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Excerpts of Amendments to House and Land Transactions Income Tax 2.0

According to the National Taxation Bureau of Kaohsiung, Ministry of Finance, the amendments to certain provisions of the House and Land Transactions Income Tax 2.0 have been promulgated by the President and will come into effect on July 1, 2021; the main amendments are as follows:
1. Expand the applicable scope of house and land transactions: The transactions of pre-sale houses and their building lots acquired after January 1, 2016, and transactions of shares or capital contribution amounts meeting certain conditions are deemed as taxable house and land transactions. 

2. Extend the holding period of individual house and land of short-term transactions applicable for high tax rates: The tax rate is 45% for transactions of house and land held by domestic residents for less than 2 years; the tax rate is 35% for transactions of house and land held by domestic residents for more than 2 years and less than 5 years. The tax rate is 45% for transactions of house and land held by non-residents for less than 2 years, and 35% for transactions of house and land held by non-residents for more than 2 years.

3. Profit-seeking enterprises are computed separately according to the holding period by differentiated tax rates and then declared and paid on the consolidated basis: The tax rate is 45% for transactions of house and land held by profit-seeking enterprises for less than 2 years; the tax rate is 35% if the house and land is held for more than 2 years and less than 5 years; the tax rate is 20% if the house and land is held for more than 5 years.

4. Amend the regulations on the deduction of the total amount of land value increment: The total amount of land value increment that could be deducted is limited to the total amount of land value increment calculated by deducting the previous transfer value from the assessed land present value in the transaction year, and the excess is not allowed to be deducted. However, the land value increment tax on the excess of the total amount of land value increment could be recognized as an expense.

5. Lower the estimated expense rate and increase the upper limit amount: In order to make the taxation authority have more realistic cost basis for the unprompted supporting document, the estimated expense rate is reduced from 5% to 3% and the upper limit amount is increased to NT$300,000. If the actual payment exceeds this limit, supporting documents must still be submitted for verification.

6. Transactions of house and land by sole proprietorships and partnerships shall be taxed in accordance with taxation regulations on individuals: The amount of income from the transactions of house and land of the sole proprietorship and partnership is included in the profit-seeking enterprise income of the sole proprietorship or partnership before the amendment, and it is recognized as the profit-seeking income of the sole proprietor or the partner of the partnership and is assessed by individual income tax. After the amendment, it is subject to the regulations on individual taxation, the sole proprietor or the partner of the partnership shall file the income tax return in accordance with the regulations on individual taxation, and the income is not included in the profit-seeking enterprise income of the sole proprietorship or partnership.

The National Taxation Bureau of Kaohsiung, Ministry of Finance explained that the regulations of the House and Land Transactions Income Tax 2.0 apply to transactions of shares or capital contributions that meet certain conditions for house and land, house, land, housing use rights or pre-sale houses acquired after January 1, 2016 and transacted after July1,2021. If the owner is an individual, he/she should file within 30 days from the day after the registration completion date of the transfer of ownership of the house and land, and the day after the transaction date of the housing use rights, the pre-sale houses, and the shares or the capital contributions, in order to avoid penalties for overdue declaration.

Contact: Ms. Liao, the officer of  the Second Examination Division
TEL: 07-7256600 ext. 7258

 

Issued:National Taxation Bureau of Kaohsiung Release date:2021-09-27 Last updated:2021-09-27 Click times:191