| I. Introduction Land value increment tax is collected at the time of title transfer based on the total increased value of the land calculating at multiple progressive tax rate; the so called total land increased value refers to the total present value at the time of land title transfer deducting the present value at the time of acquiring the land or the original assessed value. Starting from February 1, 2005, land value increment tax has adopted three classes’ of progressive tax rate of 20%, 30%, and 40%. Privileged rate is applicable for owners owning the land for more than 20 years. In addition, the government offers an once in a lifetime 10% discount for each person for selling self-use residential land in order to lessen the burden of self-use house owners. When purchasing a self-use residential land after selling a self-use residential land, the land value increment tax paid at the time of selling may be returned if all the criteria are met. Furthermore, in order to realize agricultural policy of agricultural land in use for agricultural purposes and encourage agricultural production, transfer of agricultural land meeting certain criteria can also apply for non taxable of land value increment tax. II. Levy of Land Value Increment Tax A. Land value increment tax is collected at the time of title transfer: land value increment tax is a tax collected for the natural value increase at the time of land transfer. B. The taxpayers of land value increment tax are as follows: 1. For land transferred with compensation, the original title owner. 2. For land transferred without compensation, the acquired title owner. 3. For land with a Dien Right established, The Lien Right assignor. 4. For trust land transferred with compensation or with a Dien Right established, the trustee. 5. For trust land transferred to person or entity, the transferee. C. Calculation of total increased amount: reported present value at the time of land transfer deducts present value of last transfer (or the original decreed value) multiple by consumer price index. If land improvement expense is involved, then it shall be deducted all together. Land improvement expenses include the following: 1. Land improvement expense. 2. Construction benefit tax already levied. 3. Land readjustment expense. 4. Total assessed present value of land donated prorated without compensation as use for public facilities due to land use alteration. D. Calculation of tax rate and tax amount (1) Tax rate of regular land (three classes)
Class |
Formula for Calculation |
Class 1 |
Tax Payable=Total Amount of Value Increment 【After adjustment is made pursuant to the consumer price index, and the increment is not in excess of 100% of the original decreed value or the assessed present value of last transfer】× Rate (20%) |
Class 2 |
Tax Payable=Total amount of Value Increment 【After adjustment is made pursuant to the consumer price index, and the increment is in excess of 100%, but less than 200% of the last transfer】 ×【Rate (30%) –[ (30% - 20%) × Reduced Rate ]】– Cumulative Difference (Original decreed value or the assessed present value of last transfer as adjusted according to the consumer price index × A) Note: For land that has been owned for a period of less than 20 years, there is no reduction; A is 0.10. For land that has been owned for a period of over 20 years, the reduction rate is 20%; A=0.08. For land that has been owned for a period of over 30 years, the reduction rate is 30%; A=0.07. For land that has been owned for a period of over 40 years, the reduction rate is 40%; A=0.06. |
Class 3 |
Tax Payable=Total Amount of Value Increment 【After adjustment is made pursuant to the consumer price index, and the increment is in excess of 200% of the original decreed value or the assessed present value of last transfer】 ×【Rate (40%) –[ (40% - 20%) × Reduced Rate ]】– Cumulative Difference (Original decreed value or assessed present value of last transfer as adjusted by the consumer price index × B) Note: For land that has been owned for a period of less than 20 years, there is no reduction; B is 0.30. For land that has been owned for a period of not over 20 years, the reduction rate is 20%; B is 0.24. For land that has been owned for a period of not over 30 years, the reduction rate is 30%; B is 0.21. For land that has been owned for a period of not over 40 years, the reduction rate is 40%; B is 0.18. | Fast Calculation Table for revised Tax Rate
Length of time holding the land Tax Class |
Under 20 years |
More than 20 years ~ Less than 30 years |
More than 30 years ~ Less than 40 years |
More than 40 years |
Class 1 |
ax20% |
ax20% |
ax20% |
ax20% |
Class 2 |
ax30%-bx10% |
ax28%-bx8% |
ax27%-bx7% |
ax26%-bx6% |
Class 3 |
ax40%-bx30% |
ax36%-bx24% |
ax34%-bx21% |
ax32%-bx18% | Remarks: a: Total amount of Land Value Increment b: Originally set land price or the reported value of last transfer (adjusted per consumer price index). (2) Tax rate of self-use residential land: 10% (3) Exemption 1. Public land sold by any level of government or land transferred due to succession, or private land bestowed to any level of government. 2. Land transferred due to succession. 3. Private land donated for the purposes of establishing social welfare enterprises or private schools in accordance with laws shall be fully exempted. 〈Please refer to C(2)〉 4. Land requisitioned by the government. 5. Land reserved for public facilities pursuant to the Act of Urban Planning, which is transferred before requisition, shall be exempted. 6. Private land requisitioned by government in accordance with laws and the owner of the land is willing to sell the land to agencies needing the land with requisitioned land compensation value. (4) Non taxable 1. Land bestowed to a spouse the land value increment tax thereof shall be entitled of non taxable. 2. When agricultural land in use for agricultural purposes is transferred to a nature person the land value increment tax thereof shall be entitled of non taxable. |