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  • Interpretation
  • No.317
  • Date
  • 1993/05/21
  • Issue
    • Is Article 111 of the Income Tax Act constitutional in stipulating a sanction against tax withholders for violating their legal obligations?
  • Holding
    •        Paragraph 2 of Article 111 of the Income Tax Act, which was amended and promulgated on December 30, 1987, stipulates that any private entity or enterprise that fails to prepare and file a report within the prescribed time limit or fails to make a truthful report as required by the provision of Paragraph 3 of Article 89 of this Act shall be subject to a fine of NT$ 500. This stipulation is a sanction against tax withholders for violating their legal obligations. The purpose of this stipulation is to obtain precise and relevant tax information and is necessary to increase the public interest. Therefore, such stipulation does not contradict the Constitution.
  • Reasoning
    •        Under the Income Tax Act, the term "tax withholder" refers to a person who is required to withhold income tax from his payment to be made to a taxpayer. For a taxpayer having any income, the tax withholder involved is required to withhold tax payable at the time of payment as per the prescribed tax rates or withholding procedures, pay the tax withheld to the national treasury, and complete withholding certificates and submit them to the tax collection authority. If tax is not withheld because the amount paid does not reach the minimum amount of income that is subject to tax withholding, the tax withholder is required to file the name and relevant information of the recipients to the tax collection authority before the prescribed time limit expires. These have been explicitly provided for in Paragraph 5 of Article 7, Articles 88 and 92, and Paragraph 3 of Article 89 of the Income Tax Act, which were amended and promulgated on December 30, 1987.     
      
    •        The stipulation of Paragraph 2 of Article 111 of the Income Tax Act, which provides that any private entity or enterprise that fails to prepare and file a report within the prescribed time limit or fails to make a truthful report as required by the provisions of Paragraph 3 of Article 89 of this Act shall be subject to a fine of NT$ 500, is a sanction against tax withholders who do not perform their legal obligations. Such withholding and filing obligations are prescribed by law to ensure the acquisition of relevant tax information by the government and are necessary to increase the public interest and do not contradict the Constitution.  
      
    • *Translated by John C. Chen, Attorney at Law.
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