1.Strengthen inspection of farmhouse land and speculative house trading
(1)All local tax collection agencies are required to strengthen the inspection of whether farmhouse lands are illegally used or unrelated to agricultural operations. From July 2009 to June 2023, 78,092 pieces of land not used for agricultural purposes were found by the competent authorities, and a total of NT$ 318 million in land value tax was levied.
(2)With regard to those who sell houses frequently over a short period of time, trade in tremendous amounts, and sell pre-sale houses before the day on which the ownership transfer registration is completed, the national tax administration under the Ministry of Finance (MOF) in all districts (hereinafter referred to as the national tax administrations) emphasized the checking of such cases and levied taxpayers in accordance with actual prices in order to maintain taxation fairness and to decrease speculative house trading. From October 2010 to June 2023, 20,369 house transactions were investigated by the national tax administrations, and the total amount of additional tax levied from such cases was approximately NT$ 8.73 billion.
2.House tax rationalization
(1)Increasing the tax burden of the house owner whose house is used for residential purposes but not owner-occupied
i.Article 5 of the House Tax Act was revised on June 4, 2014 as follows: for a house used for residential purposes, which is not occupied by the owner, the rate is raised to the interval between 1.5 and 3.6 percent from the interval between 1.2 and 2 percent. This regulation was added so that the local government may stipulate different rates based on the number of houses a person owns. For operating a private hospital, a private clinic or a professional office, the rate is raised to the interval between 3 and 5 percent from the interval between 1.5 and 2.5 percent, which is the same as the one for doing business.
ii.Each local government has revised its self-governance articles for the house tax since Article 5 of the House Tax Act was revised on June 4, 2014, and the assessed house tax in 2015 increased NT$ 2.02 billion over 2014.
(2)Assessing the current value of houses rationally
To provide a uniform reference for local governments as a basis for adjusting the tax base of the house tax, the amendments to Articles 2 and 16 of “The Reference Principle for Simplifying the Operation of Assessing the Standard Values and the Current Values of Houses” were promulgated on March 3, 2017.
(3)Strengthening the inspection of house tax, continuously urging local governments to assess the tax base of the house tax, and to stipulate the rate of the house tax rationally
i.To prevent taxpayers from committing tax evasion, local tax collection agencies emphasize the checking of the usage of houses in accordance with the plan made annually by MOF. The taxpayer shall be required to make supplemental payment in accordance with the rates regulated concerned and be subject to punishment for insufficient payment of the house tax.
ii.The following measures were taken by the MOF:
i) The MOF includes the item “rationally assessing the Standard Values and stipulating the rate of the house tax” in its list of annual tax collection auditing. The amount of tax levied, the final result of the adjustment of the tax base and the tax rate are auditing items taken into consideration as the central government appropriates a general grant for local governments.
ii) For rationalizing the tax base and rate of the house tax, the MOF requests local governments to assess the Standard Values rationally according to their conditions, to adjust the Standard Values closely to actual construction cost, and to increase the tax burden of the house owner who has many houses used for residential purposes but not owner-occupied.
iii) In order to come to a consensus with local governments, to request them to assess the tax base of the house tax, and to stipulate the rate of the house tax rationally, the MOF invited local tax authority agencies on April 16, 2021 to formulate supervision plans, rewards and punishments, The formulas for calculating the indicators and endeavors were announced on August 10, 2021.
iv) In order to induce a peer effect, the MOF called meetings and invited local tax authority agencies and local financial authorities to strengthen communication, share experiences, and exchange opinions about stipulating different rates of house tax based on the number of residential houses a person owns but does not occupy and assessing the tax base in accordance with the House Tax Act on November 23, 2021 and January 17, 2022, respectively.
iii. The aforementioned measures have borne fruit as follows:
i)The tax base: the Taoyuan City Government and the Kinmen County Government increased their Standard Values based on their re-assessed house tax base in 2021, and the Keelung City Government, the Hsinchu City Government, the Changhua County Government, the Nantou County Government, the Yunlin County Government, the Chiayi County Government, the Chiayi City Government, the Pingtung County Government, and the Taitung County Government have increased their Standard Values in 2022; the Taipei City Government, the New Taipei City Government, the Taichung City Government, the Kaohsiung City Government, and the Miaoli County Government have increased their Standard Values in 2023, too.
ii)The tax rate: the Taipei City Government, the Yilan County Government, and the Lienchiang County Government already stipulate different rates of house tax based on the number of residential houses a person owns but does not occupy. The Taoyuan City Government, the Hsinchu County Government, the Hsinchu City Government, the Taichung City Government, the Tainan City Government, the Kaohsiung City Government, and the Pingtung County Government amended their Self-Government Ordinance on House Tax Rates which entered into force on July 1, 2022, and levy house tax on residential houses not occupied by owners using a similar tax rate structure; the Penghu County Government and the New Taipei City Government have amended their Self-Government Ordinance on House Tax Rates which entered into force on July 1, 2023 and September 1, 2023, respectively.
(4)Version 2.0 of the differential tax rate of the house tax
To reduce the tax burden on individual owner-occupied houses, encourage effective utilization of houses, and rationalize the house tax, the MOF refers to the experience of local governments in implementing the differential tax rate of the house tax. The MOF developed a plan for version 2.0 of the differential tax rate of the house tax. The amendment is expected to be completed by 2023, and will be implemented on July 1, 2024.
i. This policy airms to increase the tax burden of taxpayers who do not utilize their houses effectively by raising the tax rate of non-owner-occupied residential houses from the range between 1.5% and 3.6% to the range between 2% and 4.8%, and
ii. Reduce the tax burden of the owner of residential houses which are only owner-occupied. The house tax rate for owner-occupied residential properties whose owner has only one house in the country will be reduced to 1%, and
iii. Encourage house owners to lease their unused properties, and consider the involuntary nature of inheriting co-owned houses, thus making houses vacant. The statutory tax rate for inherited co-owned residential properties and rental properties whose rental income are declared and reach the Local Prevailing Rental Standard will also be reduced to the range between 1.5% and 2.4%, and
iv. Consider that the house supply is increased with constructed houses by the builder, and the price of houses is so high that it takes some time for the buyer before making a decision. The statutory tax rate of residential houses for sale, which are owned by the builder less than 2 years, will be in the range between 2% and 3.6%.
3.The recovery of levying vacant land tax, the revision of the scope of the exemption of private land for public use, and the provision of the special 1% tax rate shall not apply to land used for temporary off-street parking lots pursuant to the Parking Lot Act
(1)The MOF and Ministry of the Interior(MOI) issued a document on January 26, 2011, to abolish the suspension of the vacant land tax. Local governments may levy the above tax in accordance with their rights and responsibilities.
(2)The amendment to Article 7 of the “Land Tax Reduction and Exemption Regulations” was promulgated on May 7, 2010 to prevent speculation and to revise the scope of the exemption of private land for public use.
(3)The provision of the special 1% tax rate as provided in Subparagraph 5, Paragraph 1 of Article 18 of the Land Tax Act shall not apply to land used for temporary off-street parking lots pursuant to the Parking Lot Act on June 9, 2011 by the MOF, and therefore prevents against the hoarding of land by consortiums and the resulting negative influence on society.
4.Impose the Specifically Selected Goods and Services Tax (SSGST)
(1)Any unit of a building and the share of land associated with the unit, or any urban land for which a construction permit may lawfully be issued, that has been held for a period of no more than two years sold within the territory of the Republic of China is subject to the SSGST on an ad valorem basis in accordance with the provisions of the SSGST Act. The tax rate is 15% if the holding period is no more than one year; 10% if the holding period is more than one year and less than two years. Moreover, to further implement the purpose of the Act, it was revised on January 7, 2015 to broaden the tax scope, including that any industrial land in non-urban areas that has been held for a period of no more than two years shall be subject to the tax.
(2)The SSGST Act has been enforced since June 1, 2011, and it has exerted restraints on short-term speculation of real estate. In line with the tax system that shall take force from January 1, 2016 and calculate tax based on combining income from transactions of house and land on the actual transaction price, the SSGST Act on real estate will cease to be enforced effective from the same date.
5.Examine Regulations Governing the Calculation of Income from Property Transactions
To reflect the status of the housing market, the national tax administrations refer to actual economic conditions and trading activities in the housing market in current years to draft relevant standards (the Regulations Governing the Calculation of Income from Property Transactions) and submit them to the MOF for approval. Details of the standards are as follows:
(1)As to the individual who sold a house and has not filed the tax return, or has already filed the tax return but could not provide any document to prove the amount of income from said property transactions, the amount of such income should be aligned with a certain portion of the current value of the house. Concerning the portion, the MOF has raised that of Taipei City and New Taipei City from 29% and 16% in 2009 to 48% and 36% in 2015. In 2016, the housing market experienced a slight cooldown, so the MOF decreased the portion of some districts, such as reducing that of Taipei City to 46% and New Taipei City to 35%. In 2017, the housing market saw its ups and downs, and thus the MOF observed the status of the local housing market and adjusted the standard accordingly. In 2018-2019, the status of the housing market was still under observation, and considering that the thresholds to adjust the portion under the national tax administrations have not yet been achieved, the MOF maintained the same standards as in 2017. In 2020-2022, because the housing market of some area grew up, the MOF has raised the above area’s portion 1% to 6% separately depending on the uptrend of price and quantity.
(2)Since 2013, regarding houses with a high transaction price wherein only the actual transaction price is provided by the taxpayer or knowable to the tax administration, but the original cost of the house cannot be proven by the taxpayer, the MOF has regulated a way to calculate the income from houses with a high transaction price from a certain percentage of real transaction prices. In 2019, income from houses with a high transaction price which complies with one of the following conditions is calculated at 15% of the actual transaction price multiplied by the ratio of current value of the house/ present value of the land(the percentage has raised to 17% since 2020):
i.The transaction price of house and land located in Taipei City is above NT$70 million.
ii.The transaction price of house and land located in New Taipei City is above NT$60 million.
iii.The transaction price of house and land located outside of Taipei City and New Taipei City is above NT$40 million.
6.Establish house and land transaction income tax system
(1)Based on the regulations governing the calculation of income from property transactions, taxes on house and land transactions are levied separately. Lands were only being levied on land value increment tax by its present value and no longer being levied on income tax. Under such tax system, most house transactions were levied on income by the current value of the house which leads to low tax revenue and is not in compliance with international trends. In order to set up a rational and transparent tax system, the MOF established the house and land transactions income tax system and made amendments to the Income Tax Act accordingly which came into force on January 1, 2016. Taxpayers who sold a house or land from January 1, 2016, which was acquired on or after January 2, 2014 and held for less than two years, or acquired on or after January 1, 2016, are in the scope of the amended income tax. The resultant income tax revenues are used for expenditures on housing policy and long-term social care services to preserve justice in housing, narrow the gap between the rich and the poor, allocate social resources rationally, and implement the spirit of fairness in taxation.
(2)In order to prevent short-term real estate speculation, to preserve housing justice, to curb tax avoidance, and to maintain tax fairness, partial articles of the “Income Tax Act” were amended and promulgated on April 28, 2021. An individual or a profit-seeking enterprise who has any income derived from transactions of house and land from July 1, 2021, which was acquired on or after January 1, 2016, are in the scope of the amended income tax. The house and land transactions income tax system reform extends the holding period for the high tax rate applicable to short-term real estate transactions, amends the applicable tax rates for the income derived from transactions of house and land incurred by a profit-seeking enterprise according to the holding period of the transferred house and land, and regards transactions of presale houses, qualified shares or capital as real estate transactions.
(3)From January 2016 to June 2023, 469,579 house and land transactions were filed, and the total amount of tax payable was approximately NT$ 118.81 billion. By the end of June 2023, 68,682 house and land transactions were investigated by the national tax administrations, and the total amount of additional tax levied from such cases was approximately NT$ 5.51 billion.
7.Follow the Healthy Real Estate Market Plan to amend tax measures
8.Real estate tax base assessment mechanism established by the MOF and MOI
In order to promote correctness and rationality of real estate assessment and to achieve tax fairness, the MOF and MOI have established a discussion platform for land administration, finance and tax experts and scholars, as well as local governments to discuss the issues relating to the assessment of a real estate tax base and the tax system.
9.Amending the Urban Renewal Act to offer tax incentives
Responding to the public’s unwillingness to participate in urban renewal due to the increment on the property tax burden in recent years, the MOF aided the MOI in amending the Urban Renewal Act to offer tax incentives to relieve the burden of taxpayers and accelerate urban renewal.
10.Tax incentives of Statute for Expediting Reconstruction of Urban Unsafe and Old Buildings
To promote the reconstruction of urban unsafe and old buildings and improve residential safety and quality, the Statute for Expediting Reconstruction of Urban Unsafe and Old Buildings was enacted on May 10, 2017, providing tax incentives in the house tax and the land value tax, and increasing the willingness of the owners of legal buildings to participate in the reconstruction.
11.Provide relevant tax incentive measures in compliance with the housing policy of MOI
(1)In order to encourage landlords to rent their houses to persons who are qualified for rent subsidy, Article 5 of the House Tax Act was amended on June 4, 2014, adding the provision that, for a house used for public welfare purposes by a landlord registered with the local government as a charity, the rate of house tax shall be 1.2 percent of the current value of the house (same as a house used for residential purpose by the owner).
(2)In order to encourage landlords to rent their houses to persons who are qualified for rent subsidy, and to encourage landlords to release empty houses as social housing, long-term care services, and child-care services, amendments to partial articles of the Housing Act were promulgated on January 11, 2017, providing tax incentives involving individual income tax, land value tax, house tax, and value-added business tax. Besides, the amendments to partial articles of the Housing Act were promulgated on June 9, 2021, stipulating that the rental revenue exemption for landlords who rent their houses to persons receiving rent subsidy or provide their houses as social housing is increased from NT$10,000 to NT$15,000, to further encourage landlords to rent their houses.
(3)In order to build up a better house rental system and protect our nationals’ right to quality living and to rent a house, the Rental Housing Market Development and Regulation Act was established on December 27, 2017 and came into force on June 27, 2018. House owners who lease their house to the rental housing subleasing business for subleasing are entitled to tax incentives, including individual income tax, land value tax, and house tax.
II. Utilization of National Land
1. Discontinuance of open tender for national land more than 500 ping
Starting from October 20, 2009, the open tender of all national land not in public use under management of the National Property Administration(NPA) (both constructible or non-constructible land) has been discontinued, with the exception of lands collected to offset taxes. As clearly stated in Article 53 of the National Property Act, which was amended and promulgated on January 4, 2012, “Non-public use vacant house, land with no specific use and its area is less than 1,650 square meters shall be sold by public tendering by the National Property Administration, MOF. If its area is 1,650 square meters or more, it shall not be sold by public tendering.”
2. Establishment of after-sale repurchase mechanism of national land
(1)In the case of land located inside urban planning districts in Taipei City and New Taipei City with an area of or more than 330 square meters, where the Successful Tenderer fails to put it into use within two years (three years where the land is subject to urban planning evaluation), the local branch of the NPA may conduct an appraisal of the current market value and re-purchase such land if the current market value is higher than the original sale price. However, the land will not be re-purchased if the current market value is lower than the original sale price.
(2)Where the national real estate is sold in accordance with Article 51; Subparagraphs 4 and 6 of Paragraph 1, Article 52-1 of the National Property Act and Subparagraph 4, Paragraph 3, Article 55-1 of the Enforcement Rules of the same Act, and has not been developed for public interest or pursuant to the development schedule (where the permit has been revoked or abolished) within a specified time period (4 years after the completion of the payment process), or where the competent authority determines a need for the provision of said land, such land shall be repurchased to prevent a consortium or construction firm from monopolizing the land and bidding up the land prices.
3. Provide national real estates to build social housing
(1)To assist the competent authority in charge of social housing to build social housing, the NPA appropriates and leases national real estate and reserves for preliminary planning.
(2)The Ministry of the Interior has instructed the National Housing and Urban Regeneration Center to build social housing in accordance with the Housing Act and Article 27 of the Act for the Establishment of the National Housing and Urban Regeneration Center, and the NPA will assist the Center by leasing, contributing, or selling national real estate.
4. Establishment of mechanism for leasing national non-public real estate by tender for subleasing
In coordination with the central government’s housing policy, to increase the supply of the rental housing market and revitalize the use of idle national non-public housing, the NPA has recently established a mechanism for leasing by tender national non-public real estate to rental housing subleasing businesses in compliance with the "Rental Housing Market Development and Regulation Act", who agree to sublease rental housing to the sub-lessee for residential purposes.
5. Participation in urban renewal
In coordination with urban renewal policy, national lands should be utilized in urban renewal programs. Buildings and lands distributed according to the rights shall be priority targets as evaluation for use as central government offices or social housing. If deemed suitable for social housing following evaluation by the central or local housing competent authority, the land will be appropriated by the competent authority in need and be included in urban renewal pursuant to the Urban Renewal Act.
6. Establishment of superficies rights by means of open tender
The development of large-area national non-public use land shall be conducted by means of superficies rights through open tender. This method allows the government to maintain ownership of the land, while collecting royalties and rent, enriching the National Treasury, and increasing the supply of real estate.
III. Assisting Youths to Purchase Their Own House
Coordinating banks with government-owned shareholdings to handle the “Preferential Housing Loans for the Youth”
Banks with government-owned shareholdings were coordinated to offer loan under the project named “Preferential Housing Loans for the Youth” within the time period from December 1, 2010. The limits for each household are a maximum loan ratio 80%, a maximum loan amount of NT$10 million, and a maximum loan period 40 years. Furthermore, to assist the public in reducing the financial burden of home purchase under the rising interest rate trend, the government has provided a 0.25% interest subsidy in addition to the former 0.125% interest reduction offered by the banks, effective since August 1, 2023. The implementation and subsidy period will continue until the end of July 31, 2026. At the end of August 2023, preferential loans administered by the eight banks with government-owned shareholdings had been granted to 347,369 households to the amount of NT$1,458.6 billion.