With regard to warrants for risk avoidance and tax reduction, the Financial Supervisory Commission issued a report stating that the benefits of this amendment are estimated to increase investors’ willingness to participate in warrant transactions, and the overall total annual tax increase will be 868 million yuan.

(Photo by reporter Wang Menglun)

[Reporter Wang Menglun/Taipei Report] The Finance Committee of the Legislative Yuan will review the amendments to the "Securities Transaction Tax Regulations" and other draft amendments on Wednesday (29th), lowering the warrant hedging transaction tax from 3 per thousand to 1 per thousand one.

The Financial Supervisory Commission pointed out today that the benefits of this amendment are estimated to reduce the market-making costs of securities firms, increase investors' willingness to participate in warrant transactions, and increase the overall tax revenue by 868 million yuan per year.

On Wednesday, the Finance Committee arranged for the Executive Yuan to review the draft amendments to the "Partial Provisions of the Securities Transaction Tax Act", and invited Minister of Finance Zhuang Cuiyun, FSC Vice Chairman Xiao Cuiling and other officials to make inquiries.

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In this regard, the Financial Supervisory Commission issued a report stating that it supports the "Draft Amendment to Some Provisions of the Securities Transaction Tax Regulations" proposed by the Ministry of Finance, which will reduce the securities transaction tax rate for warrants and hedging stocks from 0.3% to 0.1%, and the implementation period will be 5 years. Authorization sub-laws to standardize the control and supervision mechanisms of warrant hedging special accounts.

As for reducing the tax burden on warrants and hedging stock transactions, why is it necessary and beneficial?

The Financial Supervisory Commission stated that there are several reasons for the following reasons. First, promoting the development of the warrant market will help increase market issuance and trading volume: Since the establishment of the warrant market, the Financial Supervisory Commission has promoted the warrant liquidity provider mechanism, adjusted A number of measures have been taken, such as reducing the listing fees of warrants and implementing a differentiated management system for issuers.

Although securities firms have actively participated in the issuance of warrants, and the number of warrants issued in 2022 will reach 5.4, the transaction value of the warrant market accounts for only about 0.89% of the total market transaction value, which means that the degree of investor participation still needs to be improved.

Secondly, the tax burden for securities firms engaged in warrant hedging transactions is heavy: after securities firms issue warrants, they must perform market-making obligations and conduct risk hedging according to regulations. The average annual securities transaction tax paid by securities exchanges and safe-haven exchanges is about 1.81 billion yuan, accounting for 32.6% of the average annual gross profit of 5.55 billion yuan for securities companies issuing warrants, and the tax burden is heavy.

The Financial Supervisory Commission emphasized that after lowering the securities transaction tax rate for warrant market-making, it can reduce the cost of securities firms' market-making, improve the quality of market-making, and increase investors' willingness to participate in warrant transactions. It is estimated that the trading volume of warrants can increase by 78%, driving "securities The annual increase of "transaction tax" is 623 million yuan, the annual increase of "profit-making enterprise income tax" and "personal comprehensive income tax" is 245 million yuan, and the overall total annual increase of tax revenue is 868 million yuan.

In addition, in addition to warrant hedging, some legislators also proposed to amend the law to include the stocks of "index investment securities" (ETN) hedging accounts into the scope of tax reduction; in this regard, the Financial Supervisory Commission stated that ETN commodities It has been three and a half years since it was listed on April 30, 2019. Currently, there are 30 ETNs listed, and the total outstanding amount is only about 2.477 billion yuan. According to statistics, in 2022, ETN will only pay 4.76 million yuan in certificates and taxes. , the scale is still limited.

Therefore, the Financial Supervisory Commission recommends maintaining the version of the Executive Yuan’s letter sent to the compound, “prioritizing the promotion of warrants to avoid risks and reduce taxes.”

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