Taiwan legislature passes new capital gains tax rule

TAIPEI (REUTERS) - Taiwan's legislature passed on Tuesday a final reading in easing rules on a new capital gains tax, removing uncertainty that has dampened local stock market turnover.

The ruling KMT party and the opposition parties agreed that no capital gains tax would be collected when the main index hits 8,500 points.

Under the new rule, no tax will be collected from individual investors whose annual transactions are below T$1 billion (S$41 million). Transactions above T$1 billion will be charged with a 0.1 per cent tax.

The Taiwan government said last month it was likely to ease rules on the new tax earlier than scheduled due to a slump in market turnover on concerns the tax would raise the cost of transactions.

Taiwan passed the tax into law last year, and was set to implement it in 2014. The proposed tax has led to a sharp drop in turnover.

Daily turnover dropped to T$83 billion (S$3.5 billion) on average in 2012, sharply lower than T$140 billion in 2011.