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  • Interpretation
  • No.180
  • Date
  • 1983/05/06
  • Issue
    • Do the rules on the expropriation of the land value increment tax and the calculation of the total incremental value of land in the Statute for the Equalization of Urban Land Rights and Land Tax Act violate the Constitution?
  • Holding
    •        Article 47, Paragraph 2, of the Statute for the Equalization of Urban Land Rights and Article 30, Paragraph 1, of the Land Tax Act, regarding the rules on the expropriation of the land value increment tax and the calculation of the total incremental value of land, state that the objective is to share the natural increment of land value with the people in common, and such purpose does not contravene Articles 15, 19 and 143 of the Constitution.  Nevertheless, since it is a matter of tax account, to be consistent with the principle of equality in taxation, the tax should be levied on the person who benefited from the natural increment of land value.
      
  • Reasoning
    •        Article 143, Paragraph 4, of the Constitution clearly states that where the value of land has increased not through the exertion of labor or employment of capital, the State shall levy thereon a land value increment tax, the proceeds of which shall be enjoyed by the people in common. The land value increment tax shall be calculated in accordance with the total natural incremental value, and shall be levied upon the person who obtained the proceeds to be consistent with the basic national policy of sharing increments with the people in common and the principle of equality of taxation.
      
    •        Article 47, Paragraph 1, of the Statute for the Equalization of Urban Land Rights provides: “Whenever the ownership of any parcel of land is transferred or a right of dien is created over land, the obligee and the obligor shall apply for registration of change in land rights or for registration of the creation of a right of dien, with a copy of the contract and other relevant documents attached to the application, within one month from the day when they have signed the contract. At the same time, they shall declare the current transaction value of the said land. Where there is no obligor, the obligee may solely declare the current transaction value of the said land.”  Paragraph 2 of the same article also provides: “If the current transaction value declared in the preceding paragraph by the reporter is lower than ‘the publicly announced current land value’ after examination, the competent authorities may purchase the land at the current transaction value declared by the reporter, or levy the land value increment tax according to ‘the publicly announced current land value’. If the current transaction value declared by the reporter is higher than ‘the publicly announced current land value’, the current transaction value reported shall be the base for the levy of the land value increment tax.”  Consequently, a landowner who transfers land ownership or creates a dien shall apply for registration within one month from the day when he or she has signed the contract, and shall declare at the same the current transaction value of the said land, upon the examination of the competent authorities. If the current transaction value is lower than “the publicly announced current land value”, the competent authorities may purchase the land at the current transaction value, or levy the land value increment tax according to “the publicly announced current land value”; If the current transaction value is higher than “the publicly announced current land value”, the current transaction value shall be the base for the levy of the land value increment tax. Such is not contrary to the objective regarding the levy of increment tax on the natural increment value of land to share increment with the people in common.  Additionally, Article 30, Paragraph 1, of Land Tax Act provides: “The calculation of the total land increment value is based on the publicly announced current value of the land at the time the taxpayer and owner apply for transfer or declare the creation of a dien, but if the actual declared current value of the transferred land is higher than the publicly announced current value, the self-declared transfer current value shall be the calculation base.”
      
    •        The term “publicly announced current value” refers to the publicly announced current land value within the time period required under Article 49 of the same law when the taxpayer and owner apply for land transfer or declare for creation of a dien, and is said to be consistent with the objective as provided under Article 47 of the abovementioned Statute for the Equalization of Urban Land Rights. Applications for registration and payments made after the time period will be subject to penalty or interest added in accordance with law, and in case the publicly announced current land value has changed, any benefit of such difference from the natural increment value shall be levied as the land value increment tax. Since the benefit is not acquired by the original taxpayer, the land value increment tax from such difference shall, under a legal expropriation cause, be levied upon the person who receives such benefit in order to be fair.  In case there is a difference of interpretation on the judgment made in accordance with prior articles, this is merely a matter of appropriateness of legal interpretation, and it cannot be said that the provision of the law is contradictory to the Constitution.  In conclusion, the provisions of Article 47, Paragraph 2, of the Statute for the Equalization of Urban Land Rights and Article 30, Paragraph 1, of the Land Tax Act regarding the expropriation of land value increment tax and calculation of the total amount of land price increase, which objective is to share the increment on the benefit of any natural land price increase with the people in common, is not contradictory to Article 143 of the Constitution, and at the same is not contrary to the substance of Articles 15 and 19 of the Constitution. Nonetheless, it is considered a tax account and thus to be consistent with the principle of equality of taxation, tax shall be levied on the person who acquires the benefit of the natural increment of land value.
      
    • *Translated by CHEN Louis, Professor of Law.
      
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