If a business entity concealed business amount and evaded tax before December 30, 1965, the date on which the amendment of the whole Business Tax Act came into force, the tax evaded may not be pursued five years after the coming into force of the amendment if the evasion is not discovered within that period.

       Article 41 of Business Tax Act provides that if a business entity evades business tax but such evasion is not discovered within five years, the tax evaded shall not be pursued thereafter.  This provision was added to the Business Tax Act when the whole Act was amended on December 30, 1965.Therefore, if the act of evasion took place before the new provision came into force, no matter how much time has elapsed, the tax evaded shall be pursued because under the old Act there was no limitation period for the pursuit of tax obligations. On the other hand, if the evasion took place after the new law came into force, but was not found within five years, no tax evaded may be pursued thereafter. The result would be unfair and is against the rationale of the enactment of Article 41. Consequently, taking fairness into consideration, if a business entity evaded tax before December 30, 1965, the date on which the amendment of the whole Business Tax Act came into force, but such evasion was not discovered five years from that date, the tax evaded shall be waived.

*Translated by David Yang and Jane Lai of Baker&Mckenzie Law Office, Taipei.