Consensus built on dual-system, 2-stage gains tax
By Camaron Kao ,The China Post June 1, 2012, 1:06 am TWN
The Executive Yuan and the Kuomintang (KMT) caucus reached a new consensus regarding the stock gains tax late last night which will see the tax implemented in two stages.
They agreed that the KMT will promote its caucus' integrated version, but will eliminate the option offered to individual investors to pay the tax pegged to the weighted index by 2017.
The Ministry of Finance estimated that the number of investors influenced would be 20,000, generating tax revenue of around NT$10 billion.
The KMT's version offers individual investors a choice to pay tax rates based on the performance of the weighted index or according to the income tax system with several exceptions.
There will be a dual system from 2013 to 2016. Under it, shareholders with more than 3 percent of a listed company's shares, or with yearly income — excluding gains from the stock market — of more than NT$5 million and those who do not live in Taiwan will have to combine their capital gains with their other income and pay taxes according to existing income tax regulations. Other shareholders will be able to choose between two options offered by the KMT's integrated version.
From 2017, shareholders with more than 1 percent of a company's shares and annual income of more than NT$3 million will be obliged to pay tax according to the income tax regulations. Investors purchasing stocks when companies conduct initial public offerings will also be obliged to pay tax based on income tax rules.
New Finance Minister 0utlines his Vision
Chang Sheng-ford (張盛和), a former vice finance minister, was appointed finance minister by President Ma Ying-jeou yesterday. Chang will replace Christina Liu (劉憶如), whose resignation was approved by Premier Sean Chen the night before.
According to the Executive Yuan, Chen values Chang's taxation expertise and his experience promoting the value-added tax and the integrated income tax system. Chen reportedly hopes that Chang can promote the stock gains tax and take into consideration both the "idealistic aspects" and "practical issues" involved in drafting the tax.
Chang, currently 63 years old, has a bachelor's degree in business from National Taiwan University, a master's degree in public finance from National Chengchi University, and another master's degree in economics from The University of Iowa.
Before his retirement from the Ministry of Finance (MOF) in February, when he was serving as a vice minister, Chang had served in the ministry for 30 years. He was also the chief secretary of the second tax reform committee from 1987 to 1989 and the executive secretary of the third tax reform committee from 2008 to 2009.
Since February Chang has been teaching at Kainan University and National Taiwan University.
Positive Reaction from Industry, Commerce
General Chamber of Commerce (商業總會) Chairman Chang Pen-tsao (張平沼) said yesterday that the new minister has 30 years of experience and a clear understanding of taxation in Taiwan. He also said the expertise of the new minister is impeccable.
The chairman agreed that people like Chang lack the experience of being a politician, but that his expectation for the new minister to settle the issue of the stock gains tax is still high.
Chinese National Federation of Industries (全國工業總會) Secretary-General Tsai Lien-sheng (蔡練生), however, stated that he personally does not know the new minister well and thus does not know how the controversial stock gains tax will end up. Tsai said he knows Chang has served in the MOF for a long time and has confidence in Chang's expertise.
Taiwan Federation of Industry (中華民國工業協進會) Chief Secretary Kuo Chih-lung (郭志龍) stated that the federation will support any person appointed by the Executive Yuan.
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