TAIPEI (Taiwan News)—Taiwan’s Legislative Yuan passed the third reading of amendments to the Securities Transaction Tax Act (證券交易稅) that will lower the securities transaction tax rate to 0.15 percent for one year on Tuesday.
The Tsai Ing-wen Administration first proposed the changes to halve the securities transaction tax on day trading from 0.30 percent to 0.15 percent to spur stock market exchange on Dec. 30, 2016.
Lawmakers introduced a new Article 2-2 to the Securities Transaction Tax Act, which allows traders to buy and sell different types of stocks under the same account from different listed companies on the Taipei Exchange, and charge a 0.15 percent securities transaction tax for one year.
Adjustments to the securities market will be made after the one year period passes.
The act first established in in 1965 underwent seven amendments throughout the years, with the last update made on Dec. 30, 2016.
Minister of Finance Sheu Yu-jer (許虞哲) estimated during the first review of the Securities Transaction Tax Act, the tax cut will decrease Taiwan's annual tax revenues by NT$3.75 billion (US$122.39 million) in 2017, but projected the loss could be compensated if Taipei Exchange trade value is raised to NT$10 billion.
The new laws are aimed at stimulating Taiwan's declining stock trade volume in recent years.
According to a Formosa News report, Taiwan stock market average daily turnover in 2016 amounted to NT$77.6 billion, the lowest figure in 11 years.
Financial Supervisory Commission projects the reduced tax rate to 0.15 percent can raise day trade turnover at Taiwan Stock Exchange from 10 percent to 15 percent, and from 15 percent to 22.5 percent at Taipei Exchange (GreTai Securities Market).
The Ministry of Finance estimated during the first review of the Securities Transaction Tax Act the new act will be effective by end of April 2017.
MasterLink Securities Cooperation Investment Advisory President Liu Kun-hsi (劉坤錫) said the changes have been made known to the public since it passed its first reading in March and that that would have resulted in a limited effect in stimulating local stock market, but applauded the government for its efforts.