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Judicial Yuan Interpretation No. 706 interpreted that in the event of purchasing the VAT taxable goods auctioned or sold by the court, the Ministry of Finance (MOF) prescribed that the buyer can only use the "VAT Payment Slip of Goods Auctioned or Sold by the Court", issued by the tax authorities upon receipt of VAT tax payable, as the voucher for Offsetting Output VAT, such prescriptions which exclude the payment receipts stipulating the auction price or purchase price issued by the court as the vouchers for deducting the Input VAT of the underlying transaction from the Output VAT in the same tax period are deemed in contravention of the Doctrine of Taxation Per Legislation.
The commonly accepted view acknowledges that: (i) when a business entity sells taxable goods, the list price shall be VAT inclusive; and (ii) the court of execution standing in the shoes of the seller, on behalf of the debtor, in the auction or sale conducted in accordance with the Compulsory Execution Act. If the seller is deemed as a business entity regulated under the VAT Act, the auction price or purchase price of the taxable goods shall include VAT. Considering that the auction or sale procedures handled by the court of execution in accordance with the law are prudent, the payment receipts issued by the court of execution, not in the form of a government unified invoice, are credible, the VAT included in the auction price or purchase price can be determined by applying the statutory formula, and relevant documentation can be supported by the court records, the payment receipts issued by the court of execution to the purchaser, deemed as a business entity under the VAT Act, shall have the same significance as the vouchers issued by the seller, deemed as a business entity under the VAT Act.
Nonetheless, Subparagraph 11, Paragraph 1, Article 38 of the Enforcement Rules of the Vat Act promulgated by the MOF on 22 June 2011, and Letter Ref. No.: Tai-Cai-Shui-851921699, dated 30 October 1996, issued by the MOF exclude the payment receipts issued by the court of execution as vouchers proving the amount of Input VAT, which contradicts Paragraph 1, Article 32 and Subparagraph 3, Article 33 of the VAT Act, and therefore should be invalidated. The Grand Justices advised that the competent authorities promptly consult with each other and the MOF should approve the payment receipts specifying auction/sale objects and the auction/purchase price thereof issued by the court of execution in accordance with Paragraph 3, Article 33 of the VAT Act to be the vouchers demonstrating buyer’s Input VAT.
