On July 1, the Ministry of Finance released its annual list of top tax evaders — and the listed individuals and firms are almost the same as in previous years. The ministry defines wealthy tax defaulters as individuals who owe at least NT$10 million (US$357,577) or companies that owe at least NT$50 million. This year’s list included 955 wealthy tax evaders, one fewer than last year, but the amount owed rose by NT$1.916 billion to NT$100.14 billion.
Since 2010, the ministry has posted the names of top tax evaders on its Web site over the last six months of the year in the hope of pressuring them to pay their share. Late business tycoon Huang Jen-chung (黃任中) again tops this year’s list of individuals, and two of his family members are also in the top five, with the family owing NT$5.066 billion in unpaid taxes. The Kaohsiung-based family of real-estate businessman Huang Cheng-chih (黃承志) is third, with NT$1.493 billion in outstanding taxes, but since his indictment over allegedly fraudulent loans in 2001, he has been hiding in China.
The Holiday Inn Asiaworld Taipei, which changed ownership to become the Sunworld Dynasty Hotel Taipei, once again tops the list of corporate tax evaders, with NT$2.473 billion in back taxes. The No. 2 corporate evader is Yang Hwa Technology Corp, a green energy company in Hsinchu County that made the list for the first time, with a NT$1.23 billion tax bill, while Procomp Informatics, which in 2004 defaulted on NT$2.98 billion in corporate bonds, is still third, with NT$1.175 billion in outstanding taxes.
While the ministry hopes that public opinion would prompt some listed firms and individuals to get current on their taxes, people are wondering if the list still packs any punch, as this year’s top 20 are similar to those of previous years, with the oldest case going back to 1985. Furthermore, from 2010 to March 31, the ministry only recovered NT$15.787 billion in unpaid taxes, with the amount recovered falling steadily. Unfortunately, the government’s ability to collect back taxes has lagged far behind tax defaults.
Adding salt to the wound, the opportunity to recover back taxes from some big defaulters might be closing. Going back to 2007, the government has on three occasions passed amendments to the Tax Collection Act (稅捐稽徵法) to extend the maximum collection period. This time, the government says that it wants to stay in step with the Civil Code, which states that a claim not exercised within 15 years should be annulled. Unless the collection period is once again extended, the ministry would on March 4 next year halt efforts to collect about NT$30 billion in back taxes owed by nearly 500 individuals and firms.
The ministry stopping efforts to collect older back taxes is not fair to the majority of taxpayers who pay their share — and only highlights the government’s inadequacy at collecting what it is owed. Tax evaders cannot be allowed to avoid paying their share, so the ministry must conduct a thorough review of its procedures for recovering unpaid taxes and coordinate better with the Ministry of Justice to crack down on tax evasion, dealing with offenders promptly and effectively.
The government must take the initiative to demonstrate its authority and make it more difficult for tax evaders to move abroad, as they use overseas registries or shell companies to hide assets and possibly also transfer property to unknown entities. The tax authorities could also use court orders to detain offenders and ensure that taxes owed are eventually paid.
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