Land value increment tax is collected on the total incremental value at the time of the transfer of the title of land which has previously been set at a certain value. For land that has a dien right established, the original land owner (or the dien right assignor) must make prepayment of land value increment tax and the said tax paid is refunded without interest when he or she redeems the land.

B. Taxpayers

The taxpayers of land value increment tax are as follows:

For land transferred with compensation, the original title owner.
For land transferred without compensation, the acquired title owner.
For land with a dien right established, the dien right assignor.
For trust land transferred with consideration or compensation, the trustee.
For trust land transferred to person or entity other than the settlor or in accordance with the purpose of the trust, the transferee.

In the above provisions, “transfer with compensation” means sale-purchase, exchange, government acquisition, or requisition at value.

C. The Basis for Land Value

In terms of its nature, the land value increment tax is a form of income tax and thus, in principle, costs and fees should be deducted to obtain the net taxable amount. For the convenience of the taxpayers in their declaration of the present value of the land being transferred, and for the purpose of minimizing dispute when the collection authority reviews the present declared value, the government announces a present value once a year to be used as the standard present value of transfer for declaration and review.

The calculation of the incremental value differs according to which of the following categories the land is assigned: regular land, government-acquired land, or land auctioned by the courts of law. Their respective details are as follows:

1. Regular land

For the transfer of regular land, the government-announced present value at the time the owner-taxpayer makes the transfer declaration or the dien declaration shall be used in the calculation of the total value increment of the land in question. However, in the case that the declared actual transfer value of the land exceeds the announced present value, the declared transfer value shall be used as the basis of calculation.

2. Government-acquired purchased land

For land acquired or purchased at a value approved by the county (or city) government, the basis of calculation shall be the lower of the price actually paid by the government or the government-announced value at the date of acquisition.

3.Court-auctioned land

For land auctioned through the courts of law, the basis of calculation shall be the lower of the actual auctioned price or the government-announced value at the date of the auction.

D. Deduction of the Increment Amount

To obtain the net increment value, the following itemized amounts shall be deducted from the respective aforementioned calculation and the balance shall be the net increment amount.

Where there is no transfer after the first governmental decree of specific land value, this original decreed value shall be deducted.
Where the land has been transferred after the first governmental decree of specific land value, the assessed present value on the payment of land value increment tax for the last transfer shall be deducted.
The total expense paid by the title owner for improvement of the land, including fees paid for public construction and fees paid for land consolidation, and the announced present value of donated land at donation, in the case that the land was donated without compensation due to changes in land zones which required changes in the percentage of the land to be used for public facilities, if any, shall be deducted.
During the period of ownership of the land in question, any supplemental payment of land value tax paid, consequential to reassessment of the land value, pro rata to the part of the land being transferred, shall be deducted from the land value increment tax payable, but the total deduction of this item shall be limited to 5% of the land value increment tax payable for an instant land transfer.

When calculating the net incremental value of land, in addition to the deductions in Items 1 and 2 above, any change in general consumer prices shall be taken into account and adjusted by the consumer price index announced by the government to derive the net land incremental amount. The formula for the calculation of the natural value increment of the land is as follows:

Amount of Natural Land Value Increment = Declared Present Value at Last Transfer of the Land - Original Decreed Value or Assessed Present Value At Last Transfer of Land × (Consumer Price Index/100)- ( Land Improvement Cost + Construction Benefit Fee Paid + Fee Paid for Land Consolidation + Announced Present Value of Donated Land)

Formula for the Calculation of the Amount of Land Value Increment Tax Payable

Classes	Formulas for Calculation
First Class	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%)
Second Class	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 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 not over 20 years, there is no reduction; A is 0.10. For land that has been owned for a period of over 20 years, the reduced rate is 20%; A is 0.08. For land that has been owned for a period of over 30 years, the reduced rate is 30%; A is 0.07. For land that has been owned for a period of over 40 years, the reduced rate is 40%; A is 0.06.
Third Class	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 not over 20 years, there is no reduction; B is 0.30. For land that has been owned for a period of over 20 years, the reduced rate is 20%; B is 0.24. For land that has been owned for a period of over 30 years, the reduced rate is 30%; B is 0.21. For land that has been owned for a period of over 40 years, the reduced rate is 40%; B is 0.18.

Introduction to local taxes is abstracted from” Guide to ROC Taxes 2011”.