May marks the end of another tax season. According to regulations, those who fail to pay taxes will face penalties. For instance, if an individual liable for comprehensive income tax does not pay within the stipulated time, a late payment penalty of 1% of the tax amount will be charged for every three days overdue. If the payment is overdue by more than 30 days, the tax authority will enforce collection measures as per the law.

In past tax investigation cases, tax authorities have sometimes used their powerful means to force citizens to comply, exploiting their lack of knowledge to infringe on their rights, leading to disadvantages for the taxpayers. Scholars have thus advocated for mechanisms to protect taxpayers' rights, resulting in the addition of Chapter 1-1, "Protection of Taxpayers' Rights," to the Tax Collection Act in 2010.

Taxpayers' Rights Protection Act

With the global rise in awareness of taxpayers' rights, the previous provisions in the "Protection of Taxpayers' Rights" chapter were found to be inadequate. Consequently, Taiwan enacted the "Taxpayers' Rights Protection Act" on December 28, 2016, which came into effect a year later on December 28, 2017. A crucial aspect of this act is the implementation of "due process of law," ensuring that citizens know their rights during tax investigations

Written Notice Obligation

According to Article 12, Paragraph 1 of the "Taxpayers' Rights Protection Act," tax authorities must provide a "written" notice to the person under investigation before conducting an investigation. The notice must state the "reason and scope" of the investigation, allowing the individual to prepare. However, if notifying beforehand would compromise the investigation, the tax authorities may decide not to notify to prevent unlawful actions by the investigated party.

Right to Appoint Representatives or Assistants

Article 12, Paragraph 2 grants the investigated party the right to appoint a "representative" or be accompanied by an "assistant." Until the arrival of the representative or assistant, the investigated party may "refuse to make statements or accept the investigation," ensuring their rights are not violated due to legal ignorance.

Recording the Entire Process

Article 12, Paragraph 3 allows the investigated party to "notify" the tax authorities to "record" the investigation process, either by themselves or by requesting the tax authorities to do so. The tax authorities cannot refuse this request. If the tax authorities deem recording necessary, they must inform the investigated party in advance to ensure evidence collection and preservation are conducted transparently.

Obligation of Fair Conduct

Articles 10 and 11, Paragraph 1 require tax authorities to assist taxpayers and ensure they receive due process during tax collection. The authorities must consider both favorable and unfavorable evidence and follow the principle of proportionality, avoiding excessive infringement on taxpayers' rights.

Prohibition of Illegal Evidence Collection

Article 11, Paragraph 3 states that evidence obtained through illegal means by tax officials cannot be used as a basis for taxation or penalties. This provision prevents tax authorities from infringing on citizens' basic rights to obtain evidence. However, the court may consider the severity and public interest to decide if such evidence can be used.

Obligation to State Reasons and Provide Explanations

Articles 11, Paragraphs 4 and 5 require tax authorities to provide taxpayers with an opportunity to explain before making tax assessments or decisions. Except for situations specified in Article 97 of the Administrative Procedure Act, reasons and legal basis must be provided in "writing" to ensure taxpayers' right to be heard and informed.

Additionally, the Ministry of Finance, responding to Articles 10 to 12 of the Taxpayers' Rights Protection Act, issued the "Matters to be Noted in Tax Collection Procedures" on September 14, 2017, under Order No. 10604652840, ensuring tax officials adhere to due process during investigations.

In summary, it is recommended that citizens appoint a lawyer as their representative if faced with a tax audit to ensure that tax authorities conduct their investigations lawfully, protecting their rights from being compromised by the authorities' high-handed approach.

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