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In practice,
there is a question whether the criminal charges can be brought against a company’s
officers who have declared tax but have failed to remit it to the budget within
the prescribed term.
It appears
that the Unified State Register of Court Decisions (an “inexhaustible source of knowledge” to a certain extent) is able to provide an answer even to this question.
Let me look at two analogous cases from the register. These are In re Mirgorod Kombinat Khliboproductiv № 1 (http://reyestr.court.gov.ua/Review/20486739)
and In re Tsukrovyi Zavod
Maharynetskyi (http://reyestr.court.gov.ua/Review/9105838).
The cases were resolved in 2011 by
the general courts of first instance.
In the given cases directors were
convicted because of the failure to discharge the
declared tax liabilities on personal
income tax and unified social contribution
(pension contribution) in the presence of the financial ability to do so.
The conduct of the Director of Mirgorod Kombinat Khliboproductiv was classified as neglect of official duty (s. 367 of the Criminal Code of Ukraine), while the conduct of the director of Tsukrovyi Zavod Maharynetskyi was classified as tax evasion/unified social contribution evasion (sections 212 and 212-1 of the Criminal Code of Ukraine).
The conduct of the Director of Mirgorod Kombinat Khliboproductiv was classified as neglect of official duty (s. 367 of the Criminal Code of Ukraine), while the conduct of the director of Tsukrovyi Zavod Maharynetskyi was classified as tax evasion/unified social contribution evasion (sections 212 and 212-1 of the Criminal Code of Ukraine).
Can this
approach be extended to other taxes and contributions? For example, may the director
who has declared corporate income tax due but has not paid it in time be
exposed to criminal conviction?
It seems
that the answer is rather ‘yes’ than ‘no’. Even though there is no priority for
paying corporate income tax liabilities over any other liabilities at law, the
prosecuting authorities can identify a crime in the conduct of the director
remitting an amount “X” available at the company’s account not to the state
budget, but to the supplier providing raw materials needed for the continuation
of the company’s business.
In the above cases,
the judges did not apparently burden themselves with considering the matter of priority/non-priority of certain payments.
If they had opined that the criminal responsibility for
the declared but not paid tax is only possible insofar as the legislation
lays down the priority of the payment of
such tax to the budget over making other payments, the directors of these companies would have been convicted only
for the failure to remit unified social contribution (pension
contribution), and would not have
been convicted for the failure to
discharge personal income tax.
Currently,
the law sets forth the priority of discharging unified social contribution (pension
contribution)*, but does not provide such a priority for personal income tax.
* - para 12
of s. 9 of the Law of Ukraine "On the Collection and Accounting of Unified
State Social Contribution" and para 12 of s. 20 of the Law of Ukraine
"On Compulsory State Pension Insurance".
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