TAIPEI (Taiwan News) -- The Ministry of Finance's National Taxation Bureau of the Northern Area has announced that red envelopes (hongbao, 紅包) and other gifts given at weddings, funerals and other occasions can be subject to tax, if they total an excess set thresholds, reported UDN.
The announcement by the tax bureau was in response to a question by a woman surnamed Chen (陳), who said that she had recently received many invitations for weddings and wanted to know if the red envelopes the gave would be subject to the "gift tax."
Red-colored envelopes with money inserted inside are given as gifts for special occasions in Taiwan such as weddings and the Lunar New Year, with the amount inside depending on one's relationship to the recipient, among other factors. While white-colored envelopes (baibao, 白包) are given to the immediate family of the deceased at funerals.
The tax bureau said that in accordance with Article 3, Item 1, Article 4, Item 2 and Article 22 of the "Estate and Gift Tax Act" (遺產及贈與稅法), any citizen of Taiwan who regularly resides in the boundaries of the country who presents real estate or gift domestically or abroad, is subject to the tax law.
A so-called "gift" is defined as the giving of property to others without compensation in exchange. However, the tax only applies to total gifts valued at over NT$220,000 (US$7,500) over the course of a single year and individual gifts valued at over NT$100,000.
Officials explained that because red envelopes and other gifts of monetary value given at weddings and funerals are given for free, they are subject to the gift tax.