TAIPEI: The Executive Yuan's tax reform committee reached a consensus yesterday to maintain for the time being the existing taxation system under which gains obtained by individuals and corporates from securities investment are tax-free.

In the mid- to long term, however, the "Ministry of Finance (MOF)" should study the possibility of taxing corporates for gains from securities, instead of for securities transactions, the committee decided in a meeting held to discuss issues concerning capital gains.

"Vice Premier Eric" Liluan Chu told reporters after the meeting that the existing securities transaction tax actually takes into consideration gains on securities, and that he has required the "MOF" to release related data to allow the public to better understand the situation.

In the future, the securities transaction tax for corporates will probably be changed to a securities gains tax, in which losses can be offset against gains, Chu said.

The committee has recommended that in the initial stages of the new system's implementation, corporate investors should be able to choose whether to shift to securities gains taxation.

According to "Minister of Finance" Lee Sush-der, the option will be offered to corporate investors out of fairness.

Citing analyses of the investment performance of more than 10 large companies in Taiwan over the past three years, Lee said that although these companies made gains in the first two years, their losses in the third year far exceeded their previous gains.

These companies nevertheless were still required to pay tax, which raises questions about the fairness of the present system, he said.

China Daily/CNA

(HK Edition 12/23/2009 page2)