Taipei: Lawmakers on Friday passed a Commodity Tax Act amendment called for by local auto companies that extends an existing tax deduction encouraging the scrapping of old vehicles for new ones and expands the incentives to new purchases.

According to Focus Taiwan, the amendment was passed to extend the NT$50,000 (US$1,635.55) tax deduction on the new purchase of sedans, mini trucks, and light passenger-cargo dual-purpose cars-such as pickups-for scrapping under Article 12-5 of the Commodity Tax Act to December 31, 2030. Additionally, the NT$4,000 tax deduction available when scrapping an old motorcycle for a new one was also extended beyond the original deadline of January 7, 2026.

The newly amended law will offer a NT$50,000 tax deduction on new purchases of passenger sedans with an engine cylinder volume of 2,000 cc or less, and a NT$2,000 deduction on new purchases of 150cc motorcycles. This means car owners scrapping their vehicles and buying new passenger sedans with the required engine capacity will benefit from the existing NT$50,000 tax deduction, in addition to the NT$50,000 deduction introduced for the new purchase under the amended law.

During a legislative committee review of the proposed amendment on August 21, Deputy Minister of Economic Affairs Ho Chin-tsang expressed that the expanded tax deduction is expected to assist first-time buyers, and local auto makers are eager for the swift passage of the bill. Finance Minister Chuang Tsui-yun also emphasized that the bill aligns with public expectations and will promote the purchase of more energy-efficient vehicles.

Commodity tax is a significant cost factor for purchasing new vehicles in Taiwan, whether domestically manufactured or imported, with tax rates for passenger sedans set between 25-30 percent. The Ministry of Finance, in a statement released on August 21, noted the rise in the number of electric vehicles sold in Taiwan-from 1 percent of all new registered cars in 2020 to 7.7 percent (35,406 cars) in 2024-attributed to the commodity tax exemption over the past decade.