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  • Interpretation
  • No.252
  • Date
  • 1990/02/16
  • Issue
    • Is the Ministry of Finance directive in conflict with the Constitution in demanding that a business be held punishable under the Tax Levy Act if it, when making sale of goods, issues sales invoices to customers of its purchasers instead of issuing such invoices to direct purchasers as required by law?
  • Holding
    •        The Ministry of Finance Directive (69) Tai-Tsai-Shui-Tze No. 36624 (August 8, 1980) takes the position that a business entity which, when making sale of goods, fails to issue uniform invoices to direct purchasers of the goods but instead issues such invoices to customers of such purchasers shall be punishable in the manner as prescribed in Article 44 of the Tax Levy Act. This directive is consistent with the purpose of the Act in establishing a correct tax voucher system among business entities, and is not in conflict with the Constitution.
  • Reasoning
    •        Article 19 of the Constitution provides that the people have the duty to pay tax as prescribed by law. To encourage every citizen to perform such duty honestly so as to ensure fair taxation, the state may of course take necessary actions to prevent tax evasion. Article 44 of the Tax Levy Act before the amendment made on January 24, 1990, provided: "Where a business entity fails to give others vouchers as required by law or to obtain from others vouchers as required, it shall be liable to a fine of five percent of the amount of business it is found to have failed to enter into books as a result of its failure to give or obtain such vouchers." This is a statute designed to establish a correct tax voucher system by bringing into line the tax assessment data of the antecedent and subsequent parties to transactions through the giving and obtaining by business entities of vouchers truly reflecting all transactions done, and is necessary for the realization of the substance of Article 19 of the Constitution.
      
    •        The expression "as required by law" in Article 44 of the abovementioned Tax Levy Act refers to the requirement of Article 32, Paragraph 1, of the Business Tax Act, which states: "A business operator making sale of any goods or services shall issue and deliver to the purchaser a uniform invoice within the time limit set forth in the Schedule of Time Limit on the Issue of Sales Vouchers by Business Operators as annexed hereto." (The former Business Tax Act, Art. 12, Par. 1, states: "A business entity shall, at the time of doing any business transaction, issue and deliver to the purchaser a uniform invoice within the time limit specified in the Table of Categorized Items Subject to Business Tax herein incorporated.") And the term "others" means the direct purchasers or direct sellers of goods or services, not any persons other than such direct purchasers and sellers. Accordingly, the failure of a business entity to give a "direct purchaser" a voucher or to obtain from a "direct seller" a voucher as required by the Schedule of Time Limit on the Issue of Sales Vouchers by Business Operators (the Table of Categorized Items Subject to Business Tax in the former Business Tax Act) constitutes an act in violation of Article 44 of the Tax Levy Act.
      
    •        The Ministry of Finance Directive (69) Tai-Tsai-Shui-Tze No. 36624 (August 8, 1980) (mistyped as No. 36634 in the criminal ruling of the Taiwan High Court (76) Tsai-Kang-Tze No. 848) states that the corporation in question which, when making sales of plywood to its distributors during 1977, issued uniform invoices to customers of such distributors instead of issuing uniform invoices to such distributors as required by law is punishable in the manner as prescribed in Article 44 of the Tax Levy Act. We find that said directive is consistent with the aforementioned statute without extensive application and is hence not in conflict with the Constitution.
      
    •        Incidentally, Article 1 of the Tax Levy Act provides that "The collection of taxes shall be governed by this Act, except for matters not prescribed herein, which shall be governed by provisions of other applicable laws." Thus, in case of any conflict between the Tax Levy Act and any other law, the provision of the Tax Levy Act shall prevail over such other law. Furthermore, the provision of Article 48 of the Business Tax Act relating to the "failure of a business operator to make such entries in uniform invoices as required to be entered or to make correct entries therein" refers to the situation where a business operator has issued and delivered to the purchaser a uniform invoice in compliance with Article 32 of the Business Tax Act, but has failed to make such entries in the uniform invoice as required or has made false entries therein, e.g., omission of the name or the uniform serial number of the purchaser. This article is irrelevant to the requirement with respect to the issue of vouchers to direct purchasers, and therefore has nothing to do with the prior application of the Business Tax Act.
      
    • *Translated by Raymond T. Chu
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