Investors evading luxury tax to face hefty fines
The China Post news staffTAIPEI, Taiwan -- Officials at the Ministry of Finance (MOF) warned that real estate investors attempting to dodge the luxury tax with various schemes will not only have to make up the tax payment but are also liable to fines up to three times the amount of evaded taxes.
October 14, 2013, 12:13 am TWN
Real estate experts acknowledged yesterday that there are presently various tricks adopted by realty investors and speculators to avoid tax payments.
But they advised parties involved in realty transactions to abide by the rules instead of evading the tax because it is extremely hard to get away with it.
The MOF has decided to step up tax audit operations after the new tax regulations were implemented more than two years ago in June 2011 with the goals of stemming realty speculation and cooling down house price rises by levying the luxury tax on sellers of properties they have held for less than two years.
MOF officials said they already found that some home owners and realty speculators have been using the schemes to evade luxury tax at the advice of property registration agents.
The methods used include advance property registrations that allow buyers to temporarily retain ownership and then wait out the two-year taxable period to complete registration changes in actual ownership later on to avoid the luxury tax.
The MOF's tax officials said they will check all the records of property ownership changes and related capital flows to plug the loophole.
Other tax-evading schemes include making arrangements to place the apartments in trust or allowing property buyers to become tenants first and then complete real ownership registrations after the taxable period.
One other way is to conduct realty transactions through surrogates who do not have any residential properties under their names.
Tax officials said that they have already worked out effective countermeasures like verifying the authenticity of transactions to prevent tax evasions.
The tax dodgers will have to pay up the tax plus a heavy fine three times the evaded taxes, they stressed.
Realty experts pointed out that all such schemes also tend to create ownership disputes, especially after the prices surge when one side seeks to renege on their deals.
Since the implementation of the new tax on June 1, 2011, the total luxury tax revenues amounted to NT$10.06 billion as of the end of September this year.
More than NT$6.785 billion of the total came from property sales, much more than the tax collected from other luxury items like expensive automobiles, watches, jewelry and fur products.