Taiwan’s government reconsiders to abolish the luxury tax

12.10.2012

Taiwan’s luxury tax was established by «The Special Goods and Services Sales Tax Act». The main purpose of his adoption was the reducing speculative property purchases and limitation of the rapidly growing difference in the welfare of people. The prime target of this tax is real estate that was bought and then sold on within a short period: one or two years. The tax rate varies between 10 and 15%, respectively deadline.

Although the luxury tax was initially temporary measure, the government has no current plans for its removal, as Taiwan’s Finance Minister Chang Sheng-ford openly declares.

According to him, tax collection was a successful measure that led to a significant reduction in the amount of speculation in the property market. In the period from January to August 2012 real estate sales fell by 17.2%, compared to the same period in 2011.

On the basis: http://www.dot.gov.tw/en/,

http://www.ntak.gov.tw/en/AllInOne_Show.aspx?path=2267&guid=eeed912c-7a75-4046-afed-84c2b5b083bb&lang=en-us

Expert’s opinion

In addition to Taiwan, many other countries also operate luxury tax. A special tax on wealth, which applies to all assets of a citizen, including property, bank accounts and securities, operates in France since the 80s. Moreover, the fortune of the taxpayer must exceed a threshold, which in 2012 amounted to EUR 1.3 million. The tax rate varies in the range 0.25-0.5%. In 2011 a similar tax was introduced as a temporary measure in Spain. This measure is intended to help the country to overcome the debt crisis. The owners are recognized rich in Spain if the value of their fortune is over than 700 thousand Euro, and the tax rate varies from 0.2% to 2.5%

In some other countries there is no specially established luxury tax, however, some kinds of expensive goods (cars, yachts, jewelry) are liable to excise tax or tax on sales.

In Russia, the necessity for the introduction of such a tax has been discussed for a long time. In the State Duma of the Russian Federation even submitted the relevant draft law, which, however, was rejected and caused a lot of disputes.

In Russia, the same as in Taiwan, the introduction of this measure causes a lot of doubts as in respect of the objects to which it should apply, and in respect of its desirability and feasibility.

Egurtsova Yulia ( Paralegal of Moscow office Company Honest&Bright)