Investors and homeowners in Taiwan should be aware of the newest law amendments in 2021 as their tax liabilities may have changed. To put the breaks on short-term market speculations in house and land (H&L) transactions and strengthen healthy market developments, the Taiwan Legislative Yuan had passed the latest Income Tax Law Amendment on April 9, 2021, effective as of July 1, 2021, to target on the houses, their bases, as well as land transactions with construction permits, obtained after January 1, 2016 by individuals and/or profit seeking enterprises, to the effect that their taxable subjects, tax rates and taxable bases are now amended. This article summarizes the new impacts on the individuals and profit seeking enterprises for domestic and foreign entities in Taiwan.
The new law has adjusted the tax rates applicable to short-term holding of house and land in the case of individuals in or outside of Taiwan and profit seeking enterprises headquartered in or outside of Taiwan, while the tax rate changes to profit seeking enterprises headquartered in Taiwan are the most noticeable. According to the new law, several tax rates apply based on different holding periods, which has changed the fixed 20% tax rate under the old law. Meanwhile, the new law has expanded the scope of taxable subjects to cover pre-sale transactions and qualified company stock/capital contribution transactions, so that they are all regarded as house and land transactions under the new law. In addition, the new law allows a deduction of the total land price rise from the house and land transaction income to avoid double taxations or tax evasion practices. Moreover, the new law has added a few exceptions to house and land transactions, which allow a few lower tax rates.
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Provided by Kingdoms Law