Quantcast
Wednesday , August 23 2017
Breaking News
Home / International Customs / Taiwan: Finance minister opposes rising capital gains tax threshold to $31.45m
Taiwan: Finance minister opposes rising capital gains tax threshold to $31.45m

Taiwan: Finance minister opposes rising capital gains tax threshold to $31.45m

TAIPEI: Taiwan finance minister Chang Sheng-ford said Wednesday that he sees no need to raise the taxation threshold for a capital gains tax targeting major players in the local stock market.

Chang told lawmakers that the current low turnover in the local bourse reflects weak confidence in the market and fears over volatility in global equity markets but has nothing to do with the tax aimed traders of NT$1 billion (US$31.45 million) and up each year.

His comments came after lawmakers’ suggestions that the government raise the threshold to NT$1.5 billion (US$47 million) to encourage trading.

Chang said that turnover on the main board of the local stock exchange failed to expand significantly in Wednesday trading, even though the Legislative Yuan’s Finance Committee decided last week to postpone implementation of a capital gains tax on stock gains, and the Dow Jones Industrial Average breached 18,000 overnight for the first time ever.

The weighted index on the Taiwan Stock Exchange closed up 0.97% at the day’s high of 9,186.18, on turnover of NT$83.58 billion (US$2.6 billion), lower than the average of NT$93 billion (US$2.9 billion) so far this year. Analysts said the thin turnover came as foreign institutional investors left for Christmas vacation.

Last week, the Legislative Yuan’s Finance Committee approved an amendment to postpone for three years the implementation of a looming capital gains tax on stock gains, which targets the biggest traders in the market, in a bid to encourage turnover. The bill is subject to approval from the full legislature floor.

Under the existing capital gains tax measure, which was passed in mid-2013 and had been scheduled to go into effect in January 2015, major market players would have had the choice of paying either an extra 0.1% transaction tax on trades over NT$1 billion (US$31.45 million) or a 15% tax on their capital gains.

Many investors had blamed the tax for the recent fall in daily turnover, saying that the tax burden had turned many major market players away from the trading floor.

A day earlier, turnover on the local main board stood at only NT$70.42 billion (US$2.2 billion) Tuesday despite the agreed postponement of the capital gains tax.

Chang told lawmakers that judging from low trading volume in the past few sessions, the postponement has not helped turnover expand at all, indicating the tax was not the culprit behind recent low trading volume.

The minister repeated that he does not support calls for raising the taxation threshold, adding that the NT$1 billion mark is unlikely to deter major players from entering the market.