MOF Seeks to Increase Penalties for Tax Evasion

The lack of appropriate penalties for tax evasion has been widely criticized in Taiwan.  According to the Tax Collection Act, an individual/entity may face both administrative sanctions and criminal fines for the same offense.  Typically, in the case of tax evasion, however, only the criminal fine is imposed rather than the administrative sanction.  This situation has resulted in critics complaining that the highest regulatory amount of the criminal fine is significantly less than the administrative sanction.  Critics of this situation have pointed out that the less severe criminal fines may not effectively deter individuals/entities from committing tax evasion.
Given the above concern, Taiwan’s Ministry of Finance (“MOF”) has recently proposed draft amendments to several articles of the Tax Collection Act, aiming to increase the criminal fines and add imprisonment as a penalty for tax evasion in order  to bring criminal fines and penalties to levels of severity similar to the administrative sanctions.  Under the proposal, the MOF indicates that a taxpayer who evades his/her tax obligation will be subject to:
(1) imprisonment for more than six months but less than 10 years,
(2) a fine in an amount of more than NTD 10,000,000 but less than NTD 100,000,000, or
(3) both of the above penalties.
The period for public comments on the draft amendments has passed and the MOF is in the process of submitting the draft amendment to the Executive Yuan for acceptance and enactment.
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