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Taiwan Brings Forward Luxury Tax

May 2011 - Tax & Private Client. Legal Developments by Hassans.

The Ministry of Finance has announced that the Selective Goods and Services Sales Tax Act, which establishes Taiwan's new luxury taxes targeted at reducing speculative property purchases and a widening wealth gap in the economy, are to take effect earlier than originally expected on June 1.

To control property prices in Taiwan's cities that have reached levels beyond the means of average wage-earners, the prime target of the new taxes will be properties purchased for speculative purposes, which are then sold on within a short period.

The owner of a property will suffer a 15% tax on its sale price if it is sold within one year of its purchase, falling to 10%, if sold during the second year. There will, however, be various exemptions so as not to affect, for example, the sale of first family homes.

There will also be a 10% special sales tax on the purchase of luxury items, such as private jets, yachts and luxury cars, priced at more than TWD3m (USD103,800). In addition, such items as annual club membership fees, fur coats and furniture worth more than TWD500,000 will also be taxed at the same rate.

It has been emphasized that the luxury taxes are designed so as not to affect ordinary citizens. In fact, it has been said that the additional tax revenues received will be spent by the government on the funding of social welfare projects.

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Taiwan Brings Forward Luxury Tax