July 28 (Bloomberg) -- Taiwan is considering changes in luxury tax rules to narrow the gap between property prices and incomes amid slower pace of economic expansion.
“Current rules have flaws, for example, we are unable to tax those deep-pocket investors, who can wait for more than two years to sell properties,” Finance Minister Chang Sheng-ford said in a briefing on July 26. Changes may include a levy on buyers of properties, he said. Sellers are already taxed.
The move comes amid an increase in prices of properties in Taipei City, the country’s capital, and a widening in the gap between home prices and incomes. Taiwan, which imposed luxury tax from June 2011, may extend the current levy on investment properties sold within two years of purchase, Chang said.
A 15 percent tax applies to commercial and residential investment properties sold within a year of purchase and 10 percent to those sold within two years. A 10 percent tax applies on sales of luxury goods such as yachts and airplanes worth at least NT$3 million ($100,328), and furs and furniture valued at NT$500,000 or more.
Taiwan in May lowered its official forecast for gross domestic product growth this year to 2.4 percent from 3.59 percent amid weakening global recovery.
The changes in taxation will focus on real estate rather than other luxury items, Chang said. The finance ministry will discuss with the industry and experts next month before drawing a blueprint, he said. The administration may seek approval in the Legislative’s next session starting September.
Taiwan’s overall house price-to-income ratio increased to 8.9 in the first quarter this year from 8.2 a year earlier, according to data on Ministry of the Interior’s website. Taipei City saw its residential property price index rise 6.7 percent in April this year from August 2012, the city government said in a statement.
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