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  • Interpretation
  • No.687
  • Date
  • 2011/05/27
  • Issue
    • Is it unconstitutional to impose only imprisonment sentence on the responsible person of a company for his intentional act to cause the company to evade tax?
  • Holding
    •     Article 47, Item 1 of the Tax Collection Act, as promulgated on October 22, 1976, stipulates: “The provisions of this Act stipulating the imprisonment sentences which may be imposed on a taxpayer ... shall apply to the following persons: 1. The responsible person of a company as provided for under the Company Act.” (It is the same as Paragraph 1, Item 1 of the same Article, as amended and promulgated on May 27, 2009.) It is designed to hold the responsible person of a company accountable for the criminally illegal and culpable act and to shoulder the criminal liability, and does not contradict the constitutional principle of “nulla poena sine culpa (no culpability carries no penalty).” With regard to “provision stipulating the imprisonment sentence”, it contradicts the principle of equality under Article 7 of the Constitution, and shall become ineffective no later than the anniversary since the issuance of this Interpretation.
  • Reasoning
    •     Based on the constitutional principle of nulla poena sine culpa (no culpability carries no penalty), a person shall be subject to criminal penalty only for criminal violations and culpable acts. The law may not stipulate that a person assumes criminal liability for the criminally illegal act of the others. In addition, the purpose of the principle of equality stipulated under Article 7 of the Constitution is to prevent the legislators from arbitrarily setting unreasonable differential treatment among the people. Any unjustified differential treatment towards the same subject matter is contradictory to the principle of equality under Article 7 of the Constitution. 
      
    •     Article 47, Item 1 of the Tax Collection Act, as promulgated on October 22, 1976, states: “The provisions of this Act stimulating the imprisonment sentences which may be imposed on a taxpayer... shall apply to persons listed as follows: 1. The responsible person of a company as provided under the Company Act.” (a Paragraph 2 was added on May 27, 2009, with the original provision adjusted as Paragraph 1, and the language “listed to the left” was amended to “listed as follows”; hereinafter the Disputed Provision). Having consulted with the legislative records, “the provisions of this Act stimulating the imprisonment sentences” refers to the Executive Yuan’s draft Article 41 of the same Act, “[a] taxpayer who intentionally evades tax payment by fraud or other unjustified means is subject to the imprisonment of no less than 6 months and no more than 5 years.” During the review sessions, the Legislative Yuan considered that “as far as the circumstances of the crime are concerned, tax evasion is more or less compatible with the crimes of fraud under Article 339, Paragraph 2 and forgery of documents under Articles 210 and 214 of the Penal Code. By references to the sentences of each respective provision, the basic penalty is set to be no more than 5 years imprisonment, and may be imposed jointly with detention or fine so that the court may take into account the totality of circumstances, pay attention to the respective factor stipulated under Article 57 of the Penal Code, weigh in and determine the appropriate sentence to avoid severity and in the hope to be adequate.” Thus the statutory sentence of the Executive Yuan’s draft stated above was amended as  “no more than 5 years imprisonment, detention, fine or jointly with fine of no more than 1,000 Yuan.” (see the Legislative Yuan Gazette, vol. 65, No. 66, pp. 4-5, vol. 65, No. 79, pp. 85-86, the same volume,  No. 82, p. 11; the fine was amended to no more than NT$ 60,000 on January 24, 1990). However, for the language not amended in the Disputed Provision, the so-called “the provisions stipulating the imprisonment sentences” is then limited to “no more than 5 years imprisonment”. 
      
    •     In accordance with the Disputed Provision, if the responsible person of a company should intentionally instruct, participate in the implementation or fail to prevent the act of tax evasion, he shall be subject to criminal penalty. Therefore, the Disputed Provision is to have the responsible person of a company bear the criminal liability for the criminally illegal and culpable acts of his own. It does not make the responsible person of a company criminally liable for the criminally illegal and culpable acts of the others, which does not contradict the principle of nulla poena sine culpa (no culpability carries no penalty) . 
      
    •      n addition, the imposition of criminal sanctions on the responsible person of a company who intentionally instructs, participates in or fails to prevent tax evasion, and resulting in the shortage of tax payment by the company, is to maintain tax equity and safeguard the revenue of the public treasury. Once the responsible person of a company is subject to the penalty of the Disputed Provision, the substantive conditions to constitute the criminal act and the statutory sentences have all been stipulated under Article 41 of the Tax Collection Act. The target of the penalties is the act of fraud or other unjustified means to evade taxes, and the statutory sentences include imprisonment, detention and fine. They are the evaluation of the legislators on such criminal unlawfulness as intentionally falsify tax returns that results in levy shortage. Given that the Disputed Provision penalizes the responsible person of a company bases on the same tax evasion act but separately limits the scope of those subject to imprisonment, they are differential evaluations of unlawfulness out of the same tax evasion act. Therefore, the Disputed Provision that “provision stipulating imprisonment sentence” is the imposition of a more severe statutory sentence is a differential treatment without proper justification and contradicts the principle of equality under Article 7 of the Constitution, and shall become ineffective no later than the anniversary since the issuance of this Interpretation. 
      
    •     The Petitioner also petitioned for an interpretation of Article 47, Items 2-4 of the Tax Collection Act, as promulgated on 22 October 1976. Based on the description under the Petition, the above-stated provisions were not the applicable laws for the case the petition derives from. Separately, with regard to the petition for an interpretation of Supreme Court precedents 69 Tai Shan Tsu No. 3068 and 73 Tai Shan Tsu No. 5038, since judicial precedents are the expression of legal opinions of that Court to unify the views on laws and regulations, they are different from law and are not the subject matters that a judge may file petition for an interpretation. The above two parts in the petition do not meet the requirements for interpretation in accordance with J.Y. Interpretation Nos. 371 and 572, and are hereby denied.
      
    • Translated by Chun-yih Cheng.
      
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