The petitioners, the Catholic Diocese of Taichung affiliated with Holy Family Training Center for Special Needs in Changhua County (hereinafter referred to as the “Holy Family Center”) and the Catholic Diocese of Taichung affiliated with Holy Wisdom Training Center for Special Needs in Changhua county (hereinafter referred to as the “Holy Wisdom Center”) are disability welfare institutions registered by the Changhua county government. The Catholic Diocese of Taichung affiliated with Taiwan Provincial Tsz-Ai Development Center (formerly the Catholic Diocese of Taichung affiliated with Taiwan Provincial Tsz-Ai Mental Development Center, hereinafter referred to as the “Development Center”) is also a disability welfare institution registered with the Taiwan Provincial Government’s Social Affairs Department, Ministry of the Interior, and Ministry of Health and Welfare. All three institutions are social welfare institutions as well as non-profit organizations with registered tax status. The Holy Family Center has two small vans for personal use, the Development Center has two small vans for personal use and one small car for personal use, and the Holy Wisdom Center has two small cars for personal use (collectively referred to as the 7 disputed vehicles). All have been approved for exemption from vehicle license tax by the Changhua County Local Tax Bureau pursuant to Article 7, Paragraph 1, Subparagraph 9 of the Vehicle License Tax Act and have been on record from 2007 to 2014. Subsequently, the Changhua County Local Tax Bureau found that petitioners Holy Family Center, Holy Wisdom Center, and the Catholic Diocese of Taichung affiliated with Immaculate Heart Training Center for Special Needs in Changhua County, already had three other vehicles exempt from tax by the Changhua County Local Tax Bureau in 2003 and 2006. Therefore, the seven disputed vehicles could not be exempt from vehicle license tax, and their vehicle tax exemptions were revoked and supplementary payments separately collected according to Article 21 of the Tax Collection Law. The petitioners were dissatisfied and first separately filed for review and appeal, before jointly initiating administrative litigation. The Changhua District Court delivered a judgment in 2016 revoing the appealed decision and the original punishment. Nevertheless, the Changhua County Local Tax Bureau disagreed and appealed.The Taichung High Administrative Court delivered a final judgment in 2016 (hereinafter referred to as the “Final Judgment”) invalidating the original judgment and rejecting the petitioners’ appeal .
The petitioners argue that the Ministry of Finance’s Order No. 0920450239 issued on February 12, 2003 (hereinafter the “Disputed Order”) and Letter No. 10504576330 issued on August 31, 2016 (hereinafter the “Disputed Letter”, which according to the Ministry of Finance’s Order No. 10704670390 has not been reapproved by this ministry since January 1, 2019 and shall no longer be invoked) that have been applied in the Final Judgment violate the principle of equality under Article 7 of the Constitution, protection of property rights under Article 15 of the Constitution, and principle of taxation under the law pursuant to Article 19 of the Constitution, by imposing restrictions not found in Article 7, Paragraph 1, Subparagraph 9 of the Vehicle License Tax Act. The petitioners request the Constitutional Court to interpret the Constitution. Given the requirements of Article 5, Paragraph 1, Subparagraph 2 of the Constitutional Interpretation Procedure Act were fulfilled, the petition was accepted. The reasons are as follows.
Article 19 of the Constitution stipulates that people have the duty to pay taxes in accordance with the law. When the state imposes the duty to pay taxes or grants tax exemptions or preferences to the people, it should specify the taxable subject, taxable object, the attribution of taxable objects to taxable subjects, taxable base, tax rate, tax payment method, and taxable period, and other tax components in express statutory provisions. The competent authority, in exercising its statutory powers to interpret relevant laws, should adhere to constitutional principles and legislative intent and abide by general legal interpretation methods. If the competent authority exceeds the scope of legal interpretation and adds tax obligations that are not provided by law or reduces tax benefits granted by law, such actions are not permitted under the principle of taxation under the law enshrined in Article 19 of the Constitution (see J.Y. Interpretation Nos. 674, 692, 703, and 706 for reference).
Article 7, Paragraph 1, Subparagraph 9 of the Vehicle License Tax Act, as amended and promulgated on January 17, 2001, states that “the following transportation vehicles are exempt from vehicle license tax:...9. Vehicles for the exclusive use of registered social welfare organizations and institutions, as certified by local social affairs authorities, with a limitation of three vehicles per organization or institution.” The legislative intent was the legislators’ consideration that it is not easy to maintain domestic social welfare organizations and institutions, hence they should be exempt from vehicle licence tax to alleviate the burden of their operations and structures (see Legislative Yuan Gazette, Proceedings Record of the Plenary Session, Volume 90, Issue 5, pages 549-550). The beneficiaries of the tax exemption are registered social welfare organizations and institutions, and the exempted objects are transportation vehicles that must be certified by the competent authority for social affairs as being exclusively used by the social welfare organizations or institutions, with each organization or institution enjoying the benefit of tax exemption for three vehicles at most. For purposes of calculating the limited number of exempt transportation vehicles, it is irrelevant whether these organizations or institutions are affiliated with the same legal entity or located in the same administrative region.
Furthermore, the so-called “social welfare organizations and institutions” as referred to in Article 7, Paragraph 1, Subparagraph 9 of the Vehicle License Tax Act should include non-profit organizations established and licensed by central or competent local authorities under various welfare laws and regulations (such as the Protection of Children and Youths Welfare and Rights Act, the Senior Citizens Welfare Act, the Law on the People with Disabilities Rights Protection Act), as well as social assistance laws and regulations for the primary purpose of providing social welfare services and social assistance (see the Disputed Order with reference to the Letter of Response by the Ministry of Interior of 20 June 2002, No. 0910068689). Private social welfare institutions should establish accounting systems (Article 18 of the Regulations for the Establishment and Permission of Private Children and Youth Welfare Institutes, Article 22 of the Permit and Management Regulations for the Establishment of Private Senior Citizens’ Welfare Institutions, Article 23 of the Regulations Governing the Establishment and Management of Private Welfare Institutions for People with Disabilities), and the financial and accounting systems of privately owned social welfare institutions affiliated with legal entities should be independent (Article 17 of the Regulations for the Establishment and Permission of Private Children and Youth Welfare Institutes, Article 21, Paragraph 1 of the Permit and Management Regulations for the Establishment of Private Senior Citizens’ Welfare Institutions, Article 22, Paragraph 1 of the Regulations Governing the Establishment and Management of Private Welfare Institutions for People with Disabilities). ),. Each organization and institution that has been established with a permit and has independent financial and accounting systems may register its tax status with the competent tax collection agency according to the law (see Article 6, Paragraph 2 and Article 28 of the Value-Added and Non-Value-Added Business Tax Act). Even if they are not legal entities, they may still be taxable subjects. Since each organization or institution is a taxable subject, it is of course also entitled to tax exemptions and reductions in accordance with the law.
The second point of the Disputed Order states: “Furthermore, regarding the provision that ‘each organization and institution is limited to three vehicles,’ in order to implement the legislative intent of social welfare policies and consider tax fairness, the total number of exempt vehicles for the main and branch offices within the same administrative region (same municipality or county/city) shall not exceed three.” The fourth explanation in the Disputed Letter states: “The limitations on the number of tax-exempt vehicles for foundations and their affiliated institutions should be based on the Ministry of Finance’s Order No. 0920450239, dated February 12, 2003, which stipulates that the total number of exempt vehicles for the main and branch offices within the same administrative region (same municipality or county/city) shall not exceed three.” The limitation for legal entities belonging to the same administrative region and their affiliated institutions should take into combined calculation the limited number of transportation vehicles exempted from vehicle licence tax; only then would the transportation vehicles of that same legal entity within the same administrative region and registered social welfare institutions affiliated therewith meet the tax exemption requirement of “exclusive use of registered social welfare organizations and institutions, as certified by local social affairs authorities”. Accordingly, they could not separately claim to have three vehicles exempt from vehicle licence tax according to Article 7, Paragraph 1, Subparagraph 9 of the Vehicle License Tax Act, since they belong to the same legal person and not each individual organization or institution is considered a tax-exempt subject. Thereby reducing the scope of tax-exempt objects is obviously not in accordance with the tax exemption requirements of above mentioned provision and violates the legislative intent. Therefore, the Disputed Order and the Disputed Letter reduce the vehicle licence tax exemption benefits that people are entitled to by law, impose additional limitations not provided for by law and to this extent violate the“principle of taxation under the law” stipulated in Article 19 of the Constitution. Hence they should no longer be invoked.
*Translated by Hsin-Hsuan LIN