Proposal to extend tax deadline fails to pass

By Alan Fong,The China Post

The China Post — The proposal to extend the tax collection period from five to ten years failed to pass a legislative hurdle yesterday as lawmakers questioned the effectiveness of the Ministry of Finance in chasing tax evaders. At the Legislative Yuan’s Finance Committee meeting, the MOF stressed that since the last amendment of Article 23 of the Tax Collection Act in 2007 set the period for the collection of a specific tax at five years, about 80,756 cases of uncollected tax totaling NT$126.3 billion would expire on March 4, 2012. The MOF pushed for doubling the collection period so it can continue the pursuit of individuals or businesses trying to evade tax. Lawmakers Lai Shyh-bao (賴士葆) of the Kuomintang and Hsu Tain-tsair (許添財) of the Democratic Progressive Party, however, were not convinced. Hsu pointed out that given the poor performance of the MOF, which had only collected about 10 percent of the outstanding uncollected tax in the past five years, extending the period would not have much impact on tax evasion and only add administrative costs. Lai requested the MOF not to use the “vanishing” NT$126.3 billion as a rationale to force lawmakers to approve the amendment. March 4, 2012, is still a year away, he pointed out, the MOF can still achieve a lot if it puts enough effort into it. The KMT’s Lu Shiow-yen (盧秀燕) also motioned to require the MOF collect at least NT$70 billion in uncollected tax every five years and at least NT$10 billion annually. During the discussion, committee chair and KMT Legislator Alex Fai (費鴻泰) reminded Lai and Hsu that lawmakers blocking an amendment could be held responsible for setting tax evaders free if the law is not changed by March 4 next year. Hsu rejected the suggestion, which he described as “populist,” saying that he was providing his professional opinion on the shortcomings of the current proposal.

Since lawmakers had yet to reach a consensus on the proposal, the amendment was sent for negotiation at the Yuan sitting later. Article 23 of the Tax Collection Act currently stipulates that “the period for collection of a specific tax shall be five years commencing from the date following the expiration date of the period for payment of said tax. Any tax which is collectable but has not been collected during the period for tax collection shall no longer be collectable” unless compulsory execution is in procedure or a claim is filed according to bankruptcy law. Due to the de-facto cancellation of tax evasion records in five years, some have dubbed the clause the “tax evader’s pardon.”