Research on the Tax System

Review on the Taxation System of Taiwan's Art Market and Analyses and Research on its Benefits


In 2000 and 2001, two international auction houses, Christie's and Sotheby's, left the Taiwanese market due to tax issues. They moved the Chinese contemporary art market, which had already put down its roots in Taiwan, to Hong Kong. In less than 10 years' time, Hong Kong not only became the auction hot spot for art from Chinese-speaking artists, it also became the auction hot spot for all Asian art. Auction houses from neighboring countries in Asia all opened branches in Hong Kong. The key factor in all of this was that the art trade in Hong Kong is exempt from taxes. If we add to that the high level of financial freedom, Hong Kong is truly heaven for art auctions.

In 2007, the Chinese State Administration of Taxation issued Notice of the State Administration of Taxation on Issues about Strengthening and Regulating the Collection of Individual Income Tax on the Individual Income Arising from Auctions. The notice stipulates that individual income from sales of paintings, antiques, etc., must be taxed 3% of the revenue, if the seller is not able to provide legal proof of costs. According to calculations made by Art Price, a well-known art database company in France, the Chinese art auction market has surpassed that of France's in 2008, to become the third largest in the world. In 2010, it surpassed that of Great Britain, and in 2011, it surpassed the United States to become the largest market in the world.


In contrast, art auction revenue in Taiwan has to be included in an individual's income tax return. The taxation rate is between 3-40%. Most collectors fall under the 40% taxation category, causing collectors to turn to Hong Kong or Beijing to auction their pieces. And because of this, Taiwan has become an important source of art for auction house based in Hong Kong and Beijing. Also, according to statistics from Christie's in Hong Kong, 64% of buyers of contemporary art from Christie's in Hong Kong in 2009 were Taiwanese. This means that not only are important piece of art from Taiwan moving to Hong Kong and Beijing, but billions of New Taiwan Dollars are going to auction houses in Hong Kong and Beijing ever year. Taiwan's auction volume in 2010 was a mere $1.9 billion NTD. Hong Kong's auction volume was $27 billion NTD, China $290 billion NTD. Taiwan has the highest tax on the art trade in the Taiwan Strait region, yet its market has the lowest tax income. This is a triple loss situation for Taiwan: the decline of the industry, decrease in tax income, and marginalization of artists.


Taiwan is a member of the greater China region art market. It cannot and should not isolate itself. But as we are unable to compete with Hong Kong and China in terms of economic freedom, market size, and tax rates. How can Taiwan avoid being marginalized is a pressing issue that we have to solve. Our primary goal is to figure out how to keep important art pieces and funding from leaving the country. Second, through utilizing the fact that Taiwan has the collector base of the highest quality in all of Asia, we should attract art and funding from neighboring countries to Taiwan. "Tax" is the key to this issue and is also at the core of the above mentioned three major issues. "Tax" can not only affect the international competitiveness of our market, it is also a deciding factor in the scale of our market. "Tax" is also an important indicator for economic freedom.

Research Project on the Relationship and Comparison between Taxation on Taiwan's Art Trade and International Competitiveness of the Visual Arts Market


The birth of the Law for the Development of the Creative and Cultural Industries will bring Taiwan's creative industries and other related industries to a whole new level. According to this new law, the Council on Cultural Affairs and other related central government agencies will complete 13 regulations and supporting measures. The execution of this law and other regulations soon be announced will bring positive impact to the supply and demand of the creative and cultural industry. Eagerly anticipated by many in the art and cultural sectors, the Law for the Development of the Creative and Cultural Industries is full of ideals. But when facing the diverse and rich creative industries which are full of unlimited possibilities, the principles of passing and implementing legislation and the roles of the supervisory and execution agencies must be observed with a forward-looking point of view.


In the section on tax breaks, the Law employed an incentive method to encourage for-profit organizations to promote development of the creative industries. There are no clear regulations on tax deductions for for-profit organizations and investments on cultural and creative research and development and training. The Law covers 16 different industries, all with its own characteristics. If all of these different regulations are implemented in a one-size-fits-all manner, it will be tough to maximize the varying natures and needs of these different industries. The current art world and tax world have very different understanding on the issues of taxation on art pieces. Hence, the aim of this research is to explore Taiwan's taxation mechanism on the trade of art pieces in the visual arts industry and current laws and policies. This research project also hopes to take a step farther and propose a reasonable standard, and then evaluate the standard’s feasibility. We want to use this research project to understand if cultural and taxation policies can help to grow the visual arts industry. We also want to investigate the operations and the needs of the art trade market and see if there a need to amend and improve on the taxation system due to tax regulations in order to enhance the visual arts industry's economic vitality and industry competitiveness.


This research project is significant because it attempts to look at how improving cultural policy and related tax regulations can benefit cultural economics and the development of the visual arts industry. It also wants to showcase the accumulation of cultural and artistic energy and the combination of theory on culture and taxation research and the anticipated results. If we combine cultural, taxation, and fiscal policies with cultural sociology, cultural economics, and public finance, we will be able to build a bridge between cultural economics, public finance, and cultural policy discourse. Through using taxation and fiscal policies as support, we can embed cultural policy within the art industry, in hopes that the government can improve on the tax breaks to strengthen Taiwan's culture and art.


105 臺北市松山區光復南路一號二樓之一

T:+886 2 2742-3968


© 2020 by Taipei Art Economy Research Centre