REPLY:
(C)
33
WEDNESDAY, NOVEMBER 23, 1994
WHETHER CONSIDERATION HAS BEEN GIVEN ΤΟ PAYING TAXPAYERS WHO ARE OVERCHARGED AN AMOUNT AS COMPENSATION CALCULATED ACCORDING TO THE INTEREST RATE PAID ON BANK DEPOSITS PREVAILING DURING THE PERIOD BETWEEN THE DATE OF PAYMENT AND THE DATE OF REFUND?
AT THE OUTSET, I SHOULD CLARIFY THAT IF A TAXPAYER DISPUTES HIS TAX LIABILITIES, THE INLAND REVENUE DEPARTMENT (IRD) DOES NOT IN ALL CASES REQUIRE HIM TO SETTLE THE TAX PAYMENT FIRST AND IMPOSE A SURCHARGE ON LATE PAYMENT. IN RESPECT OF CERTAIN TAX TYPES, E.G. SALARIES TAX AND PROFITS TAX, IRD HAS A WELL-ESTABLISHED SYSTEM OF ALLOWING HOLDOVER OF TAX IN DISPUTE. IN BRIEF
—
(I) WHERE IRD CONSIDERS THAT THE TAXPAYER HAS A PRIMA FACIE CASE FOR OBJECTION TO THE DEPARTMENT'S ASSESSMENT, IRD WILL ORDER A HOLDOVER OF THAT PORTION OF THE TAX DEMAND UNDER DISPUTE UNTIL A REVISED ASSESSMENT 18 AVAILABLE. MOST OBJECTIONS FALL INTO THIS CATEGORY.
(II)
WHERE AN OBJECTION DOES NOT APPEAR TO HAVE ANY MERIT THE BASIS OF AVAILABLE INFORMATION, IRD WILL NOT ALLOW ANY HOLDOVER OF TAX PAYMENT. THIS SEEKS TO PREVENT TAXPAYERS FROM MAKING USE OF THE OBJECTION DEFER 'PAYMENT OF TAX.
ON
CHANNEL ΤΟ
(III) WHERE IRD CONSIDERS THAT THE OBJECTION HAS
SOME MERIT, BUT THAT THE BALANCE OF PROBABILITY BASED ON AVAILABLE INFORMATION DOES NOT WEIGH DEFINITELY IN FAVOUR OF THE TAXPAYER, IRD WILL ALLOW A HOLDOVER ON THE CONDITION THAT THE TAXPAYER PURCHASES TAX RESERVE CERTIFICATES TO COVER THE AMOUNT OF TAX IN DISPUTE. WHEN A DECISION IS MADE ON THE DISPUTE, THE TAXPAYER WILL SETTLE THE TAX PAYABLE WITH THE TAX RESERVE CERTIFICATES PURCHASED. IRD WILL REFUND ANY EXCESS AMOUNT TO THE TAXPAYER, TOGETHER THE INTEREST THEREON.
FOR SOME OTHER MINOR TAXES AND CHARGES SUCH AS RATES, MAINTAIN A SIMPLE SYSTEM WHEREBY TAXPAYERS PAY THE TAX OR CHARGES PENDING THE RESOLUTION OF THE DISPUTE.
ON (A)
WITH
WE
DUE
IN THE CASE OF IRD, THERE IS NO STATUTORY TIME-LIMIT FOR PROCESSING TAX OBJECTIONS. HOW LONG IT TAKES TO RESOLVE A TAX DISPUTE DEPENDS, TO A LARGE EXTENT, ON THE COMPLEXITY OF THE ISSUES INVOLVED AND THE COOPERATION OF THE TAXPAYERS AND THIRD PARTIES IN FURNISHING RELEVANT INFORMATION. FOR SIMPLE CASES WHERE TAXPAYERS DISPUTE THE ESTIMATED ASSESSMENTS MADE BY IRD IN THE ABSENCE OF TAX RETURNS, IRD WILL REQUIRE THE TAXPAYERS TO SUBMIT A FRESH RETURN, ON THE BASIS WHICH THE DEPARTMENT WILL IMMEDIATELY DECIDE WHETHER TO UPHOLD ORIGINAL ASSESSMENT. IRD CAN SETTLE THESE CASES QUICKLY. INDIVIDUAL TAXPAYERS WHOSE OBJECTIONS MAKE UP OVER 60% OF ALL OBJECTIONS, IRD'S RECORDS INDICATE THAT OF THE OBJECTIONS SETTLED DURING THE PERIOD APRIL TO OCTOBER 1994, 70% WERE SETTLED WITHIN FOUR MONTHS AND 92% WITHIN EIGHT MONTHS.
OF
THE FOR
/BY CONTRAST,
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