By Chung Li-hua and Jake Chung / Staff reporter, with staff writer
The Executive Yuan yesterday approved draft tax incentives for the Taiwan Individual Savings Account (TISA) program, allowing annual deductions of up to NT$24,000 (US$738.30) to encourage long-term investment and retirement savings.
TISAs are government-backed, long-term savings accounts launched in July last year to help people prepare for retirement.
The government hopes TISA could become a “third pillar” of Taiwan’s retirement system, alongside labor insurance benefits and employer-funded labor pensions, Premier Cho Jung-tai (卓榮泰) said.
Financial Supervisory Commission Chairman Peng Jin-lung, third left, Taiwan Depository and Clearing Corp chairman Lin Bing-huei, third right, and other officials pose at an event announcing the Taiwan Individual Savings Account program in Taipei on July 16 last year.
Photo: CNA
Under the revisions, taxpayers could deduct up to NT$24,000 a year per person from their gross consolidated income for TISA contributions made for themselves, their spouses and their dependent minor children.
Withdrawals would also be tax-exempt for account holders aged 60 or older, or those who have held a dedicated account for at least 30 years.
Special provisions would cover death, serious illness and other major life events, the Cabinet said.
The measures require a legislative amendment before they can take effect.
The Financial Supervisory Commission (FSC) is to draft revisions to the Securities Investment Trust and Consulting Act (證券投資信託及顧問法) for Cabinet review, with the government aiming to complete the legislative process next year and apply the incentives to income tax filings in 2028.
Since its launch, TISA’s total assets have exceeded NT$21.64 billion, FSC Deputy Chairman Chuang Hsiu-yuan (莊琇媛) said.
The first phase included 53 funds with dedicated TISA share classes, while funds previously included in the “I Really Want to Retire” initiative brought the total to 84.
More than 270,000 TISA accounts have been opened since the program launched, Cabinet spokeswoman Michelle Lee (李慧芝) quoted Cho as saying.
TISA was introduced by the FSC and the Taiwan Depository and Clearing Corp (台灣集中保管結算所) to encourage regular, long-term investment. It offers access to selected mutual funds with reduced management fees and no subscription fees, with monthly investments starting at NT$1,000.
The first phase offers no tax incentives, but would continue operating alongside the proposed TISA 2.0.
Existing account holders could retain their current accounts or open separate accounts to qualify for the new tax benefits, officials said.
Whether the incentives would apply retroactively remains under discussion.
Additional reporting by CNA