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Instructions for Taxation on Individual Income from Securities Transactions

  Instructions For Taxation on Individual Income form Securities Transaction
(The tax was ceased to be imposed with effect from January 1st, 2016)

TaxableYear/Item 2013-2015 2016-
Definition of securities
Stocks, certificates of entitlement to new shares, and certificates of payment and documents that indicate the right of entitlement to his/her investment.
These regulation apply to the securities of a primary exchange-listed(or OTC-listed) as defined in Article 3 of the Regulations Governing the Offering and Issuance of Securities by Foreign Issuers.
Securities exempt from income tax: government bonds, corporate bonds, financial bonds, convertible bonds (CB), collective trust funds, the beneficiary certificates of securities investment and trust funds or future trust funds, exchange traded funds (ETF), warrants, depository receipts, and securitization merchandise.
Suspension
Scope
1. The following is the scope of taxation based on actual dealings:
  (1) Residents:
    A. An individual who sells a total of 100,000 shares or more in the emerging markets in a taxable year.
    B. Shares acquired before listed on the TAIEX or traded on the OTC market and sold after listed on the TAIEX or traded on the OTC market. However, the followings are excluded:
      a. The shares were listed on the TAIEX or traded on the OTC market before or on December 31, 2012.
b. The amount of the shares underwritten was for 10,000 or less of a company in a taxable year.
    C. An individual sells his/her shares which are neither listed on the TAIEX, nor traded on the OTC market or in the emerging market.
  (2) Non-residents: Shares sold are all taxable, no exemption.
2. Securities transactions excluding the scope of taxation based on actual dealings:
  Income from securities transactions is 0.
Calculation
Tax rate: 15%
Income from securities transactions = the transaction price -the original acquisition costs -the necessary expenses of the securities traded
When there is no sufficient evidence of the original acquisition costs, income from securities transactions is:
  1. IPO Shares50% of the actual transaction price.
  2. Shares listed on the TAIEX or traded on the OTC market or emerging market: 15% of the actual transaction price.
  3. Shares neither listed on the TAIEX, nor traded on the OTC market or in the emerging market: 20% of the actual transaction price.
Long-term possession incentive
FIFO (First-In, First-Out)method:
1. One-half of the income shall be taxable for a possession period of one year or longer while calculating income from securities transactions.
2. One fourth of the income shall be taxable in the case of IPO shares, for three years possession or more since listed on the TAIEX or traded on the OTC market.
3. Long-term possession incentive is also applicable for shares without original acquisition costs.
Deduction for losses The claim of deduction for loss shall apply only to such gains and losses calculated based on the actual transaction price and the original cost.
Note Securities shall be subject to the levy of individual income basic tax: beneficiary certificates of privately-placed securities investment trust funds.  

 

 

Last updated:2019-09-11