Study On The Tax Saving Strategy Adopted By Taiwanese Estate Taxpayers

Estate tax refers to taxation imposed upon the post mortem property of the deceasedtransferred at or after the death of said decease to his/her appointed inheritor(s). While gift tax, asa means to complement the insufficiency of estate tax policy and to prevent tax evasion, refers totaxation imposed upon property given or transferred as gift from donor to other person(s).Viewing from their final belonging, estate tax and gift tax are the two sides of the same coin ofwealth transfer.Estate tax is one of the taxation policy items that state uses to equalize the distribution ofsocial wealth. Although Taiwan has a long history in its implementation of estate tax policy,various tax exclusions and higher tax rate in the existing system has created, according to LafferCurve, greater incentives and motivation for the taxpayers to evade governmental taxes. Thecurrent ceiling of 50% estate and gift tax rates has made tax saving and exclusions seeking apopular social phenomenon. Lacking in their recognition of law-abiding citizenship, people fromChinese communities characterized by loophole finding mentality, has helped to evolve thephenomenon to a more pervasive societal practice.Presently, the most usual strategies adopted by Taiwanese taxpayers are: 1) balancingproperties between spouses; 2) shifting property categories to gain tax savings; 3) increasingtotal deduction of tax payment; 4) utilizing property value discrepancy; 5) making the best use ofwithholding tax.In addition to explore feasible planning on legalized tax savings for Taiwanese estatetaxpayers, the study aims to uncover the ways the rich and tycoons have misused to escape theirdutiful estate and gift taxes. Finally, suggestions and recommendations on both the short- andlong-term reforms of future estate tax policy in Taiwan are provided with a view to create a fairtax policy and equal distribution of social wealth by either imposing or abolishing the muchcontended existing estate tax policy on Taiwanese taxpayer across both sides of the Strait.