Taiwan Stock Rules· Lesson 5 of 6· 6 min

Day Trading and the Halved Transaction Tax

A stock day trade means buying and selling the same stock on the same day and settling only the difference; the transaction tax is halved to 0.15%, but you still have to account for commission and the risk of not being able to sell.

This lesson is free: sign up for an account to use the interactive simulation

Every lesson has an interactive simulation you can drag and play, plus a quick quiz. Sign up free to use them and save your progress automatically. Here is the text version of this lesson.

Not sure yet? Try the first lesson (no sign-up needed)「Pre-market, Intraday Trading and the Closing Call Auction」。

Text version · Taiwan Stock Rules, lesson 5: “Day Trading and the Halved Transaction Tax”

Buy and sell the same day, settle only the difference

A stock day trade means buying and selling the same stock on the same day; on settlement day only the difference and fees are settled. You have to sign up with your broker and meet its requirements first.

Securities transaction tax halved

The securities transaction tax is normally 0.3% of the sale amount, halved to 0.15% for same-day stock day trades (the cut currently runs to the end of 2027; check the latest law). The 0.1425% commission is charged once on the buy and once on the sell.

Not sold means paying in full

If the price keeps hitting limit-down and you can't sell that day, the trade becomes a normal purchase and you pay the full amount on settlement day. Before day trading, have the settlement money ready in case you can't sell.

Key takeaways

Stock day trading requires signing up with your broker and meeting its requirements; buy and sell the same stock on the same day, and only the difference and fees are settled.
The securities transaction tax is normally 0.3% of the sale amount, halved to 0.15% for stock day trades (the cut currently runs to the end of 2027; check the latest law).
The 0.1425% commission is charged once on the buy and once on the sell; brokers often discount it but have a minimum, and the round-trip cost decides how many ticks the price must rise to break even.
If you don't sell that day (for example it's stuck at limit-down), the trade becomes a normal purchase and you pay in full on settlement day; if the money isn't there, it's a settlement default.

Try it yourself

You can do these exercises in this lesson's interactive simulation:

Buy one lot at NT$50 and sell 5 ticks higher: how much do you make after fees? Do you pay or receive money on settlement day?
Set the sell price to +2 ticks: the price difference is positive, so why is the net P&L negative? How many ticks to break even?
Change the commission to 28% of list: does the number of ticks needed to break even change?
Switch to “Not sold”: how much money do you need on settlement day? Compare normal trading and day-trading costs in the cost simulator.

Quiz and explanations

1. A stock day trade sells NT$50,000 worth. How much securities transaction tax is due?: Answer: NT$75.The day-trade transaction tax is 0.15%: 50,000 × 0.15% = NT$75 (a normal trade pays 0.3%, NT$150).
2. You day trade one lot and the price difference earns NT$200, yet you end up with a loss. What's the most likely reason?: Answer: Commission plus transaction tax came to more than NT$200.Two commissions plus the transaction tax come to a little over NT$200 on one lot of a NT$50 stock, so a smaller price difference means a loss.
3. After a day-trade buy, the stock keeps hitting limit-down and you can't sell. What happens?: Answer: It becomes a normal purchase, and you pay the full amount on settlement day.If you don't sell, it isn't a day trade, and you pay in full on T+2; so before day trading, have the settlement money ready in case you can't sell.

Terms in this lesson

day trading (Day Trading): Buying and selling (or selling and buying back) the same stock within one day, holding nothing overnight. Ordinary A-shares can't do this because of T+1; US and Taiwan stocks allow it, each with its own limits and fee rules.
minimum commission (Minimum Commission): The lowest commission a broker charges per trade. When a trade is very small and the percentage commission falls below it, you still pay the minimum, so fees take a bigger share.
price limit (Price Limit): Some markets cap how far a stock can move in a day (±10% for most Chinese main-board stocks); hitting the cap is limit-up, hitting the floor is limit-down.
settlement account (Settlement Account): A bank account linked to your securities account. Money for purchases is debited from it on settlement day, and money from sales is deposited into it on settlement day.
settlement default (Settlement Default): When there isn't enough money in the settlement account to pay for shares on settlement day. It leaves a default record, you're pursued for the amount and a penalty, you may lose your trading privileges, and serious cases can be criminal.
securities transaction tax (Securities Transaction Tax): A tax on the sale amount when you sell shares, for example normally 0.3% in Taiwan; the rate is set by the local government and can change.