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On 31 December 2003, the Ministry of Finance (MOF) issued the Regulations Governing Ad-vanced Tax Ruling, which took effect on 1 January 2004. From 1 January 2004, taxpayers intending to conduct transactions meeting the requirements set forth in the regulations may apply to the MOF for an advanced tax ruling on issues concerning tax implications of such transactions. The MOF hopes that this service will help to establish consistency and certainty in the application of tax laws, and reduce disputes between taxpayers and the tax collection au-thorities, thus encouraging taxpayers to make full and truthful tax filings, and will also enable parties to transactions to conduct tax planning to reduce risks. The main points are outlined be-low:
I. Eligibility
An advanced tax ruling is available for an in-ternational tax case involving a cross-border transaction or investment that an applicant in-tends to make within one year, and that meets either of the following conditions:
The value of the investment, not including that in land, is at least NT$200 million, or the value of the first transaction is at least NT$50 million.
The investment or transaction will create sig-nificant benefits to the economy of the ROC.
II. Grounds for Refusal
If an application does not meet the above criteria, or in any of the following circumstances, the MOF will not render an advanced tax ruling:
Determination of mere facts or the value of assets.
Hypothetical transactions, or transactions that will not be executed within one year.
Transactions that have already taken place, or where related tax filings are about to be made or have already been made.
The main issues in the case are similar to those in a case that is currently the subject of an administrative remedy procedure.
The information supplied by the applicant is incomplete, and the applicant fails to supply additional information within a specified pe-riod upon notice.
Statements of material information are incor-rect or misrepresented.
The content of the application mainly con-cerns the determination of the basis for com-putation of income, costs, or expenses as re-ferred to in Article 43-1 of the Income Tax Act.
The application requires the interpretation of law other than tax law.
The application requires the interpretation of foreign laws.
The purpose of the application is tax evasion, and not a transaction that the applicant is se-riously considering undertaking.
Other cases in which it would be inappropriate to render an advanced tax ruling.
III. Case Handling
The MOF will establish an Advanced Tax Ruling Committee to examine cases and issue rulings. The service will be entirely free of charge.
The MOF should inform an applicant within one month from the second day of receipt of an application or supplementary documents whether it will provide an advanced tax ruling, and should complete its ruling within three months from the same date. If it is unable to complete the ruling within that time, it may make a single extension before the prescribed handling period has expired.
An applicant may withdraw his application at any time before a ruling is delivered. But after withdrawing an application, he may not make another application based on the same facts.
IV. Legal Force of Rulings
A ruling made under the advanced tax ruling procedure has the same legal force as an inter-pretation ruling issued by the MOF.
