Well, I don't know whether I should just delete the question but I'm leaving it here if anyone experiences the same.
Anyway, I found out what was causing the issue while trying it on the rails console. It was obvious there that 'acts-as-taggable' expects by default tags to be lowercase.
The solution however is really simple, just add this line to an initializer.
ActsAsTaggableOn.strict_case_match = true
It just goes to show that sometimes reading the fine manual is the way to go.