A deed tax was inaugurated in our country in the Eastern chin Dynasty slightly more than one thousand six hundred years ago, with contracts transferring land and building titles as the basis of assessment. At that time, since no modern type of taxation such as income tax, commodity tax, customs duties or dues had been introduced to China, the deed tax, together with the tax on farmland, were the most important sources of the government's fiscal revenue. The Statute on Deed Tax currently in force has been amended seven times since it was first promulgated in December 1940, and unification of collection of the deed tax was not attained until December 1945, when the Ministry of Finance announced the Guidelines for the Assessment of Standard Prices for Immovable for the whole country. In July 1964, the deed tax was designated a local tax. In recent years, the revenue realized from the collection of the deed tax has constituted around 1.5 percent of the total national revenue for local governments. In January 1951, the Executive Yuan promulgated the "Provisional Measures for Uniform Collection of Various Taxes and Assessments in Taiwan Province during the Period of Communist Rebellion" under which collection of the deed tax was suspended. In its place, a land registration fee was imposed in accordance with the Land Law at a rate of 1 percent, and as such a rate was far below the then effective average rate of 5 percent for the deed tax, financing for the local government was seriously affected. As a result thereof, collection of the deed tax was resumed and has now been continued since February 1952.
Article 2 of the Statute on Deed Tax provides that for transactions involving purchases and sales, acceptance of Dien, exchange, bestowal or partition of or on immovable property, or acquisition of ownership thereof by using the prescribed deed forms for payment of the deed tax. However, if the land is located in an area where land increment tax is assessed, the deed tax shall be exempted. So-called immovable property refers to both the land and the fixtures on the land. However, since now the appraisal of land value has been completed for all the land in the Taiwan area and the land value increment tax is assessed for transfer of land title or creation of Dien, the deed tax is collectable in practice in Taiwan only upon such immovable properties as a house or building and other fixtures on land.
The taxpayers of deed tax are those who acquire the title to or Dien of the immovable properties, as described below in accordance with the respective deeds:
Deed tax on a possession: to be reported and paid by the person who takes possession of the immovable property and legally acquires its ownership.
Respective Deed | Tax Rate |
---|---|
Purchase and Sale | 6% |
Dien | 4% |
Exchange | 2% |
Bestowal or Donation | 6% |
Partition | 2% |
Possession | 6% |
The amount of the deed tax is calculated by multiplying the applicable tax rate by the value of the deed. However, the fact that it is impossible to verify whether the value of the deed actually reflects the real transaction price would very possibly cause difficulties in tax collection. Therefore, all counties and cities (or municipalities under jurisdiction of the Executive Yuan) have established a Committee for the Evaluation of Immovable Properties to evaluate standard prices for various immovable properties. If the value of the deed reported by the taxpayer is below the standard price, provided, however, that in the purchase of immovable properties sold according to law, or the purchase of publicly owned immovable property through bidding or purchase of immovable properties at auction conducted by a court, the deed tax shall be imposed on the basis of the actual purchase price.
In order to meet the needs for various government policies, such as development of postal or telecommunication enterprises, investment encouragement ,export promotion ,construction of public housing ,etc.,the measures for reductions and exemptions which have been adopted are as follows:
A taxpayer who fails to file a statement of deed tax within the prescribed period must pay a surcharge equal to one percent of the amount of the tax for each three days of delay; however ,the total fine imposed shall not exceed the amount of tax determined to be due.
A taxpayer who fails to pay the deed tax within the prescribed period must pay a surcharge equal to one percent of the amount of the tax for each two days of delay. If the taxpayer fails to pay the tax and the surcharge for belated payment or the surcharge for belated filing for thirty days or more after the prescribed period ,the matter shall be referred to the court for enforcement﹒
A taxpayer who fails to file a statement of deed tax upon transfer of immovable properties and his failure to do so has been discovered by the competent tax collection office at its own initiative or upon information brought by another person shall, in addition to payment of the tax due, be penalized by imposition of an administrative fine equal to one to three times the amount of tax due.