Fang-Wei Lin
The Supreme Administrative Court rendered the 108-Pan-586 Decision of December 19, 2019 (hereinafter, the “Decision”), holding that business taxes are value-added business taxes in principle, and the balance of the output tax less the input tax as filed for the current period (i.e., the added value) should serve as the payable or overpaid business tax amount for the current period without giving rise to the issue of double taxation.
According to the facts underlying this Decision, the Appellant issued a letter to the Appellee (the National Taxation Bureau of the Northern Area of the Ministry of Finance) on March 18, 2016, asserting that since the Appellee had determined that the Appellant failed to issue invoices to the actual trading counterparty (i.e., the Intervenor) pursuant to applicable requirements but issued invoices directly to Company A, not a party to this lawsuit, for the sale of services during September 2008 through December 2012, the input tax for the Appellant’s sale of services to Company A during the above period should be either refunded or retained. The Appellee first replied that the Appellant’s assertion had no legal basis. The Appellant then issued another letter to the Appellee to seek an explanation about the legal basis. The Appellee replied to the Appellant that it had failed to specifically point out the legal basis for the correction (tax refund). The Appellant subsequently issued another letter to explain that since the Appellee had held that it was a mistake for the Appellant to issue sale invoices to Company A and that the law requires such invoices to be issued, instead, to the Intervenor, considering the Appellant had issued invoices and paid taxes pursuant to law to Company A for the food and accommodation and management services for foreign workers during the above-mentioned period, it would obviously result in repetitive payment of business taxes if invoices were to be issued “again” to the Intervenor. Therefore, an application was filed to refund (or retain) the overpaid tax for the invoices which had been issued to Company A in accordance with Article 28, Paragraph 2 of the Tax Collection Law. The Appellee subsequently issued a letter (hereinafter, the “Original Disposition”) to deny the application. Dissatisfied, the Appellant brought an administrative action to set aside the decision on administrative appeal and the Original Disposition, as well as to compel the Appellee to render an administrative disposition that approves the refund of the business tax. After the complaint was rejected by the lower court, an appeal was filed.
According to the Decision, Article 15, Paragraph 1 of the Business Tax Law provides that the amount of business tax payable or overpaid by a business entity shall be the difference between the output tax in a tax period and the input tax in the same period. Pursuant to the above provision and in reference to the Reasons for Judicial Interpretation No. 397 issued by the Judicial Yuan, it can be concluded that the business taxes in Taiwan are value added business taxes in principle. To wit, the balance of the sale amount less the input amount (i.e., the added value) is taxed for various production, supply or distribution stages of goods or services. In addition, the balance of the output tax less the input tax as filed for the current period shall be the payable or overpaid business tax for the current period without giving rise to the issue of double taxation.
It was further indicated in the Decision, the original decision held that the Appellee did not request the Appellant to pay the business tax once again with respect to the portion concerning the Intervenor, which was determined to be the actual trading counterparty by the Appellee. Since the Appellant did not repetitively pay the business tax, it was concluded that there was nothing inconsistent with the evidence in the court files. In addition, no matter the Appellant’s actual trading counterparty was Company A or the Intervenor, the Appellant was supposed to issue invoices and file the sale amounts. If the recipients of the invoices are inconsistent with the actual trading counterparties, it only concerns a penalty for the failure to issue a voucher to another party pursuant to applicable requirements, but not an issue of paying business taxes repetitively or overpaying business taxes. The original decision has stated the reasons, and it was not legally inappropriate. Therefore, the gist of the appeal is groundless and unacceptable.