Financial Services Association Proposes 10-Year Extension of Day Trading Tax Break, Foreign Currency Payments, and Stablecoin Trials

The Financial Services Association released its interim report on the 115th Financial Policy White Paper yesterday (10th), proposing 31 recommendations across five key areas focused on enhancing financial resilience and promoting healthy market development. The most notable proposal is to extend the current securities transaction tax rate of 0.15% for cash day trading by another 10 years, until the end of 2037.

To achieve the policy goal of establishing Taiwan as an Asian asset management hub, the Association recommends relaunching the 'Overseas Capital Repatriation Special Act 2.0,' adjusting incentives based on past implementation experience under the previous Overseas Funds Repatriation Management and Taxation Act to offer more attractive tax benefits and encourage overseas capital to return to Taiwan.

Regarding tax burden, the Association urges reducing the VAT rate applicable to core banking and insurance operations from the current 5% to 2%, applying the 2% rate to all core financial income (excluding reinsurance income for insurers) to significantly alleviate industry burdens.

On market operations and fintech, given the steady growth in foreign currency-denominated insurance premium income, the industry proposes that the Financial Information Services Corporation (FISC) establish a nationwide foreign currency payment platform, or allow foreign currency payments for foreign currency products via the national e-Bill payment network, enabling unified collection and cross-institutional deduction mechanisms. This would reduce system development costs, improve payment convenience for consumers, and lower the risk of late payments.

For labor pension funds and institutional investment, the report recommends amending regulations governing government-managed Labor Pension Funds, Labor Insurance Funds, and Public Servants Retirement and Pension Funds to explicitly permit investments in private equity funds managed or invested in by domestic asset management firms. It also proposes revising the Labor Pension Act to establish a public-private coexisting self-directed investment mechanism for workers. Additionally, to address insufficient incentives for financial and insurance institutions to invest in long-term care facilities, the report recommends the Ministry of Health and Welfare allow qualified financial institutions to participate through pilot programs or special regulatory provisions.

On emerging assets, regarding the widely discussed issue of stablecoins, the report notes that Taiwan's current policy emphasizes custodial service openings and issuer-side regulation, while mechanisms for stablecoin circulation and payment settlement in the real economy remain underdeveloped. To meet the growing payment and collection needs of businesses, the report recommends early pilot programs for stablecoin use cases to lay the groundwork for future regulatory frameworks.

The Financial Services Association stated that after the interim review meeting, proposing entities will assess whether to revise, adjust, or withdraw proposals based on discussions, with a final review meeting expected by early September to consolidate the final version of the white paper recommendations.