When a seller sells an unsorted and unsubdivided parcel of land, there are no limitation rules to follow concerning the application of rights modification registration and declaration of current transfer value for payment of the land value increment tax where the land has been handed over to the buyer for use. If after the land is sorted and subdivided by the competent land administration authority, and before the buyer files for modification of rights registration, the publicly announced current value of the land has increased, then the proceeds arising from the natural incremental value shall neither be the proceeds acquired by the seller nor by the original taxpayer, but those enjoyed by the buyer. Such portion of the land value increment tax shall, according to the explanation of the High Court Conference of our Yuan Interpretation No.180, be levied on the beneficiary only when there is a subsequent legal expropriation reasoning to conform with the principle of fair rent taxation.
After the land ownership is transferred, the land value increment tax shall be levied based on the total incremental value of land (See Article 28 of the Land Tax Act). Where there is a change in the general whole price index, the total incremental value of land in accordance with the provision of Article 32 of the Land Tax Act, the original provided land price and the current value of the land value increment tax determined during the previous transfer shall be calculated based on the adjusted wholesale price index announced by the government. This is done to lessen the land increment value which has only been formally increased due to inflation, and to make the total incremental value of land consistent with the actual matter. Article 34 of the Enforcement Rules of the Land Tax Act, which is in accordance with Article 58 of the Land Tax Act, states: “Where the total incremental value of land is calculated based on Article 32 of this act, the base shall be the original provided land price adjusted in accordance with the latest monthly publicly announced general wholesale price index during the time of acceptance by the competent land administration office in which the landowner and obligor declared their current transfer value and the current value of the land value increment tax assessed during previous transfer”. The term “during the time of acceptance” refers to the time period as provided for in Article 49 of the Land Tax Act, the objective of which is to ensure the fair and reasonable calculation of the total incremental value of land. Thus, there is no contradiction to Article 19 of the Constitution.
*Translated by CHEN Louis, Professor of Law.