Regarding Land Tax Concerns, the Five Major Solar Associations Clarified that if the land used for solar power is unsuitable for farming, the application process follows the "agricultural allowance" route without requiring a change of land use, thus avoiding land tax issues. Only when agricultural land is converted for specific business purposes will there be taxes such as land value tax and land appreciation tax. However, land value tax is typically paid by the solar companies. If the land is inherited by children, there is no issue with land appreciation tax, and they can still collect rent according to the contract. Furthermore, if they are unable to pay the inheritance tax, they can opt for installment payments.

As for agricultural insurance benefits, solar companies ensure the protection of farmers' rights by asking farmers to retain a portion of the land when leasing, thus maintaining their eligibility for agricultural insurance (as detailed in Misconception 7). Solar companies aim to coexist and cooperate with farmers, striving for sustainability in Taiwan.

Below is a detailed clarification by the five major solar associations in bullet points:

1. Solar companies sign notarized, lawful contracts with farmers or landowners without any deception.

   • Misconception 1: Farmers are deceived when signing contracts with solar companies.

     • Solar companies, when signing contracts with landowners, do so under the supervision of a third-party notary recognized by the local court. The contract terms are explained to the landowner clause by clause before the contract is signed. The 20-year notarized contract is signed only after both parties reach a consensus. Some cautious landowners may even have their private lawyers review the contract before signing with the solar company.

     • The contract clearly outlines the tax responsibilities of both parties. The notary will carefully explain the rights and obligations of both parties. Solar companies also clarify that at the end of the 20-year lease, they will respect the landowner's wishes, assist in removing the solar panels, and convert the land back to agricultural use.

2. Solar companies cannot use the landowner's name for loans, nor can they mortgage the land.

   • Misconception 2: Solar companies use the landowner's name to secure loans, and the debt falls on the landowner.

     • This is baseless. Whether it is agricultural land or land for specific purposes, the land ownership remains with the landowner. Solar companies only lease the land, so it is impossible for them to use the land as collateral for loans. Solar companies secure loans using solar equipment as collateral, not the land, and they do not ask the landowner to act as a guarantor.

     • According to civil law, neither sales nor inheritance can invalidate a lease; the rent will benefit the landowner's heirs.

3. After a landowner passes away, their heirs continue to receive rent without losing the leased land.

   • Misconception 3: When an elderly landowner passes away, their heirs can't receive rent or reclaim the leased land because it's no longer agricultural land.

     • Sales and inheritance do not invalidate a lease. If the original landowner passes away, the land must be transferred to the heirs through inheritance procedures. The heirs can then continue the original lease agreement after notarizing or signing a supplemental agreement with the solar company. The heirs of the landowner can still receive rent according to the land lease, and there is no issue of losing the land.

     • Paying taxes legally is a duty of good citizens, and both solar companies and landowners must comply with tax laws.

4. Inheritance tax is applicable, not land appreciation tax, when the landowner passes away.

   • Misconception 4: Heirs must pay land appreciation tax and deal with land inheritance issues.

     • Land appreciation tax is levied when agricultural land is sold or repurposed for non-agricultural use. In cases of inheritance, land appreciation tax is not levied, but inheritance tax is. According to the Ministry of Finance's 2023 tax exemption announcement, the inheritance tax exemption is NT$13.33 million, with additional deductions for spouses (NT$4.93 million) and funeral expenses (NT$1.23 million), meaning inheritance tax is only levied if the estate exceeds NT$19.59 million.

     • Land obtained through inheritance is exempt from land appreciation tax, unless the inherited land's public value exceeds NT$22 million. Most agricultural land in central and southern Taiwan has an average public value between NT$5 million and NT$10 million per hectare, with most farmers holding about 0.2 to 1 hectare. Therefore, most landowners converting land for specific business purposes will not face land appreciation tax issues. This is explained in detail by the landowner and the notary before signing the contract.

     • Additionally, non-agricultural land can still be inherited. If agricultural land is converted for specific business purposes, the children can still inherit the land.

     • The National Taxation Bureau allows installment payments for inheritance tax liabilities exceeding NT$300,000, with up to 18 installments over a maximum of 36 months.

5. The solar company bears the cost of land value tax and agricultural land conversion fees.

   • Misconception 5: After converting agricultural land to specific business purposes, the landowner is burdened with land value tax and agricultural conversion fees.
     • After converting agricultural land to specific business purposes, the land value tax is usually borne by the solar company as per the contract. Typically, the landowner pays the tax first and then requests reimbursement from the solar company. In other words, during the 20-year lease period, the land value tax is borne by the solar company. Additionally, agricultural conversion fees are also covered by the solar company as specified in the contract.

6. Landowners must report rental income for personal income tax.

   • Misconception 6: Landowners leasing to solar companies must pay personal income tax.
     • In Taiwan, any income must be taxed. Landowners renting agricultural land to other farmers must report the rental income for personal income tax purposes. Similarly, the lease agreement with the solar company clearly states that landowners must report their annual rental income for personal income tax. The notary explains this in detail to the landowner during the notarization process.

7. Agricultural insurance benefits are maintained according to the law.

   • Misconception 7: Leasing land to solar companies affects agricultural insurance benefits.

     • Landowners leasing land to solar companies must maintain basic farming practices to retain agricultural insurance eligibility.

       • For landowners under 65 years old: They must retain at least 0.1 hectares (1 fen) of land or lease at least 0.2 hectares (2 fen) of state-owned or Taiwan Sugar Corporation land; otherwise, they lose agricultural insurance eligibility.
       • For landowners over 65 years old: Those who have already started receiving old-age farmer pensions must still retain at least 0.1 hectares (1 fen) of farmland to maintain agricultural insurance. If no land is retained, agricultural insurance eligibility is lost. However, as long as the land value does not exceed NT$5 million after conversion, the landowner can still receive the old-age farmer pension. Non-agricultural income exceeding NT$500,000 will also disqualify the landowner from receiving the pension.

     • Both of these points are clearly explained by the solar company and notary during contract signing.

The solar industry urges everyone to support the development of renewable energy, so Taiwan can achieve its mission of zero carbon emissions by 2050, contributing to global efforts to combat climate change and ensuring a sustainable environment for future generations.

Joint Statement by the Five Major Solar Associations:

• Solar Energy Sustainable Development Association
• Taiwan Photovoltaic Industry Association
• Taiwan Photovoltaic Generation System Commerce Association
• SEMI Photovoltaic Committee
• Energy Industry Promotion Committee of the National Federation of Industries

This article was translated from: https://www.mirrormedia.mg/story/20230905edi065/