Taipei, The Cabinet gave approval Thursday for a reduced transaction tax on day trading to be extended for another three years, Cabinet spokesman Hsu Kuo-yung (???) said.
The decision was taken in a bid to encourage greater investment in the local equity market and help boost turnover, Hsu said.
The proposed tax cut extension would require an amendment to the Securities Transaction Tax Act, and Premier Lai Ching-te (???) is hoping that the Ministry of Finance (MOF) and the Financial Supervisory Commission (FSC) could discuss the issue soon with lawmakers to ensure legislative passage of the amendment, according to Hsu.
On April 28, 2017, the day trading transaction tax was reduced from 0.3 percent to 0.15 percent for a one-year period.
With the approach of the expiry date, scholars and investors in the equity market have been calling for an extension.
The FSC, meanwhile, reportedly had asked for the tax break to be extended for another seven years but the MOF suggested three years.
If the Legislature passes the amendment bill approved by the Cabinet, the tax incentive will remain in place for another three years until April 27, 2021.
In addition, the Cabinet has also decided to allow the preferential tax to be applied to proprietary securities houses, which are not currently covered, Hsu said.
After the announcement of the Cabinet's approval, Wu Tzu-hsin (???), administrative deputy finance minister, told the press that day trading now accounts for 21 percent of the average daily turnover on the main board, compared with 9 percent before last year's tax reduction.
The over-the-counter market has also benefited, with day trading now making up 30 percent of the average daily turnover, a sharp increase from 16 percent prior to the tax cut, he said.
As a result, tax revenue from day trading transactions has increased from an average NT$31 million (US$1.06 million) per day before the tax cut to NT$54 million, he said.
Source: Fucus Taiwan