Taipei, April 7 (CNA) Lawmakers across party lines on Wednesday agreed to July 1 as the provisional date on which a draft amendment to the Income Tax Act will come into effect, with the aim of curbing real estate speculation.
The consensus was reached following inter-party negotiations at the Legislature's Finance Committee on Wednesday to determine when revisions to the "integrated house and land transaction income tax" would take effect.
The committee previously passed a number of revisions to the act during a session on March 29, but failed on that occasion to agree when the revisions would officially take effect.
Under the proposed revisions, the tax will be set at 45 percent of gains on the sale of property within two years of purchase and 35 percent of gains on property sales made within two to five years of purchase.
For foreign nationals and companies, the tax rate on property sales will be 35 percent on any property held for more than two years.
The same tax rate will be imposed on individuals and businesses to prevent individuals from setting up companies to buy and sell property and pay only 20 percent corporate income tax on gains.
At present, the "integrated house and land transaction income tax" rate is 45 percent of gains on sales of property made within a year of purchase and 35 percent of gains on sales of property made within one to two years of purchase, but those rates only apply to individuals.
The revisions also widen the scope of properties to which the tax applies.
For example, the tax previously applied only to transactions of existing residential properties not considered to be for "self-use," whereas the new measure also applies to the sale of presale homes, above-ground use of land rights (superficies) and special shareholdings.
The measures will be applied retroactively to transactions dating back to 2016, according to the proposed revisions.
During Wednesday's negotiations, lawmakers also agreed to add a clause to the revisions in which individuals and businesses given a share of a piece of complex land or property as a result of urban renewal projects will enjoy a 20 percent tax on gains made from property sales made within five years.
During negotiations, the main opposition Kuomintang originally wanted the latest revisions to take effect as soon as possible after clearing the legislative floor.
Meanwhile, the ruling Democratic Progressive Party, two smaller opposition parties -- New Power Party and Taiwan People's Party -- agreed that the amendments should take effect on July 1.
The proposed revisions have now been sent to the Legislature's plenary session for discussion.
The existing "integrated house and land transaction income tax" originally took effect in 2016 and was intended to reduce speculation, especially in the residential housing market. The latest measures have been proposed in response to the market heating up at a time of high liquidity and low interest rates.
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