INERNATIONAL INSOLVENCY INSTITUTE COMMITTEE ON PRIORITY OF TAX CLAIMS IN INSOLVENCY PROCEEDINGS 1 NATIONAL LAW QUESTIONNAIRE

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1 INERNATIONAL INSOLVENCY INSTITUTE COMMITTEE ON PRIORITY OF TAX CLAIMS IN INSOLVENCY PROCEEDINGS 1 NATIONAL LAW QUESTIONNAIRE NAME OF COUNTRY: NAME, ADDRESS, TELEPHONE, AND OF ATTORNEY COMPLETING THIS QUESTIONNAIRE: DATE: PART I: TAX LAWS AND ENFORCEMENT 1. Please provide a brief general description of your country s tax laws. The following information would be helpful: List the types of Direct Taxes your country imposes. ( Direct Taxes refers to taxes payable directly by the taxpayer, such as individual and corporate income taxes, gross receipts taxes, taxes on profits, capital gains taxes, assets taxes, ad valorem property taxes on value of property, such as real estate.) List the types of Indirect Taxes your country imposes. ( Indirect Taxes refers to taxes where the debtor is the tax collector rather than the taxpayer. Examples of Indirect Taxes include taxes owed by employees, but withheld from wages and salaries and paid by employer (can be income, social security, unemployment taxes) sometimes knows and PAYE (pay as you earn); taxes withheld from interest or dividends earned by residents ( RWT ) or non-residents ( NRWT ); Goods and Services Taxes such as Sales Tax (payable by seller but added to the price of goods and services sold to the buyer) and Value Added Tax ( VAT general taxes on consumption added to the price of goods and services); and customs duties and excise taxes which are taxes on specific listed goods.) Is the tax system national, local or both? If both, which taxes are imposed at each level? 1 Committee Co-chairs: Hon. Ralph Zulman, Hon. James Garrity. Reporter: Barbara K. Day.

2 Describe which types of tax revenues are most significant in your country. 2. Please describe administrative procedures available to taxing authorities in your country for assessing and collecting unpaid taxes. For example, are the following measures available? Or are delinquent taxes collected only through judicial proceedings? Assessment of interest and penalties for overdue taxes Measures for seizing property Other special enforcement e.g., garnishment by notice to third parties to pay amounts owed to taxpayer directly to taxing authorities Ability of taxing authorities to force taxpayer into bankruptcy proceeding Recording lien against taxpayer property without need to obtain judgment Responsibility of third parties such as personal liability of corporate directors, officers, controlling parties Specific remedies for particular taxes e.g., possessory lien for customs duties on imported goods Statue of limitations on enforcement 3. Please reference any authorities or studies you are aware of evaluating the effectiveness of government tax collection and enforcement in your country. 4. Are taxing authorities in your country authorized to negotiate a settlement with a delinquent taxpayer to take account of personal hardship and temporary financial problems? PART II: PRIORITIES/PREFERENCE FOR TAX CLAIMS IN INSOLVENCY PROCEEDINGS 5. Please describe the priority/preference rules that exist in your country s insolvency laws for claims of taxing authorities. Please address the following areas:

3 Where are the rules found e.g., insolvency laws, tax laws, other. Please state which taxes are entitled to priority, and for what duration Describe any additional requirements for taxing authorities to obtain priority, such as registration (before or after commencement of insolvency proceedings) Describe the relative ranking for these tax claims vis a vis other secured or unsecured claims Are tax claims dischargeable under your country s insolvency laws? If so, please describe any limitations on dischargeability of such claims. 6. If your country has abolished priority/preference rules for tax claims in insolvency proceedings, please describe when these changes were made and the reasons for the changes, including reference to any studies or reports related to this. 7. Please describe any priority/preference available to taxing authorities in insolvency proceedings through tax administration and enforcement laws Tax liens entitling tax authorities to position of secured creditor Levy or garnishment not stayed by commencement of insolvency proceedings Availability of statutory interest and penalties before/after commencement of insolvency proceedings Third party personal liability, including the standard used for imposing third party personal liability. 8. Please describe the treatment of tax claims in rehabilitation/reorganization proceedings Under what circumstances can the taxing authorities be required to accept payment over time Are the tax claims classified separately, or with other claims in terms of voting on a plan of reorganization or rehabilitation What rules apply for payment of interest and penalties in such a proceeding?

4 9. Please describe any secondary materials, official studies, and commission reports related to tax priority rules explaining policies, reasons for structure. 10. Please describe any recent amendments to your country s rules relating to treatment of tax claims in insolvency proceedings. Please include any materials relating to the reasons for such changes. 11. Please describe any amendments or proposals under consideration relating to change in the existing priority rules. Please include references to commentary or other materials discussing the reasons for such changes. 12. Please describe the extent to which empirical data is available relating to the effect of the existing priority rules. 13. Please add your country to the following table, placing a in each box where your country provides a priority for taxes in the listed category under the national insolvency laws. Please feel free to make any changes, footnotes, or additions if necessary to reflect your country s laws, and proposed amendments. Table Summary of Tax Priorities Under National Insolvency Laws Withholding (PAYE / Sales / RWT / NRWT) VAT / Sales Indirect Excise / Customs Soc Sec / Pension / Payroll Direct Income / Gross Receipts Other Name of Your Country

5 14. Please describe any other features of your country s insolvency or tax law systems, including proposed amendments or other legal trends that you believe might be relevant to this study or to understanding your country s treatment of tax claims in insolvency cases.