A weekly snapshot of Taiwan business news stories brought to you by CommonWealth and AmCham Taiwan’s TOPICS
Property tax rates revised to curb speculation
The Legislative Yuan on April 9 passed the third and final reading of amendments to the Income Tax Act that aim to revise property tax rates. The amended law will take effect on July 1 and will impose different tax rates on property based on the amount of time it is owned before sale in order to curb house flipping – purchasing and quickly re-selling a property to generate profit.
The amendments broaden the definition of “short-term house flipping,” which originally referred to selling a property within one year of its purchase. Such sales are subject to a 45% tax on the profit made from those transactions. The revised definition extends the 45% tax to properties being sold within two years of being bought. Properties owned between two to five years are subject to a 35% tax and 20% is applied to those owned for more than five years.
The amendments also focus on fighting the flipping of pre-sale properties and tax evasion by deeming both pre-sale property transactions and those made under the guise of a company equity transfer as real estate transactions. In addition, the new law will for the first time include legal persons as subjects of taxation. Such a change will help prevent the setting up of for-profit entities or organizations to buy properties as a means of evading taxes. Foreign nationals and legal persons will be subject to the 45% rate for selling properties owned for two years or less and a 35% for those owned for more than two years.
Observers expressed confidence that the amendments will effectively deter hot money from flooding the housing market and will reduce the amount of short-term house flipping.
Ta Ya switches to solar energy
Ta Ya Electric Wire & Cable President Shen San-yi publicly stated on April 6 that Taiwan must transform its saturated cable market. According to Shen, the company had evaluated the possibility of investing in offshore underwater cables but considered them too risky and costly. He said the company will therefore divert investment into the solar energy industry.
The Ta Ya Group in 2020 completed construction of a 76MW solar power plant – the first such facility to be developed on repurposed land – in Tainan’s Syuejia Township. The plant began operations this February and is expected to produce 1.8 billion kWh of electricity over the next 20 years, significantly reducing carbon emissions and generating NT$9 billion in revenue.
In addition, Ta Ya completed its acquisition of Tatung’s energy subsidiary in March and will commit NT$6 billion to the construction of Taiwan’s largest solar panel fish farm. This year, Ta Ya celebrates its 66th anniversary and the deepening of its investment in renewable energy, which includes assisting with the installation of and obtaining a green energy certification for Taipower’s Automatic Frequency Control (AFC) system, as well as production of enameled wires for EVs.
Mitsui Chemicals to double Taiwan output
Japanese chemical manufacturer Mitsui Chemicals announced on April 9 that it would expand its investment in Kaohsiung to ￥10 billion (US$ 91.5 million). The company aims to double its production of wafer-protecting tapes used in semiconductor manufacturing by 2023 to meet global demand.
According to Japanese financial newspaper Nikkei, Mitsui Chemical’s ICROS™ Tape is a surface protective tape used in the silicon wafer back-grinding process of integrated circuit manufacturers. The company currently produces ICROS™ at its factories in Nagoya and Kaohsiung. The Kaohsiung plant was built in 2020 and is expected to double in manufacturing capacity after the company increases investment there.
Mitsui Chemicals occupies 40% of the global semiconductor tapes market and primarily sells its products to Taiwanese semiconductor fabs. The Nikkei article states that Japanese suppliers such as Mitsubishi Chemicals and Showa Denko will also look to expand operations in Taiwan due to the incredible growth experienced of its semiconductor sector, driven by 5G and electric vehicle technology.
This edition was translated from the original Chinese by Jason Wu.