Lawmakers across party lines yesterday agreed to July 1 as the provisional date on which a draft amendment to the Income Tax Act (所得稅法) is to come into effect, with the aim of curbing real-estate speculation.
The consensus was reached following interparty negotiations at the legislature’s Finance Committee to determine when revisions to the “integrated house and land transaction income tax” would take effect.
The committee on Monday last week passed a number of revisions to the act, but failed to agree on when they would take effect.
Under the proposed revisions, the tax would be set at 45 percent of gains on the sale of property within two years of purchase and 35 percent of gains on property sales made within two to five years of purchase.
For foreign nationals and companies, the tax rate on property sales would be 35 percent on any property held for more than two years.
The same tax rate would be imposed on individuals and businesses to prevent individuals from setting up companies to buy and sell property, and paying only 20 percent corporate income tax on gains.
At present, the integrated house and land transaction income tax rate is 45 percent of gains on sales of property made within a year of purchase and 35 percent of gains on sales of property made within one to two years of purchase — but those rates only apply to individuals.
The revisions also widen the scope of properties to which the tax applies.
For example, the tax currently applies only to transactions of existing residential properties not considered to be for “self-use,” whereas the new measure would also apply to the sale of presale homes, above-ground use of land rights (superficies) and special shareholdings.
The measures would be applied retroactively to transactions from 2016.
Lawmakers also agreed to add a clause to the revisions in which individuals and businesses given a share of a land or property as a result of urban renewal projects would enjoy a 20 percent tax on gains made from property sales made within five years.
The proposed revisions have been sent to the legislature’s plenary session for discussion.
The integrated house and land transaction income tax was introduced in 2016 to reduce property speculation, especially in the residential property market.
The latest measures have been proposed as the property market heats up at a time of high liquidity and low interest rates.