The idea of “Substance-over-Form-Principle(SOFP)” in tax law raised because of confrontation to tax-avoidance. It emphasizes that we should differentiate the essence between tax arrangement and transaction, rather than focusing on the form of them. The SOFP was accepted by majority country as it firstly appeared in 1919 German Reich Tax Code, but it differs in formation mechanism, regulations, and operation universally. Unfortunately, the connotation “Substantial taxation” commonly used in Taiwan the state quo is in a quite incoherent manner when it comes to understanding the definition. - And therein lies potential disputes invariably. Therefore, it is of great necessity and significance for us to analyze the theory and practice about the SOFP.
This study aims to compare and analyze the content and circumscription about SOFP, especially put emphasis on adjustments, inter alia, between Principle of Taxation by Law and Tax equality. Besides, this study advocates that Principle of Taxation by Law is the most crucial guiding principle in Tax law, instead of emphasizing Tax equity in traditional opinions. In addition, the study decomposes the types of the SOFP for further empirical research. The conclusion will probe the disputable fields about SOFP aforementioned. Finally, the study compares legislative approach about the SOFP, as to see whichever is the most suitable for Taiwan. In order to maintain Principle of Taxation by Law, we should hold on Specific Anti-Tax Avoidance Rules (SAAR) as the legislative model about the SOFP. Relatively speaking, legislation concerned today shall be taken as declaratory provisions in terms of combatting tax-avoidance.