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  • Interpretation
  • No.625
  • Date
  • 2007/06/08
  • Issue
    • Are the Ministry of Finance directives constitutional in denying the refund of land value tax overpaid by reason of decrease in land area as a result of resurvey carried out in the case of overlapping boundaries of land?
  • Holding
    •        The land value tax is levied on the basis of the total land value computed on the value and acreage of all lands owned by the landowner and lying within the same county (or municipality) or municipality under direct jurisdiction of the Executive Yuan and is assessed according to the register of land value of owners and details of notification of cadastral changes prepared by the land administration agency. If the result of the cadastral resurvey carried out under the law shows any variation in the acreage from the area described in the land registration, the acreage shown in the modified land description registration effected upon ascertainment by the resurvey shall prevail unless the result of the resurvey is repudiated or it is found positively that the resurvey operation is defective. Where the boundary of a plot of land is found upon resurvey conducted by the land administration agency to be overlapping with the boundary of an adjacent plot of land and its acreage is thus decreased after the resurvey, it means that the total land value entered into the register of land value of owners and computed on the basis of the acreage described in the land registration prior to such resurvey is incorrect, and the resultant extra tax burden imposed on the landowner must be regarded as “tax overpaid due to errors in computation” under Article 28 of the Tax Collection Act so as to be consistent with the principle of equality of actual taxation.
      
    •        The interpretation made by the Ministry of Finance in its Directive Tai-Tsai-Shui-35521 of August 9, 1979, and in the first sentence of paragraph 2 of its Directive Tai-Tsai-Shui-33756 of May 10, 1980, to the effect that Article 28 of the Tax Collection Act in respect of tax refund is not applicable to the situation where the land area is decreased due to overlapping of its boundary with an adjacent plot of land discovered upon cadastral resurvey is inconsistent with this Interpretation and must be rendered inoperative as of the date of delivery hereof. It is also pointed out en passant that applications allowable by this Interpretation for tax refund under Article 28 of the Tax Collection Act may be made retroactively for the land value tax paid within the past five years only.
      
  • Reasoning
    •        The Constitution provides in Article 143, Paragraph 1, the last sentence: “Privately owned land shall be liable to taxation according to its value….” Accordingly, the Land Tax Act provides in Article 14 that “land of an assessed value shall be liable to payment of land value tax, except where farmland tax is levied thereon under Article 22 hereof,” and in Article 15 that “land value tax is levied on the basis of the total land value of all lots of land owned by each landowner and lying within each county (or municipality) or municipality under direct jurisdiction of the Executive Yuan,” and that “the term ‘total land value’ referred to in the preceding paragraph denotes the aggregated land value entered into the register of land value of owners upon verification of the assessed or re-assessed land value as duly effected by each landowner.” The land value tax is levied on a progressive rate, which is applicable if the total value of the land owned by a landowner exceeds the basic point of land value subject to progressive taxation applicable to the municipality (or city) or the municipality under direct jurisdiction of the Executive Yuan, wherein the land lies, and the more the percentage of land value is in excess of such basic point, the higher the tax rate is (See Article 16 of the Land Tax Act). Consequently, the more the acreage and the higher the total value are of all lots of land owned by a landowner in the same municipality (or city) or municipality under direct jurisdiction of the Executive Yuan, the heavier the land value tax burden will be upon him/her. Therefore, the landowner is encouraged to either make full exploitation of his/her land or release and convey to others the land which he/she may not need. Besides, as we have made clear in our Interpretations Nos. 420, 460, 496 and 597, where a competent agency has any doubt in connection with the application of any statutory provision within its scope of power, the rendering of an interpretation by the agency in line with its statutory functions is not against the doctrine of taxation per legislation insofar as such interpretation is consistent with the legislative intent of the statute and the principle of equality of actual taxation. 
      
    •        The collection of land value tax is processed by determination by the competent tax office of the municipality (or city) or municipality under direct jurisdiction of the Executive Yuan of the amount of land value tax payable by the taxpayer for each term according to the register of land value of owners and details of notification of cadastral changes prepared by the land administration agency. A land value tax payment form is then served upon each taxpayer for payment of the tax to the designated office of the government treasury within the time limit specified (See Articles 40, 43 and 44 of the Land Tax Act). Since the land value tax is levied on the basis of the total land value computed on the acreage and value of all lands owned by the landowner and lying within the same municipality (or city) or municipality under direct jurisdiction of the Executive Yuan and is charged on a progressive scale, it must be levied on the basis of the correct acreage of the land so as to be consistent with the principle of equality of actual taxation. Thus, if the result of cadastral resurvey carried out under the law shows any variation in the acreage from the area described in the land registration, the acreage shown in the modified land description registration effected upon ascertainment by the resurvey shall prevail unless the result of the resurvey is repudiated or it is found positively that the resurvey operation is defective. Where the boundary of a plot of land is found upon resurvey conducted by the land administration agency to be overlapping with the boundary of an adjacent land and its area is thus decreased after the resurvey, it means that the total land value entered into the register of land value of owners and computed on the basis of the area described in the land registration prior to such resurvey is incorrect, and the resultant extra tax burden imposed on the landowner must be regarded as “tax overpaid due to errors in computation” under Article 28 of the Tax Collection Act.
      
    •        The interpretation given by the Ministry of Finance in its Directive Tai-Tsai-Shui-35521 of August 9, 1979 that provides “where the acreage of a plot of land of a landowner is found upon resurvey or re-measurement carried out by the land administration agency or due to division of the land to be at variance with its area entered in the general register of land value of owners based on which the original tax office levied the land tax, the tax office must reassess the tax based on the new acreage as of the year or term after such new acreage is ascertained by resurvey, re-measurement or division of the land; any overpayment or underpayment of the tax due to increase or decrease of the acreage by comparing the original and the new land area need not aptly be refunded or made good, as the case may be, by application of Articles 21 and Article 28 of the Tax Collection Act.” And the Ministry of Finance Directive Tai-Tsai-Shui-33756 of May 10, 1980, states in the first sentence of paragraph 2 thereof that “Articles 21 and Article 28 of the Tax Collection Act are certainly inapplicable to the situation where the area of the land of a landowner is found upon resurvey or re-measurement carried out by the land administration agency or due to division of the land to be at variance with its area entered in the general register of land value of individual landowners based on which the original tax office levied the land tax because it is not attributable to fault in the operation of the land administration agency, nor has the area registered been duly corrected by the land administration agency, and the area has thus been already ascertained.” The Ministry of Finance interpretation given in the above-cited directives denying the applicability of Article 28 of the Tax Collection Act in respect of tax refund to the situation where the land area is decreased due to overlapping of its boundary with an adjacent plot of land discovered upon cadastral resurvey is inconsistent with this Interpretation and must be rendered inoperative as of the date of delivery hereof. It is also pointed out en passant that applications allowable by this Interpretation for tax refund under Article 28 of the Tax Collection Act may be made retroactively for the land value tax paid within the past five years only, and that this Interpretation is not applicable to taxes other than the land value tax.
      
    • *Translated by Raymond T. Chu.
      
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