Taiwan estate tax act ruled partly unconstitutional
台灣遺產稅法被判決部分違憲
Constitutional Court finds act unclear on taxes for certain heirs
TAIPEI (Taiwan News) — The Constitutional Court ruled parts of the estate tax act unconstitutional on Tuesday (Oct. 29), citing a section stating some gifts made within two years of death are included in estate tax calculations. The court ruled the Estate and Gift Tax Act Article 15 is unclear on tax responsibilities for certain heirs, per CNA. It said the article is inconsistent with the Constitution, which guarantees all citizens equality before the law. It also ruled the act may seriously impact heirs' inheritance rights and therefore infringes on property rights guaranteed in the Constitution. The court also ruled certain articles of the act prevent heirs from claiming deductions on inheritance defined in other parts, which is also inconsistent with constitutionally guaranteed equality. The estate tax issue came before the Constitutional Court due to a case involving a man surnamed Chen (陳) who died in 2017 after leaving a stock inheritance to his wife surnamed Chou (周) the year before. Due to the article regarding gifts made within two years of death, taxes were required to be paid on the stocks. However, Chou and her daughters renounced the inheritance, and it was transferred to Chen’s next heir according to law - a daughter he had outside his marriage with Chou. In addition to receiving the inheritance, the daughter was charged tax based on the value of Chen’s entire estate according to the estate tax act. The tax bill she received was higher than the value of the stocks she inherited, and she filed an administrative lawsuit against the National Taxation Bureau arguing she should not be required to pay. The administrative court ruled against her, and the case was taken to the Constitutional Court, which ruled in her favor on Friday. A second case challenging the estate tax act was also considered by the court. In 2016, a man surnamed Li (李) gave his wife surnamed You (游) land worth over NT$100 million (US$3.11 million) two years before his death. You and her son brought a case to the administrative court arguing that they should be able to claim tax reductions on the land under the estate tax act, which the court rejected. They then took their case to the Constitutional Court, which ruled in their favor. The Constitutional Court said the legislature must review the inconsistencies and amend the act within two years. It said before the amendment is made, relevant agencies should act in line with the court’s Tuesday judgment. |
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Jono Thomson, Taiwan News, Staff Writer | |
2024-10-29 |