The Taipei High Administrative Court rendered the 103-Su-828 Decision of December 18, 2014 (hereinafter, the "Decision"), holding that when a contract for borrowing the name of another person for land registration is terminated, if the parties agree to transfer the ownership of the land at issue to the original owner, the condition for the levy of an land value increment tax "upon transfer of land ownership" under Article 28 of the Land Tax Act has been satisfied. If the conditions for statutory reduction or exemption are not satisfied, land value increment taxes should be levied based on the aggregate land value appreciation.
According to the facts underlying this Decision, since the Plaintiff was not a farmer, he borrowed the name of another person and registered the land at issue under the name of Yu-fu Huang. Subsequently, since the Plaintiff sought to restore his status as the de facto owner, he applied for mediation successfully. When he applied for land registration, the Defendant imposed a land value increment tax. The Plaintiff asserted that since he was the true owner from the start and land ownership was never transferred between the Plaintiff and Yu-fu Huang, the change of the name under which the land was registered only seeks to restore the name under which the ownership should have been registered, and the land value increment tax should not be levied. Therefore, the Plaintiff applied to set aside the Defendant's disposition that imposed the land value increment tax.
According to the Decision, the first part of Article 28 of the Land Tax Act provides: "Land that has been assigned a value shall be subject to a land value increment tax based on the total amount of land value increment at the time of transfer of land title." According to the Decision, land value increment taxes are taxes levied for profits from natural land value appreciation under the principle that value appreciation should belong to the public. Therefore, a land value increment tax should be levied in accordance with Article 28 of the Land Tax Act as long as there is income generated from natural value appreciation and the fact of land ownership transfer, except for legal grounds for exemption.
It was further determined in the Decision that even though the relationship of borrowing the name of another person for land registration, which is by nature an obligation contract, existed between the Plaintiff and Yu-fu Huang over the land at issue, the legal status of Yu-fu Huang as the owner of the land at issue after its transfer was registered at that time. After the contract of borrowing the name of another person for land registration between the Plaintiff and Yu-fu Huang was terminated, Yu-fu Huang, who had the obligation to return the land, agreed to transfer the ownership of the land at issue to the Plaintiff through a mediation procedure of a civil court. This meets the requirement for the levy of a land value increment tax under Article 28 of the Land Tax Act "at the time of transfer of land title." The Plaintiff's assertion that the tax should not have been levied is not acceptable. Therefore, the Plaintiff's complaint was rejected.