The Legislative Yuan passed the amendment to the "Bequest Tax Law" on the third reading today, which clearly stipulates that if property is donated to specific relatives (including the deceased's spouse, heirs in each order and their spouses) within 2 years before the death of the deceased, the inheritance tax will be calculated based on the ratio of the donated property to the total estate, and the recipient will be the taxpayer, and no tax will be levied on non-recipients. This is the so-called "Big Wife Clause".
The current "Bequest Tax Law" stipulates that gifts between spouses are tax-free, but property donated to the spouse within 2 years before death must be included in the total estate for taxation. Two years before his death, a man named Chen donated a large amount of stock to his spouse. According to regulations, it must be included in the total estate tax (fictitious estate). However, his wife and children abandoned the inheritance, leaving the young daughter born out of wedlock to bear the huge inheritance tax alone. For this reason, the Constitutional Court ruled on October 28, 2024 that the relevant provisions are partially unconstitutional and must be amended within 2 years.
The Ministry of Finance explained that the key points of this revision are as follows:
1. Article 6: It is added that if the property donated to specific relatives within 2 years before the death of the decedent is taxed on the total estate, the amount of estate tax shall be calculated based on the ratio of each donated property to the total estate, and each recipient shall be the taxpayer; delete the provision that the executor is the taxpayer of inheritance tax, and add that in cases where there is an executor, the executor may declare and pay taxes on behalf of the taxpayer and apply for review.
2. Article 17-1: When calculating the amount of deduction for the spouse’s claim for the balance of the remaining property balance, the property donated to the spouse within 2 years before the death of the decedent shall be deemed to be the decedent’s existing property.
3. Article 23: Added regulations on the reporting period and the starting date of the verification period for cases where the ownership of the estate is determined by court judgment after the death of the deceased.
4. Article 30: Delete the provision that the inheritance tax payable must be more than 300,000 yuan before applying for payment in installments, and add that the heirs may use the deposits in the inheritance to pay the tax by majority vote, and that the donee's application to use the inheritance to offset or pay the proposed amount of inheritance tax must be approved by all the heirs.
5. Article 41: A taxpayer who agrees to create a mortgage on taxable real estate that complies with the provisions of Article 11-1 of the "Tax Collection Act" has been added to the tax collection agency and may apply for the issuance of a consent transfer certificate.
6. Article 51: Delete the method of levying late payment fees and the mandatory enforcement provisions on overdue transfers, and return to the provisions of the "Tax Collection Law".
The Ministry of Finance stated that in order to facilitate tax collection and collection, the Ministry of Finance is working on amending the "Regulations on the Implementation of the Legacy Tax Law" and other sub-regulations, revising the relevant declaration forms and online application systems, and supervising the regional taxation agencies to actively plan follow-up audit operations; it will strengthen publicity after the president announces the above-mentioned amendments to ensure that all walks of life will fully understand.
