Corporate Income Tax Correction under the Threshold of Tax NeutralityExpansion of Tax Subjects as a Consequence

The principle of tax neutrality is of significant importance to optimizing the business environment, particularly in ensuring equal protection and fair competition among market entities. The implicit indirect tax attribute inherent in corporate income tax necessitates adherence to the principle of tax neutrality. The deviation of the current corporate income tax system from tax neutrality does not primarily stem from “tax inequities” caused by economic double taxation but rather from deviations in the definition of taxable entities. The root of this issue lies in the bundling of taxable entities with private law entities under the dual constraint of corporate legalism and tax legalism. The breakthrough lies in the redefinition of “enterprise” as a taxable entity under tax law. Centered on the core element of limited liability, defining “enterprise” under tax law as a profit-making business entity where investors bear limited liability can facilitate the regression of corporate income tax law towards tax neutrality with relatively low institutional costs. Consequently, the taxable entities for corporate income tax should be expanded to include limited partners and the “enterprises” constructed from their shares in limited partnerships, as well as trust plans in business trusts. Regarding the resultant tax burden, it can be mitigated or eliminated through graduated tax rate adjustments based on factors such as profitability.