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According to Article 23 of the Tax Collection Act, all taxes are subject a collection period of five years from the day following their due date. The 5-year tax collection period excludes the time period during which a taxpayer seeks an administrative remedy (the "Exclusion Period"). As to the calculation of the Exclusion Period, in 2002, the Ministry of Finance (MOF) issued a ruling stating that it should be from the time a taxpayer seeks an administrative remedy till 30 days after the tax due date in the final tax assessment notice issued by the tax authorities upon the conclusion of the administrative proceedings (the "Final Due Date").
On 11 November 2010, the MOF, repealing the 2002 ruling, announced that the Exclusion Period should end on the Final Due Date. In other words, the 5-year tax collection period should stop running till the Final Due Date if the tax-payer seeks an administrative remedy.
For a taxpayer whose tax was originally due on 31 December 2003 and who did not seek an administrative remedy, the 5-year tax collection period would expire on 31 December 2008. However, under the 2010 ruling, if the taxpayer sought an administrative remedy on 1 January 2004 and the tax authorities, upon the conclusion of the administrative proceedings, issued a final tax assessment notice stating the Final Due Date as 30 November 2005, the Exclusion Period should be from 1 January 2004 till 30 November 2005 (i.e., one year and eleven months). Accordingly, the 5-year tax collection period should expire on 30 November 2010 (i.e., one year and eleven months following the original expiration date of 31 December 2008) rather than 30 December 2010.
The tax authorities will review all the disputed taxes cases that the Administrative Enforcement Agency is handling. For those cases that are still pending, if the tax collection period has expired under the 2010 ruling, the tax authorities will remove the additional taxes imposed on taxpayers and ask the Administrative Enforcement Agency to cancel the enforcement action. As for the cases that have been concluded before 11 November 2010, the 2010 ruling will not apply to those cases.
