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Taiwan: Customs imposes luxury tax on property markets

Taiwan: Customs imposes luxury tax on property markets

TAIPEI: The legislators in Taiwan have approved a special tax named as luxury tax on industrial lands.  Lawmakers approved the revisions to curb short-term property speculation as investors increasingly turn their focus to industrial plots

The legislature approved revisions to tighten the special sales tax, also known as the luxury tax, which might negatively affect an already-sluggish property market, analysts said.

The lawmaking body gave its go-ahead to proposals to extend the luxury tax to industrial plots, saying they have become targets of property speculation since the government imposed taxes of up to 15 percent on houses resold within two years of purchase.

The extension is necessary to help curb short-term property speculation, as investors increasingly shift their focus to industrial land, the Ministry of Finance said in a statement.

The luxury tax should remain in place, while the ministry is studying plans to impose separate income taxes on property gains based on real transaction prices, in a bid to pursue social equality and economic growth, it said.

Industrial land trading is most active in Taoyuan County with 164 deals this year, government data showed, as the administrative district is set to be upgraded into a special municipality tomorrow, joining the likes of Taipei, New Taipei City, Greater Taichung, Greater Tainan and Greater Kaohsiung.

Yilan County ranks second with 97 deals, data showed. With the Hsuehshan Tunnel significantly shortening transportation time between Taipei and Yilan, builders have been encouraged to develop commercial and residential properties in the county in recent years.

The revisions will also make it more difficult to qualify for exemptions from the special sales levy. Prospective sellers must produce proof of “self-occupancy” to obtain exemptions from the luxury tax when they sell their homes within two years of purchase, in addition to presenting home registration records.

The revisions also empower the Ministry of Finance to draw qualification details.

Taiwan Realty Co said the legal revisions reaffirm the government’s revolve to cool the property market, as soaring housing prices remain a key public concern.