A Study on the issues of Profit-Seeking Enterprise Income Tax in the Construction Industry of Taiwan

• Main Authors: Elijah kuo, 郭中堅
• Other Authors: Yu Ming-i
• Format: Others
• Language: zh-TW
• Published: 2000
• Online Access: http://ndltd.ncl.edu.tw/handle/84849750399449369601

碩士 === 義守大學 === 管理科學研究所 === 88 === A Study on the issues of Profit-Seeking Enterprise Income Tax in the Construction Industry of Taiwan Abstract Construction industry consists of building and architectural investing industries. Tax laws and regulations related to the construction industry have long been unreasonable and inequitable in their structure. When the business environment prospers, a construction company may yield good profits, and is able to pay some taxes and sustain for a certain period of time. Whereas, when an economic recession prevails, companies may be forced to close down, disband or cancel registration one after another, similar to a domino effect. Since January 1, 1998, a Integrated income tax system has been in effect in Taiwan, under which double taxation on dividend income was eliminated. Individual shareholders are allowed a tax credit against their individual income tax for the corporate income tax paid at the corporate level. Dividends going to corporate shareholders are exempt from the corporate income tax, and the imputation credit will be passed to individual shareholders. With implementation of the new integrated tax system, that construction enterprises used to manipulate tax planning in order to save taxes has now opened up a new channel for taxing reconsideration. Nevertheless, the implementation of the full imputation system, which transfers final tax burden on shareholders, does not necessarily mean that current problems for the construction industry of Taiwan will be resolved. After all under the Integrated income tax system, not all corporate income tax of profit seeking enterprises (except sole proprietorships or partnerships) can be distributed to shareholders through earnings and then is fully credited against the integrated individual income tax. Practically large shareholders of public companies may enjoy the most preferential tax treatment. For weaker small and medium-sized enterprises, however, they may not enjoy the same benefits as large corporations. In terms of the old tax system, small enterprises could choose how to distribute, retain or reinvest their earnings. At present, only two options are given to small enterprises under the new full imputation system: either distributed earnings are paid for the integrated income tax, or undistributed earnings is subject to an additional 10% corporate income surtax. Consequently, if these pre-existing problems for the construction industry cannot be solved, taxation will continue to be inequitable. Small and medium-sized enterprises will continue to attempt to save taxes as much as possible against the corporate income tax level and will not consider how much corporate income tax can be exempt from integrated individual income tax. In addition, small and medium-sized companies also dominate the downstream industry sustained by the construction industry. As a result, this study aims to explore how to establish a sound taxation system of corporate income tax for profit-seeking construction enterprises and by which both taxpayers and the taxi authority may follow a fair and equitable system. Taxation related to the construction industry includes business tax, stamp tax and profit-seeking enterprise income tax. Business tax refers to issues related to tax levying on borrowing construction licenses and forfeits. Stamp tax includes problems related to double stamps on original and copy of contracts. profit-seeking enterprise income tax includes problems related to whether account books should be designed for construction schedules and how to identify losses due to uncompleted projects. Taxation related to the architectural investing industry includes land value-added tax, business tax, stamp tax, contractual tax and profit-seeking enterprise income tax. profit-seeking enterprise income tax includes issues related to land tax exemption, price too low for houses, transfer of property in different years, identification of percentage of completing projects, capitalization of interests and joint construction. By exploring defects of the integrated tax system and advantages and disadvantages of tax laws, this study will attempt to provide suggestions for improving the current tax system: by strengthening administrative orders in the short term and revising tax laws and regulations in the long term. This study plans to conduct a survey, by the means of distributing questionnaires, on various arguments surrounding the construction and architecture investing industries as well as outdated relevant tax laws. The target samples of the survey will be drawn from members of various unions of construction and architectural investing industries, members of certified public accountant, and relevant Auditing, Examining and Checking departments from various Tax Bureaus that investigate the construction and architectural investing industries. Valid samples will be screened and a descriptive statistical method will be employed to analyze the feasibility of the study. The results best analyzed from the investigation will be included for suggestions as reference for the financial authorities in the future. This study aims to build a sound taxation system on profit-seeking corporate income tax for the construction industry of Taiwan, and on which collect information about relevant arguments. The paper will also conduct a statistical analysis based on questionnaires and from which provide suggestions as reference for the authorities in the future. The study hopes to create an adequate tax environment for the construction industry of Taiwan and in which both taxpayers and the tax authority will follow an equitable tax system to reduce financial wastes. Key Words：Construction Industry，Profit-Seeking Enterprise Income Tax，Integrated Income Tax System，Account Books。 Elijah Kuo in Kaohsiung 2000.06