Press release from Kaohsiung Branch, Administrative Enforcement Agency (AEA), Ministry of Justice

Issued on: November 17, 2021

Contact person: Chief Enforcement Officer Shu Wen Wang

The Chairman of a Famous Liquor Products Production Company was Taken into Custody due to Failure of Paying the Outstanding Taxes of NT$400 millions

   On Nov. 16, the Representative surnamed Lin of a famous liquor production company was taken into custody by under the authorization of Kaohsiung Branch, Administrative Enforcement Agency (AEA), Ministry of Justice (AEA Kaohsiung) under the approval of the Kaohsiung District Court due to the fact that the company refused to fully pay the outstanding taxes of NT$418.51 millions after five years of reminders by AEA Kaohsiung.

    The Obligor XX Liquor Production Biotechnology Co., Ltd. was well-known for producing Pandorla wine, which was a product series with good sales performance and popular for wedding banquets. The Company originally operated very well and made steady profits. However, the Representative Lin in pursuit of higher profits to make up for other investment losses, produced the above products by blending the flavors with alcohol and falsely claimed that those products were naturally-brewed distilled liquors. Besides increasing profits, Lin also declared the lower distilled liquor tax rate to the National Taxation Bureau to evade potential taxation.

    The wine products produced by Representative Lin using flavors, fruit juices and alcohol shall be subject to a higher tax rate for tobacco and alcohol. However, Lin started to declared the lower distilled liquor tax rate to the National Taxation Bureau since 2008, which upon the later discovery of the Bureau, resulted in an outstanding payment of tobacco and alcohol tax and profit-making business income tax of more than NT$418.51 million.

    The Obligor had not paid the outstanding taxes for over five years. The enforcement officers and clerks of AEA Kaohsiung worked diligently to collect evidence, and constantly summoned the Representative Lin to track the Company’s capital flow. Despite all of these efforts, the Obligor company still refused to pay the taxes.

    By examining the balance sheet of the company, AEA Kaohsiung found that the Obligor’s company also had a huge amount of accounts receivable that had not been recovered; and the main sales targets were the liquor sales company established by the Representative Lin and its spouse and children. The relevant companies refused to cooperate with the audit by National Taxation Bureau of Kaohsiung, and the relevant capital flow remained unknown. For these situations, the Representative Lin refused to cooperate with the interrogation by answering terms such as “I don't know” and “I am not sure”. Therefore, AEA Kaohsiung believed that the Representative Lin was suspected of concealing and disposing of the property under the name of the company, and applied to the Court for custody of the Representative, which was approved.