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May 30, 2017

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Business tax proposal sends stocks tumbling

TAIPEI -- Shares in Taiwan lost ground Monday, pulled down by financial stocks after the government floated the possibility of raising the business tax rate on financial institutions as part of a fiscal reform package to help narrow the country's fiscal deficit.

The market opened slightly higher before it weakened as financial stocks drifted lower.

The weighted index on the Taiwan Stock Exchange ended down 41.25 points, or 0.47 percent, at 8,560.61 after moving between 8,541.65 and 8,612.21 on turnover of NT$85.36 billion (US$2.81 billion).

The market's financial sub-index fell 1.69 percent, the biggest fall of any category on Monday, with Taiwan's two biggest financial holding companies, Cathay Financial Holding Co. (國泰金控) and Fubon Financial Holding Co. (富邦金控), losing considerable ground.

Cathay Financial Holdings fell 3.04 percent to NT$44.70 and Fubon Financial Holdings lost 2.53 percent to NT$42.30 on concerns over the losses they could suffer it the government goes through with the plan outlined by Premier Jiang Yi-hua on Friday.

According to Financial Supervisory Commission estimates, if the business tax rate on financial services is raised by 1 percentage point from the current 2-percent tax rate, banks will pay an additional NT$9 billion in taxes.

If the rate goes up by 3 percentage points, banks will pay nearly NT$30 billion more to the government.

Because the tax rate is calculated on a financial institution's gross receipts, any tax increase would likely affect larger rather than smaller banks, dealers said.

One dealer said the five banks that would be most adversely affected by a higher business tax rate would be Fubon Bank, Cathay United Bank, First Bank, Taiwan Cooperative Bank and CTBC Bank.

Kent Liu, a fund manager at Taishin Securities Investment Trust Co. (台新投信), said that beyond the unfavorable news of the planned tax hikes, the market's slump Monday was also caused by a technical correction following the steady gains made in recent sessions.

Related story on page 5

1 Comment
February 25, 2014    somphan222@
What's Taiwanese still waiting from China mainland? The cold war was gone for a Long time. Each year Taiwan spends a lot of money to buy weapons from USA. What's it for? Against China? I can say that:
Taiwan! You are not smarter than South Koreans and Japanese. You let them come to Profit a lot in China instead of you. You are Chinese blood absolute without refuse. It's time to build an all Chinese dignity. Chinese was prejudiced against by the west, don't you feel a little bit of that? Taiwan's brain, the world regards you having a fool’s head.
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