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KMT, Cabinet agree to pass stock gains tax

The Cabinet and the legislative caucus of the ruling Kuomintang (KMT) have reached a consensus to clear a revised version of a stock gains tax proposed by KMT lawmaker Tsai Cheng-yuan in the upcoming extraordinary session, sources said. The two sides also agreed that the imposition of the tax on trading of IPO (initial public offering) shares won't be retroactive.

The consensus was reached at a coordination meeting held on Wednesday and presided over by Presidential Office Secretary-General Tseng Yung-chuan. Participants in the meeting included acting Cabinet Secretary-General Chen Shih-kuei, Finance Minister Chang Sheng-ho, KMT legislative caucus cadres and lawmakers Tsai, Tseng Chu-wei and Fei Hong-tai.

The extraordinary Legislative Yuan session will run from July 24-27, and the stock gains tax bill will be up for priority discussion and ratification during the session, followed by bills concerning the import of U.S. beef containing ractopamine and a personnel reshuffle of the National Communications Commission (NCC).

Just one month earlier, the Legislative Yuan's Finance Committee concluded that five versions of the stock gains tax will be sent to the extraordinary plenary session for final deliberation and ratification, including versions proposed by the Cabinet, Tsai, the Democratic Progressive Party (DPP), the People First Party and DPP lawmaker Hsu Tain-tsair.

At the Wednesday meeting, the Cabinet and KMT lawmakers decided to support the version proposed by Tsai, as he proposed combining the dual-track, two-step version with the Cabinet's version. The proposal would also shorten the dual-track system to two years.

Under Tsai's version, the two-track system will expire at the end of 2014, two years ahead of the original schedule. It will be replaced by the single system based on actual gains in 2015, when those liable will pay the tax at the separate rate of 15 percent.

According to the new version, during the first two years — 2013 through 2014 — local stock investors will continue to be exempt from the stock transaction tax when the TAIEX is below 8,500 points. This does not include those who are required to pay the tax according to their actual gains.

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