Taiwan Extends Bond ETF Tax Exemption for 10 Years, Includes Active Funds

Taiwan's financial regulator is backing a decade-long extension of the transaction tax exemption for bond exchange-traded funds (ETFs). The Financial Supervisory Commission (FSC) chairman, Peng Jin-lung, announced support for the proposal, which would continue the tax holiday until the end of 2036.

Lawmakers from both the Democratic Progressive Party and the Kuomintang have proposed extending the exemption, which previously applied only to passively managed bond ETFs. The new proposal explicitly includes actively managed bond ETFs, aligning policy for similar investment products. Peng stated that this move ensures policy fairness and consistency.

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The tax exemption for bond ETFs has led to an overall net tax revenue increase of approximately NT$54.97 billion, demonstrating that suspending the transaction tax is beneficial for the development of Taiwan's bond ETF market and overall tax revenue growth.

The FSC's data indicates that the tax exemption has been a boon for Taiwan's bond market. During the period of exemption, the outstanding balance of corporate and financial bonds grew from NT$2.7 trillion to NT$4.7 trillion. The total transaction value also increased significantly. For bond ETFs specifically, the FSC reported that from 2017 to 2024, the exemption led to an estimated NT$54.97 billion increase in net tax revenue. This suggests the policy has not only stimulated market growth but also contributed positively to overall government income.

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We must always hold onto this market, always hold onto this technology, and always hold onto this manufacturing capability.