Abolishment of capital gains tax for resident and foreign individuals
Date:2015-11-19
The Legislative Yuan has passed a revision of the Income Tax Act to abolish capital gains tax applicable to both resident and foreign individual investors (FIDIs) on 17th November,2015. which would be effective since January 1, 2016. Basically, capital gains of FINIs are still tax-exempted in Taiwan; however, FINIs with fixed business locations or business agents in Taiwan will continue to pay tax on capital gains under the Alternative Minimum Tax (AMT) scheme at the rate of 12% should the following criteria are all met: (1) the FINI registered as a non-fund / non-trust type with TWSE and (2) with headquarter in other country but has fixed business location or business agent in Taiwan and (3) use its own capital to engage in security transactions. The term "fixed business location" as used in Income Tax Act refers to fixed places for business operation, however, this shall exclude (1)its local security houses, (2)its local stock sale and purchase agents doing such transactions as instructed by FINIs and (3)its local custodian banks in Taiwan. Before or after this revision on Income Tax Act becomes effective, the FINIs without fixed business locations or business agents in Taiwan would not incur any capital gain taxes issues here. TBBC Ltd.
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