| dc.description.abstract | It is believed that a good taxation system improves public interest and helps achieve modern democracy. Article 19 in the Constitution states that the citizens are obligated to pay taxes, and this means that when the national collects taxes from its people, the components and procedures of taxation, including taxable entity, taxable object, tax base, tax rates, and the means and period of tax-paying shall be specified by law; otherwise, the people will be over-burdened with taxes, violating the “Principle of Statutory Taxpaying”. However, the current taxation law itself is flawed. Taxation is a highly dedicated and technical domain, taxation procedures are very complicated, and the legislation process is too slow to respond to the social-economic changes. In fact, it is necessary for taxation agencies to provide an interpretive release in order to avoid being arbitrary when dealing with the abstract tax law and result in unorganized administration, ensure fair implementation of tax laws, reduce the burden on taxation personnel and agents when the legal doctrines they use are being questioned, and give a sense of predictability in the taxation behavior that in turn increases security in tax laws. Nonetheless, any action of taxation must not exceed its legal authorization, such as when it is in violation of people’s freedom and rights, or having arbitrary, punitive doctrines, as this would violate the principle of “legal stability” and the public can no longer know what kind of violations they properties will be exposed to.
As for the profit from land transactions, Dr. Sun Yat-sen, the founding father of the Republic of China, specifically stated that the profit from a land due to its increased value shall be given to the government, and this is why the Land Value Increment Tax replaces the Income Tax when dealing with increased land value. In other words, the Land Value Increment Tax is separated from the Income Tax. However, although today’s profit-seeking enterprises are exempted from business income tax for profits generated from land transactions, a shareholder of such a enterprise who receives the profit from the land transaction, as required by the Ministry of Finance, is treated having business income and needs to pay taxes accordingly in the same tax year the land transaction took place.
Tax law is a subject covering law, accounting, and economics, and taxation is also a combination of the three. When interpreting tax law, regulations, and interpretive release, we must first analyze their legal nature based on their content, understand their origin and definitions, and also understand the jurisdiction of legislation on the interpretive releases. A question, therefore, is whether a profit-seeking enterprise’s profit generated through land transactions treated as shareholders’ income and filed in their income tax report, as after-tax income, or as tax-free income? We will not be able to get the whole picture if this issue is only looked at from a perspective of law, accounting, or economics.
In this study, therefore, actual cases are examined in order for us to combine the legal, accounting, and economic perspectives to construct, analyze, and interpret the issue of taxation on profit-seeking enterprises’’ land transactions.
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