According to Article 30, Paragraph 2, of the Estate and Gift Tax Act, the estate tax shall be paid in cash and shall not be paid in kind unless paying the tax in cash is indeed difficult.  Hence whether an application for making tax payment in kind should be granted is a question for the tax collection authorities to answer after making due investigation as to whether the requirements mentioned above are satisfied and whether the kind of thing at issue is suitable for tax payment.  Article 43 of the Enforcement Rules of the Estate and Gift Tax Act provides that the kind of thing suitable for tax payment should be limited to one that is readily resalable or easily kept safe, and that no other right or encumbrance has been created thereon. The Directive Ref. No. (71)-TTST-37277 issued on October 4, 1982, by the Ministry of Finance states to the effect that a piece of land that is not reserved for road use under an urban plan but already has a privately built road on it is not the kind of thing eligible for tax payment because such land is not readily resalable.  The said directive is consistent with the intent of the law mentioned above, which is designed to carry out the provisions of the applicable tax laws and to nurture a general environment in which taxpayers fulfill their duties to pay tax in good faith.  Therefore, the above provisions and directive are not unconstitutional.

       Article 30, Paragraph 2, of the Estate and Gift Tax Act provides that “where the taxable amount for estate tax or gift tax exceeds three hundred thousand New Taiwan dollars (NT$300,000), the taxpayer may, within the tax-paying period as prescribed in the preceding paragraph, apply with the relevant supervising tax collection authorities for payments thereof in two to six installments, the interval of which shall not exceed two months, and such payment may be made in kind in lump sum if such taxpayer indeed has difficulty paying cash in lump sum.”  The said provision makes clear that the estate tax shall be paid in cash and shall not be paid in kind unless paying the tax in cash in lump sum is indeed difficult. Accordingly, since making tax payment in kind is conditioned on the fact that making such payment in cash in lump sum is indeed difficult, the relevant supervising tax collection authorities should make due investigation as to whether the requirements mentioned above are satisfied and whether the kind of thing at issue is suitable for tax payment.  A taxpayer is not entitled to designate anything for tax payment in kind under any circumstances.  Furthermore, the original purpose of such payment in kind is to expect such kind of objects to be easily converted into cash and the end results thereof are no different from payment in cash.  Thus, Article 43 of the Enforcement Rules of the Estate and Gift Tax Act provides, “The kind of object for tax payment as applied for by a taxpayer under Article 30, Paragraph 2, of the Act should be limited to one that is readily resalable or easily kept safe, and that no other right or encumbrance has been created thereon,” which means that where there is a difference between resalable and non-resalable things that are attachable, the resalable ones should be used for tax payment in kind.  Despite the fact that “readily resalable” and “safekeeping” are both enumerated therein, it is not meant to rule out the power and authority of the tax collection authorities to make proper determinations by forcing such authorities to make a choice between the two. In the event that an object that is easily kept safe is nonetheless in no way resalable so as to serve as payment for the estate tax, the state, on the contrary, would be further charged with the burden of safekeeping of such thing if the payment in kind is approved, which is not in line with the intent of the Act.  The Directive Ref. No. (71)-TTST-37277 issued on October 4, 1982, by the Ministry of Finance states, “It is explained in the Directive Ref. No. (71)-TTST-31610 that ‘in respect of the application filed by the taxpayer for payment in kind for the estate tax by means of land reserved for road use or land as preexisting road, the application would be approved regardless of whether such land is already subject to an expropriation and compensation program executed by the local county or municipal government.’ The “preexisting road” referred to therein means a piece of land that is reserved for road use under an urban plan and is already used for a road; the kind of land that is not reserved for road use under an urban plan but is privately built and used for a road is not the kind of road contemplated thereunder and, thus, the aforesaid rule is not applicable.”  The said directive shares the same intent as the provisions of the Enforcement Rules of the Estate and Gift Tax Act described earlier. The reason behind the said directive stating to the effect that a piece of land that is not reserved for road use under an urban plan but has a privately built road on it is not the kind of thing eligible for tax payment in kind is that such land is not readily or easily resalable since the competent authorities are not obligated to expropriate any land that is not reserved for road use under an urban plan, and that, as such, it should not be eligible for the tax payment in kind.  The foregoing provisions, as well as the said directive of the Ministry of Finance, are both meant to carry out the provisions of the applicable tax laws and to nurture a general environment in which taxpayers fulfill their duties to pay tax in good faith, and, therefore, do not contradict the Constitution.  Excluding those possessions of the taxpayer which are not subject to attachment, it would be pointless to differentiate between resalable and non-resalable things if nothing is easily resalable.  Whether, under such circumstances, the tax payment in kind should be allowed is another issue that needs to be considered while making investigations and determinations.

*Translated by Vincent C. Kuan