Newsletter
PROOF OF OFFSETTABLE BUSINESS TAX PAYMENTS MUST BE FILED WITHIN FIVE YEARS
With respect to whether there is a time limit for businesses to file documents evidencing business tax paid on purchases (input tax) that may be offset against business tax collected on sales (output tax), the Ministry of Finance (MOF) stated in its ruling dated 17 June 2004 that under Paragraph 1, Article 131 of the Administrative Procedures Act, such filing is subject to a time limit of five years. Paragraph 1, Article 131 provides that a right of claim under public law lapses if not exercised within five years, unless otherwise provided by law.
With regard to this issue, the MOF had previ-ously stated in its ruling dated 22 February 1995 that there was no time limit for businesses to file such documents in accordance with Article 29 of the Enforcement Rules of Business Tax Act. Therefore, if a business entity stated legitimate grounds that were confirmed on investigation, the reported input tax, if verified, could be offset against output tax. The MOF's 1995 ruling also stated that the five-year limit on tax refunds un-der Article 28 of the Tax Collection Act applied to a situation in which a taxpayer had paid excess tax due to incorrect application of the law or due to calculation errors, and this was different from filing proof of input tax for offsetting against output tax.
The MOF's new ruling of 17 June 2004 overturns its 1995 opinion, with effect from 1 January 2005. Therefore, if a business entity still have proof of input tax payments more than five years ago that have not yet been offset against output tax, they should apply for such offsetting by 31 December 2004.