Government still mulling tax hikes

The Ministry of Finance yesterday issued two statements saying the government has yet to reach conclusions on tax rates or an implementation date for a proposed income levy on property gains.

The ministry made the clarifications after the Cabinet called a meeting on the proposed tax and gave its go-ahead to the tax plan, but left controversial clauses for future discussions.

The controversial aspects include tax rates, the implementation date and tax break qualifications, the ministry said.

Numerous local media outlets reported that the ministry planned to raise the income tax rate from a flat 17 percent to 20 percent on gains from houses sold for more than NT$40 million (US$1.27 million) or more and hike the rate to 35 percent on houses sold within one year of purchase.

The tax rate would remain unchanged at 30 percent for houses sold within two years of purchase, reports said.

Some reports said the ministry would tighten tax credit qualifications by imposing a flat 12 percent income tax on gains from houses sold after more than 10 years of ownership.

Under a previous draft, three years of ownership or more were sufficient to qualify for different levels of tax breaks.

The Cabinet gave its approval to the introduction of a separate income tax on property gains, sparing them from existing income tax rates of up to 45 percent on incomes in excess of NT$10 million, the ministry said.

The Cabinet further lent support to tax returns for housing transactions resulting from relocation needs, the ministry said.

To avoid double taxation, the Cabinet agreed that land taxes can be deducted from income taxes on property gains. The Cabinet plans to soon work out a new draft and turn it over to the legislature for review so that property tax plans might go into effect at a date involved parties deem appropriate, the ministry said.

The ministry originally set the implementation date for Jan. 1 next year.