Editor's note: The State Council's General Office issued the "Guiding Opinions on Comprehensive Implementation of the Administrative Law Enforcement Disclosure System, the Whole Process Record System of Law Enforcement, and the Major Law Enforcement Decision Legal Review System" (Guobanfa [2018] No. 118), which clearly states that when implementing law enforcement actions, the rights and obligations of the parties must be informed to the parties.

Based on this, when tax authorities implement enforcement actions such as ordering rectification within a time limit, should they ensure the rights of taxpayers to make statements and defenses if there is no explicit legal provision? This article will analyze specific cases.

 

13031. Introduction of the case: Tax authorities issue a notice of rectification deadline to a certain enterprise

Enterprise A occupied arable land for production and operation without declaring arable land occupation tax. The tax bureau believed that Enterprise A violated tax management and did not handle the declaration and submission of arable land occupation tax in accordance with the prescribed period. Therefore, the tax authorities issued a notice of rectification to Enterprise A in accordance with the relevant provisions of the Tax Collection and Administration Law, requiring Enterprise A to make tax declarations and submit tax materials.

Enterprise A believes that the tax authorities did not fulfill the obligation of prior notice before issuing the rectification notice, such as not informing Enterprise A of its rights to make statements and defenses in advance, and not informing Enterprise A of the relevant tax information that can be postponed for declaration, etc. The tax authorities acted procedurally and should revoke the rectification notice issued by the tax authorities.

The tax authorities believe that tax declaration belongs to the tax collection process and is a procedural act, and taxpayers do not have the right to make statements or defenses. Therefore, the tax authorities do not need to fulfill the obligation of prior notification. In addition, there is no explicit provision in the law that requires the tax authorities to inform the taxpayer of the right to make statements or defenses before issuing a notice of rectification deadline. The tax authorities only require company A to submit relevant tax information, not to pay land occupation tax and other related taxes.

It can be seen that the main dispute between the tax authorities and the enterprise in this case is whether the tax authorities should fulfill the obligation to inform the taxpayer of its rights to make statements and defenses before issuing a rectification notice.

 

13031. Legal analysis of whether taxpayers have the right to make statements and defenses before the tax authorities implement the order to rectify the law enforcement actions

(1) Can the tax authorities claim that the issuance of the deadline correction notice is a procedural act and therefore do not need to ensure the correctness of the taxpayer's statement and defense rights?

According to Article 8, Paragraph 4 of the "Tax Collection and Administration Law": "Taxpayers and withholding agents have the right to make statements and defend against decisions made by tax authorities..." From the perspective of the interpretation method, the "decision" in Article 8, Paragraph 4 of the Tax Collection and Administration Law does not clearly define its nature. In other words, as long as the tax authority makes a tax decision on taxpayers, regardless of whether the nature of the decision is a process administrative act or a result administrative act, the tax authority should protect the taxpayers' rights and interests in making statements and defenses. From the perspective of law enforcement consequences, although result-based administrative actions will have a final impact on the rights and interests of taxpayers, process-based administrative actions will also affect the law enforcement results made by tax authorities and have an impact on the rights and interests of taxpayers. Therefore, if the tax authorities are unable to exercise their rights to make statements or defenses before making procedural administrative actions, it will directly affect the subsequent tax processing results of the taxpayer. Therefore, the legitimate rights and interests of taxpayers in making statements and defenses should also be protected for process-based administrative actions.

2. The tax authorities argue that there is no explicit provision in the law for the implementation procedures for issuing deadlines for rectification, so they do not need to ensure the correctness of the taxpayer's statements and defense rights.

On the one hand, according to the requirements of the central-level documents, the tax authorities cannot fail to protect the rights and interests of taxpayers' statements and defenses on the grounds that there are no explicit legal provisions. The "Outline for Comprehensive Promotion of Administration by Law" issued by the State Council (State Council [2004] No. 10) and the "Outline for the Construction of a Rule of Law Government (2021-2025)" issued by the Central Committee of the Communist Party of China and the State Council clearly stipulate that tax authorities and other administrative agencies should, in the process of implementing administrative law enforcement actions, The principle of due process should be followed, and the tax authorities and other administrative organs should be required to protect the rights and interests of taxpayers, such as the right to know and participate. It can be seen that in this case, the tax authority's behavior of not protecting the taxpayer's rights and interests in statements and defenses on the grounds that there is no explicit provision in the law does not comply with relevant regulations. Since the law enforcement actions of the tax authorities issuing the notice of rectification within a specified period have had a substantial impact on the subsequent tax processing results of taxpayers, the tax authorities should protect the legitimate rights and interests of taxpayers, such as statements and defenses.

On the other hand, there have been judicial precedents that clearly point out that the legal rights and interests of the parties cannot be refused on the grounds that there is no explicit provision in the law. For example, in 2014, the final judgment of the Shanghai First Intermediate People's Court, No. 435, pointed out that "although there is no explicit provision for the prior notification procedure for tax authorities to order correction within a time limit according to the current tax collection and management laws and regulations, in accordance with the principle of due administrative procedures, The tax authorities should provide prior notice before making administrative decisions and urge the administrative counterparts to consciously fulfill their legal obligations. Similar to this case, the behavior of ordering correction within a specified period in the aforementioned case does not have clear legal provisions to protect the legitimate rights and interests of the parties involved, such as statements and defenses. The tax authorities also have a negative impact on the taxpayer's handling results after the deadline for ordering correction within a specified period. The court, from the perspective of whether the enforcement actions of the tax authorities'deadline correction orders have an impact on taxpayers, believes that the tax authorities'requirement for taxpayers to make deadline corrections has a substantial impact on the subsequent tax recognition and other matters of taxpayers, and therefore considers the tax authorities to have procedural violations, and thus requires the tax authorities to safeguard the legitimate rights and interests of taxpayers in the process of implementing enforcement actions.

3. Are the rights of taxpayers to make statements and defenses limited to tax enforcement actions such as penalties? Are they limited to a certain stage of a particular enforcement action?

From the relevant documents of the central government, there is no clear provision that the rights and interests enjoyed by taxpayers, such as statements and defenses, do not exist in law enforcement actions such as ordering corrections within a time limit. The protection of the legitimate rights and interests of taxpayers by the tax authorities should run through various stages such as before, during, and after the event. In addition, Article 29 of the "Fujian Provincial Administrative Law Enforcement Regulations" clearly states that when tax authorities and other administrative law enforcement agencies make law enforcement actions that are unfavorable to taxpayers, they should protect the rights and interests of taxpayers, such as statements and defenses, and fully listen to taxpayers' statements and defenses. Article 2 of the "Guangdong Province Administrative Law Enforcement Publicity Measures" also clearly states that tax authorities and other administrative law enforcement agencies should actively disclose administrative law enforcement information to taxpayers and protect the legitimate rights and interests of taxpayers during the process of conducting administrative inspections. From these local regulations, it is known that the rights of taxpayers to make statements and defenses in response to enforcement actions such as orders to rectify within a time limit implemented by tax authorities are not limited to certain administrative enforcement actions or a specific stage of a certain administrative enforcement action, but are enjoyed by taxpayers at all times.

 

3. Does company A have the right to make statements and defenses in this case?

In this case, the author believes that Company A has the right to make statements and defenses. Specifically:

First, the enforcement action of the tax authorities requiring rectification within a time limit has an adverse impact on the subsequent tax treatment of company A. Although the action of the tax authorities is procedural, it has affected the subsequent enforcement actions of the tax authorities, which has a negative impact on the taxpayer. Therefore, even if the rectification action is procedural, the tax authorities should safeguard the taxpayer's legal rights such as statement and defense. The failure of the tax authorities to fulfill the obligation of prior notice constitutes procedural violations.

Secondly, although there is no explicit provision in the law, legal principles such as due process require tax authorities to protect the legitimate rights and interests of taxpayers when implementing law enforcement actions.

Thirdly, although the law enforcement action of the tax authorities to order rectification within a time limit belongs to the pre-enforcement stage, the rights of the taxpayer to make statements and defenses are reflected in various stages before, during, and after, and are not limited to a specific stage. Therefore, the taxpayer should have the right to make statements and defenses before the tax authorities implement the law enforcement action. Therefore, the taxpayer in this case has the right to make statements and defenses.

 

4. Conclusion

For taxpayers, the protection of their rights should not be limited to lawful enforcement actions explicitly stipulated in the law. Taxpayers also have the right to make statements and defenses for some law enforcement actions not explicitly stipulated in the law. In addition, taxpayers should realize that their legitimate rights are not limited to a specific stage of law enforcement. Taxpayers have the right to make statements and defenses throughout the entire process of law enforcement. For administrative agencies, when implementing various administrative actions, they should pay attention to safeguarding the legitimate rights and interests of taxpayers. If the law enforcement actions such as ordering rectification within a time limit will have actual impact on the subsequent rights of taxpayers, even in the absence of explicit legal provisions, the tax authorities should inform taxpayers of their rights in accordance with the requirements of due process.

 

 

 

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