The Supreme Administrative Court rendered the 107-Pan-59 Decision of January 25, 2018 (hereinafter, the “Decision”), holding that if a profit-seekingenterprise sells or falsely issues invoices to others as proof of purchase and fails to present a documentary evidence that substantiates the amount of income, a tax agency that cannot find data about the gains may assess the amount of income based on the behavior of issuing false invoices.
According to the facts underlying this Decision, the Plaintiff filed a profit-seeking enterprise income tax return for 2007. The Defendant assessed the amount of the annual income based on the profit standard for the same trade and demanded supplementation of the tax since the Plaintiff had failed to provide its books and vouchers for verification. After the Plaintiff applied for reconsideration, the Defendant rendered the original disposition holding that the Plaintiff had had no factual purchase or sale and had issued false uniform invoices to facilitate tax evasion by others. The Plaintiff’s business revenue was reassessed at NT$0 and its income was assessed at 8% of the amounts of the false invoices. Dissatisfied, the Plaintiff brought an administrative action. As a result, the decision on administrative appeal and the original disposition were set aside by the original decision. Dissatisfied, the Defendant appealed.
According to the Decision, if a profit-seeking enterprise illegally sells or falsely issues uniform invoices to others as proof of purchase and fails to provide books and records or documentary evidence that can substantiate the amount of income, the verifying tax agency that cannot find data about the gains is allowed under the law to assess the amount of income based on the behavior of issuing false invoices.
It was further pointed out in the Decision that the original decision had held that the Plaintiff’s gains from issuing false sales invoices could not be determined by any data, and that the original disposition was unlawful for failure to adequately investigate this matter when it had determined the gains at 8% of the amounts in the uniform invoices so issued. However, although it is not the responsibility of the parties to produce evidence in a tax lawsuit, a court’s ex officio investigation of evidence is still subject to certain limitation and circumstances involving unclear facts about major issues are still possible. Therefore, the parties are still objectively required to assume the burden of proof. With respect to the availability of any relevant data about gains in this matter, such evidentiary materials for tax-related facts were controlled or possessed by the Plaintiff. In addition, the Plaintiff’s assertion that the issuance of false invoices had not generated any gain is a fact favorable to the Plaintiff but is at odds with common practices in society. Therefore, the Plaintiff was obligated to collaborate with the substantiation of such facts. During the administrative appeal and the trial at the original court, the Plaintiff did not produce materials about the gains to allow the Defendant to determine the amount of such gain. If part of such evidence was not yet clear, the original court should have required the Plaintiff to assume the obligation to collaborate with the substantiation of the gains so obtained or should have investigated evidence ex officio or instructed the Appellee to cooperate with the investigation and provide relevant tax materials. Without conducting ex officio investigation, the original trial court rashly concluded that even if there was any gain, it would be merely the personal gain of the Plaintiff’s legal representative, and there was no way to reach the conclusion that the Plaintiff’s issuance of false invoices would definitely translate into gains. Therefore, the original decision lacked sufficient grounds and was erroneous for violating evidentiary rules, empirical rules and logical rules. Therefore, the original decision was reversed and remanded on such basis.