Taiwan’s special tax on selected goods and services went into effect June 1, marking a giant step forward in the government’s efforts to stabilize the country’s housing market and tackle tax inequality, the Ministry of Finance said.
“The special sales tax aims to remedy the existing unfair low-tax and even tax-free treatments of short-term real estate transactions,” Minister of Finance Lee Sush-der said.
The minister added that the luxury tax is also designed to placate public discontent with conspicuous consumption and rising prices.
According to the MOF, an additional 10 percent tax will be imposed on luxury purchases such as designer furniture and exclusive country club memberships priced at over NT$500,000 (US$52,134), and on cars, helicopters, private jets and yachts valued at over NT$3 million.
Real estate properties that change hands within one and two years will also be levied an additional 15 percent and 10 percent sales tax, respectively, Lee said, adding that the new law includes a waiver clause for tax exemption under certain circumstances.
The minister stressed the state’s determination to fight tax evasion. “Our taxation agencies are fully staffed and capable of tracing fund flows from real estate deals. There is no way to avoid paying the tax.”
In related news, statistics from the Ministry of the Interior show that following announcement of the luxury tax, real estate transactions in April shrank by 23 percent from a month earlier, with the largest declines posted by Taipei City and New Taipei City at 29 percent and 28 percent, respectively.
But sources familiar with the issue said the market has since recovered after the initial impact wore off. They also expect to see less volatile movement in housing prices. (THN)
Write to Meg Chang at meg.chang@mail.gio.gov.tw