Proposed Enhancement Strategies of Estate and Gift Tax Enforcement
Date Issued
2009
Date
2009
Author(s)
Wu, Yin-Shih
Abstract
The main purpose of the estate tax, or the tax levied on the property accumulated in the lifetime of the deceased person, is to uncover the average wealth of the society. Our nation adopts the essence of the estate and gift tax system to levy estate and gift tax on the property of a natural person upon his or her death. At present, the rate structure of estate and gift tax is divided into 10 classes, the highest rate of which is 50%. As the tax exemption and various deductions tend to be rather high, only 5% of cases are eligible to be levied. The number of people affected was limited and insignificant in ratio. Since the U.S. Congress passed the Economic Growth and Tax Relief Reconciliation Act, and also from the influence of globalization and internationalization, the international capital is flowing more freely. Since 2001, business magnates also suggested that estate and gift tax be abolished by 2010. The executive authority by then had integrated the reform of estate and gift tax in the agenda of reform under the Financial Reform Committee of Executive Yuan. On the basis of Professor Ho Chih-Ching’s research report, the committee simplified the classes of estate and gift tax into 5 classes. The rate of the highest class, in compliance with general income tax rate, was dropped from 50% to 40% and was listed in the medium-range financial reform plan. The research suggested that the rate of the highest class be only dropped by a small extent to 40%, which though unable to satisfy demand, would not create disputes as a large drop would. Under this situation, the suggestion of reform has not been able to be implemented so far. fter assuming power, the new government deemed high estate and gift tax the reason for the serious shift of Taiwan’s capital overseas in recent years. In order to build up a tax system with international competitiveness, though the disputes are still in existence, the Amendment bill to drop the rate of the highest class to 10% was approved on the first reading on December 3rd, 2008.hether “levying high tax rate on estate and gift tax would cause a shift of capital overseas,” “the extent of shift of capital,” “impacts on the economy” or “external factors other than tax, such as political and economic stability, industrial structure, comprehensive infrastructure, transparency of legal system, etc.” affect the shift of capital will require further evidence. Yet since Legislative Yuan adopted the tax reduction bill on first reading, this study will not discuss this subject but instead turn to analyze, from the viewpoint of efficiency, how the important stipulations of current Estate and Gift Tax Act may reach the target of fair levy. ased on this, the content of this study is first introduced and a summary is provided on the reasons for facilitating the understanding of how all important stipulations (the stipulation of Estate and Gift Tax Act, by orientation of the object of taxation, subject of taxation, declaration and rendering, guaranteed tax payment, and penalties, etc.) achieve the target of levying estate and gift tax. Second, upon practical levy operation, how to solve the contradiction between the stipulations of Estate and Gift Tax Act and the target of fair levy, and how to increase efficiency are then analyzed. The agenda of discussion includes four items, namely: reserved land for public facilities related tax avoidance, duties to declaration deemed as gift, burdening estate and gift tax within the extent of estate, and appropriate extension on assessment period. The suggestions raised are: tax exemption of reserved land for public facilities shall be limited; the duties to declaration are loosened for the case of “buy and sell” under “deemed as a gift”; estate and gift tax is to be reimbursed in the extent of the estate; lastly, the assessment period for deliberate avoidance of estate and gift tax should be unlimited.
Subjects
reserved land for public facilities
deemed as a gift
assessment period
tax avoidance
estate tax system
inheritance tax system
SDGs
Type
thesis
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