According to the National Taxation Bureau of Kaohsiung, with the introduction of the House and Land Transactions Income Tax 2.0, profit-seeking enterprises must pay attention to two major factors that will influence the method of taxation after selling real estate this year. One is the acquisition time of the real estate, which is related to the applicability of the House and Land Transactions Income Tax 2.0. If affirmative, the time of sale will then be considered as it will affect the tax rate.

Since the introduction of the new House and Land Transactions Income Tax 2.0, many profit-seeking enterprises are very confused about the details. An official said that if the selling is done this year, any of the three mentioned tax types may apply. Many businesses have been calling the tax authority for further clarification of the applicable tax type, rate and method of filing.

Filing actually becomes easier for taxpayers, according to an official. Different from an individual, profit-seeking enterprises can file the House and Land Transactions Income Tax along with Profit-seeking Enterprise Income Tax in May. The Profit-seeking Enterprise Income Tax return form will also be updated to include the new amendment.

The time of acquisition will firstly determine which tax rate and tax type shall apply. An official said for those real estate acquired before Dec 31, 2015, the old type shall apply which means the land income is tax exempt (the main feature under the old type) according to the Income Tax Act Article 4.

For those acquired from Jan 1, 2016 onwards, an official said that the time of sale should be taken into consideration next. If the real estate is sold before Jan 30, 2021, House and Land Transactions Income Tax 1.0 shall apply. This means for profit-seeking enterprises, the tax rate will remain at 20%, which is the same as the tax rate for profit-seeking enterprise income tax.

However, for those acquired after 2016 and sold after Jul 1, 2021, House and Land Transactions Income Tax 2.0 shall apply. An official said that this type of real estate transaction shall fall under the House and Land Transactions Income Tax 2.0 and tax rates vary according to ownership period. According to the tax laws, a tax rate of 45% will be levied for ownership of House and Land of less than 2 years, 35% for 2 to 5 years, and 20% for 5 years and above.

An official said that the various incomes from real estate transactions is basically computed separately and then declared and paid on a consolidated basis on the filing form. Profit-seeking enterprises should note the new changes and file accordingly.