Tax administrative compensation

Tax administrative compensation

Tax administrative compensation refers to the damage compensation that taxpayers suffer due to the violation of laws or regulations in the process of tax administration by tax authorities as prescribed by law. It generally includes property damage, economic damage and reasonable expenses incurred in the process of tax administrative activities, as well as corresponding interests.

In China, it is regulated that whenever taxpayers suffer damage from the taxation authority’s violation of laws or regulations in the process of tax administration, the taxation authority shall, in accordance with the relevant provisions of the Law on Tax Administrative Penalty and the Law on Tax Collection and Management, compensate for the damage according to law.

The taxation authority’s violation of laws or regulations in the course of tax administration should generally be damages caused to taxpayers by taxation authorities’ misapplication of laws, misuse of power and violations of due process of law.

For example, the tax authority collects taxes illegally, which causes economic losses to the taxpayers, and taxpayers can demand compensation according to law.

In addition, according to the law, the taxpayers shall give all kinds of material evidence to prove their losses during the proceedings. Therefore, taxpayers should save evidence, such as purchase receipts, materials, labor agreements, etc. in advance, so as to make the evidence confirmation more accurate, timely and effective.

Finally, taxpayers need to bear in mind that if damages are caused to them as a result of violation of administrative laws or regulations by tax authorities, they should, according to the law, timely apply for tax administrative compensation, otherwise, their right to claim damages will be easily lost.

Tax administrative compensation is compensation that the State pays to individual taxpayers for any losses caused by unlawful actions of tax officials.

Tax administrative compensation procedures mainly include such stages as submission of an application for compensation, review, on-site inspection, hearing and decision.

When applying for tax administrative compensation, the person concerned shall provide relevant evidence to prove the fact, type and cause of damage, so as to provide a basis for the taxation authorities to carry out the review and make a decision.

The person who applies for compensation must provide the taxation authority with a joint guarantee letter signed by two people with good credit guarantee for the tax the amount claimed to be compensated.

In the process of taxation administrative compensation, the taxation authority shall have the right to inquire into the responsible person of the responsible department, hold a hearing, call relevant personnel to attend the meeting and gather relevant evidence.

After the taxation authorities make a decision of acceptance or rejection of the tax administrative compensation, the applicant or the respondent shall have the right to lodge an appeal with the higher taxation authority or the taxation administrative reconsideration organ with the decision of the taxation authority within the prescribed time limit, or directly bring a lawsuit to the peoples court before the expiration of the time limit.

Tax administrative compensation is an effective mechanism to Strengthen the protection of taxpayers legitimate rights and interests and harmonize the relations between taxpayers and taxation authorities. It has played an important role in protecting rights and prompt tax administration in our country.