Taiwan shares ended 1.12 percent lower on Friday as tech shares such as High Tech Computer fell after Wall Street slumped and a report said the Taiwan government had proposed a tentative accounting plan that could hurt their earnings.
The plan requires technology companies to have their employee stock bonus taxed on the basis of market prices, rather than on the T$10 par value now, the Commercial Times said, citing the Ministry of Economic Affairs.
The ministry said in a statement, however, that no such proposal had been made.
"Discussions on this subject need to be made with the Financial Supervisory and other regulators," it said.
The statement did not stop investors selling tech stocks. The main stock index closed at 7,278.96 points, weighed down by a 1.92 percent slump in the electronics sub-index.
The financial sub-index was off 0.06 percent, but the construction sub-index jumped 2.57 percent.
Tech shares dropped. Smartphone maker High Tech topped the most active list by value and slumped 6.47 percent to T$1,085, the highest-priced stock in Taiwan. Mediatek Inc, Taiwan's largest designer of DVD chips, was off 3.5 percent at T$400.
Catcher Technology and Novatek Microelectronics Corp were among stocks added to the MSCI Emerging Markets index on Thursday.
Catcher, which makes cases used in laptop PCs and handsets, fell 3.1 percent to T$360. Novatek, Taiwan's largest design house of IC drivers used in flat panels, was 1.8 percent lower at T$191. The construction sub-index ended up 2.57 percent, having staged a 56 percent rally since early April. That beat the main index, which rose 10 percent during the same period.
Cathay Construction, Taiwan's largest property developer, was up 0.97 percent at T$25.90. High Wealth Construction rose 2.69 percent to T$38.20.