Proposed Luxury Tax in Taiwan

In order to improve fairness in taxation and to curb speculative trading in real estate and other consumption of luxury goods, a special excise tax (“Luxury Tax”) has been proposed, said a Ministry of Finance official on March 1, 2011.  The proposed tax would likely cover speculative transaction of not-owner-occupied real estate, and luxury goods such as expensive furniture and furs, airplanes, yachts, and expensive automobiles. Specifically, if a not-owner-occupied house is sold with 1 year of its purchase, the special excise tax would be levied at the rate of 15% and if sold within 2 years, 10%. The tax will be levied on the actual transfer price without regard to whether a profit or loss is incurred.  A person and his or her immediate family (i.e. spouse and children) are only allowed to have one house as owner-occupied at any one time.  The threshold for any furs and furniture is NT$500,000 while for any airplanes, yachts and expensive automobiles, NT$3,000,000.  The Luxury Tax is expected to take effect later this year, and perhaps as early as July 1, 2011.