萬國法律事務所

In response to Judicial Yuan Interpretation No. 696, the Ministry of Finance announced that it will propose appropriate amendments to the Income Tax Act. Judicial Yuan Interpretation No. 696 was recently delivered by the Constitutional Court on January 20, 2012, and ruled that Section 1, Article 15 of the Income Tax Act is unconstitutional.

According to Section 1, Article 15 of the Income Tax Act, only the amount of tax that can be levied on a tax-payer’s, or his/her spouse’s salary income may be ccalculated separately and then declared and paid jointly by the taxpayer and his/her spouse. Thus, non-salary income is not included in this calculation. Thus, the non-salary income of a taxpayer and his/her spouse must be calculated together.

As stated in Judicial Yuan Interpretation No. 696, this will lead to a higher amount of progressive tax compared to the tax amount that the couple paid individually before their marriage. This constitutes unequal treatment of married couples and persons who remained single. Therefore, the Constitutional Court declared that Section 1, Article 15 of the Income Tax Act violates the principle of equality guaranteed under Article 7 of the Constitution.

The Ministry of Finance explained that there are currently two proposals: one is that a taxpayer and his/her spouse may calculate all of their incomes separately, but still maintain that the declaration and payment of income tax be done together; the other is that a taxpayer and his or her spouse may calculate, declare and pay their taxes separately. However, these proposals are still under evaluation, as it will require changes of some of the fundamental rules of taxation that have long been followed.