A study on the tax jurisdiction of cross-border income of the Republic of China - Comments on the Court Decision of 2006 Su-Zi No. 1948 by the Taipei High Administrative Court
Date Issued
2008
Date
2008
Author(s)
Su, Wei-Che
Abstract
The rise of international trade spurred the need for international taxation schemes, where international tax law concepts attempt to coordinate laws rectifying competing jurisdictional taxation powers. In order to function properly, both territorial and worldwide system generally contains rules that define when an item of income is sourced within their jurisdiction. The perquisite for determining cross-border income tax in our country lies in the one critical question : whether the said income is within the tax jurisdiction of the Republic of China. Currently, there have been major gaps between the relevant articles under the Income Tax Law of the Republic of China and the international taxation system nowadays. This has not only led to the gradual loss of our income tax base, but also created potential risks and ambiguities for tax payers when facing taxation rulings for offshore products and services. In addition, the current “Operating Guidelines for the application of taxation treaties”(“Guidelines”) only possesses the nature of administrative guidelines and cannot create any legal binding effect by itself. Questions therefore arouse from the inherent administrative nature of Guidelines and also the appropriateness of the detailed requirements stipulated under the Guidelines. Furthermore, from the administrative practice standpoint, it has been observed that unique interpretation methods and ways of determining income tax have been long developed by the tax authorities when dealing with cross-border income issues. The unique ways of applying the taxation ruling have incurred doubts from the tax payers and also lead to various critics questioning whether these practices are in conformity with the basic spirits and intention of the Income Tax Law. This Article proposes a source tax system for the determining of cross-border income which is in line with the modern international taxation system. The Article will also introduces the Court Decision of 2006 Su-Zi No. 1948 by the Taipei High Administrative Court to provide in-depth analysis of the current methodology supported by the authorities for cross-border income tax issues. By examining the methodology and contents of the Court Decision of 2006 Su-Zi No. 1948 by the Taipei High Administrative Court, this Article seeks to achieve a more clear guidance for the cross-border income tax issues in order to reduce the ambiguities under the tax regulations in the Republic of China, and to further enhance the basic rights empowered inherently to the tax payers under the Constitution of the Republic of China.
Subjects
cross-border commerce
cross-border income
tax jurisdiction
international double taxation
Source of Income for the Republic of China
tax treaties、 the principle of taxation by law
Type
thesis
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