter and 0.08 percentage points to GDP growth for the year. The Ministry of Finance (財政部) lauded the passage as a step toward upgrading the domestic automobile industry by encouraging earlier discarding of old vehicles and stimulating demand for new cars. The measure should also reduce the number of older and less fuel-efficient vehicles on the road and help Taiwan advance toward its carbon reduction targets, the Finance Ministry said Friday. Program to Add 50,000 Units

a Year: Industry Tsai Wen-jung (蔡文榮), head of the Taiwan Transportation Vehicle Manufacturers’ Association (台灣區車輛工業同業公會), said he expects the measure to boost demand for new cars by 50,000 units per year over the next five years. Tsai said about 250,000 used vehicles in Taiwan currently are eligible for the trade-in program, which could represent an increase in demand for new cars by about 50,000 units a year in each of the next five years. The measure could improve demand in the domestic auto industry, which has been slow and should reach only about 420,000 this year, down from 423,000 last year.