ABSTRACT
Effective January 1, 1998, Republic of China¡¦s income tax turned from an independent duty to a 2-in-1 system. The move was mainly to eliminate repeated taxation created when it was an independent duty. The move also allowed business tax paid by companies be allocated to shareholders at the same time when distributing bonuses as a deductible item from the combined income tax to be filed by shareholders as individuals, making all business income be levied only once. The new tax system may be good, fair and reasonable, only the poorly prepared maximum deductible amount set by the government to shareholders and the 10% business income tax imposed on pending yield of companies made the new system unreasonable in many ways or kept the system itself from successful implementation. Excessively complicated computing triggered disputes and discontent among taxpayers, making the government taxation even a more difficult task. It is expected that this study, with its discussions and recommendations on the regulations concerning shareholders¡¦ deductible tax rate and 10% business income tax imposed on pending yield of companies in Republic of China¡¦s 2-in-1 tax system, could serve as reference in future amendments waged by the government.
As of shareholders¡¦ deductible items, the different times of effectiveness of shareholders¡¦ deductible could create vacuum in leasing plans for businesses, we would like to suggest final accounting estimates of payable or paid income tax into balance of shareholders¡¦ deductible accounts. Owing to the maximum deductible amount set for shareholders, when a company having the income tax paid for the year is different from its financial income or when asked to make up income tax of past years or income tax for pending yield, discrepancy in the definition of income tax given in financial accounting rules and income tax laws would result in deficits in computing shareholders¡¦ deductible rates, making successful allocation less probable. On the contrary, companies eligible for preferential treatments in terms of deductible taxes for investments are exempted from said maximum amount. Further, businesses, either of sole capital or association, having not to establish any shareholders¡¦ deductible account per income tax, are exempted from the maximum amount as well. Besides, it is stipulated in the income tax law that, when a company allocates its yield to directors, controllers as remuneration and bonuses, deductible items must be excluded and totally eliminated. These are all considered to be unreasonable practices as they mean counter -elimination of traditional industry in the Republic of China, making it necessary to review, improve or even revoke the stipulation in the income tax law concerning shareholders¡¦ maximum deductible amount and allocation.
In terms of the 10% business income tax imposed on pending yield of companies, the major dispute arisen from the tax reform focuses on the definition of company¡¦s pending yield as specified in the income tax law. Pending yield computed per Art. 66-9 of the income tax law is different from the pending yield given in the financial accounting rules and business accounting law on one hand, on the other, is differs from the text of other provisions of the income tax law. The narrow sense and missing in company¡¦s pending yield defined in the article would allow a company produce pending yield and the 10% business income tax imposed on pending yield could trigger helical effect of additional tax. Further, other issues such as pending yield for stock interests a company is assigned to, the problematic tax deduction for deductible shares of overseas Chinese and foreign shareholders for pending yield, listing of deduction loss reserve for overseas investment when computing pending yield overseas investments conducted by companies as approved by competent authorities, failure to listing pending yield as deduction by a company adjusting or negotiating on adjustment of revenue with tax offices are all unreasonable issues created by the 10% business income tax. Besides, statistics indicate that the 10% business income tax imposed on pending yield of companies does not mean help when it comes to state tax income, it only triggers entangled administrative tasks and disputes. This suggests that the 10% business income tax imposed on pending yield of companies needs discussion or revocation.
Finally, we like to discuss the medium and small companies in the Republic of China because of organization scale or cost factor that keep them from establishing sound accounting systems and internal controls that eventually would result in false registered capital, misappropriation of company loans, tax evasion by illegal issuance or access to invoices, the lack of books or even 2 books. The written review system implemented by the government is only created by the lack of manpower and as a way to simplify the procedure. The system allows that businesses having revenues of not exceeding a specific amount and with income subject to allowable adjustments and net yield rates at specific levels be exempted from submitting books, as approval would only be granted on written documents Besides, difference between the revenue subject to allowed adjustment and the revenue registered on books would be listed as deduction as pending yield. Such a system will never invite medium and small businesses establish sound accounting systems and internal controls and become an unfair system to businesses having books and filing their tax and, consequently, needs further discussion and improvements.
Key word¡GIntegrated income tax system , Shareholder deductible tax , Undistributed surplus
earnings
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0729103-114327 |
| Date | 29 July 2003 |
| Creators | Hu, Ko-Hsi |
| Contributors | none, none, none |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0729103-114327 |
| Rights | not_available, Copyright information available at source archive |
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