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Taiwan promulgates the Taxpayer Protection Act to safeguard taxpayer rights

Judy Lo/Tony T. L. Chen

Taiwan's Taxpayer Protection Act (the "TPA") was promulgated on 28 December 2016 and will take effect on 28 December 2017. While the TPA sets forth regulations that aim to ensure taxpayer rights, the transparency of the tax system, and the proper procedures of tax investigations, it also includes new procedures of administrative proceedings so that tax disputes can be resolved more efficiently.
In terms of taxpayer rights, the TPA provides that no tax shall be levied on the portion of the income necessary to sustain a taxpayer's basic living requirements. The Act also reiterates the principle of taxation under the Law. Furthermore, it specifies that the legal consequence of tax avoidance is that a tax avoider shall pay the avoided tax payment plus interest and another 15% of the avoided amount as the overdue fine, instead of paying several times the avoided amount like a tax evader would, as it is inappropriate to impose the same fine for tax avoidance and tax evasion.
In terms of ensuring the transparency of the tax system and the legitimacy of tax investigations, the TPA stipulates that the tax authorities' interpretations and other administrative rules shall be made available to the public unless official secrets or personal privacy are involved. If such interpretations or rules have not been made public in accordance with the Administrative Procedure Act, they may not be cited by tax authorities as basis for tax collection. The TPA also provides that a subject of tax investigation may have an advocate or assistant present during tax investigations or inquiries; either the subject or the tax authorities may request that the investigation or inquiry sessions be audio/visual recorded.
Moreover, the TPA specifies that the tax authorities shall set up taxpayer protection agencies and establish a "taxpayer protection council" under the Ministry of Finance to institute basic policies and plans to protect taxpayer rights. Tax agencies shall also appoint "taxpayer protection officers" to handle tax-related complaints and to assist taxpayers in resolving tax disputes.
As for improving the procedures of administrative proceedings, the TPA demands that at least two-thirds of the member on the administrative appeals committee under the Ministry of Finance shall be outside experts in order to increase the credibility of the committee. The new Act also provides that administrative courts shall set up independent tax tribunals so that tax-related disputes can be tried in professional courts and resolved with quality judgments and decisions.