Taipei, Nov. 8, 2012 (CENS)--The Ministry of Finance (MOF) and the Financial Supervisory Commission (FSC) reached a consensus at a meeting yesterday (Nov. 7) cutting the securities transaction tax for risk-hedging warrant transactions by securities firms in the role of market maker from 0.3% to 0.1%, for a term of three years. The FSC pointed out that as a result of the tax cut, trading volume of warrants will double or even triple.
Chuang Tai-ping, secretary general of Taiwan Securities Association, was even more optimistic, saying the share of warrant trading volume in securities trading will jump by three to five times over existing 1%.
The MOF and FSC predicted that the tax cut will actually bring about NT$956 million of extra tax income for the government coffers a year, including extra NT$508 million from securities transaction tax, brought on by expanded trading volume of warrants, and NT$448 million from personal income tax and business income tax resulting from increased employment.
In addition, the FSC will discuss with securities firms for cutting handling fee for warrant trading, which is now capped at 0.1425%.
Under the request of the MOF, the aforementioned cut on securities transaction tax for warrant trading by securities will be put into practice for three years. Then, the tax cut will be terminated, if it fails to induce expanded trading volume of warrants as expected.
Statistics of Taiwan Securities Association show that local securities firms paid NT$1.336 billion of securities transaction tax for risk-hedging warrant trading last year. The cut of the tax to 0.1% will cost the government NT$890 million of tax income a year, if the trading volume remains unchanged.
(by Philip Liu)
