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One of the key issues surrounding the qualification of
tax crimes is an issue of intention. Intention (mens rea) is the attribute of
tax evasion (s. 212 of the Criminal Code of Ukraine). If the tax has not been paid
without the intention to do so, there is no criminal liability under s.212 of
the Tax Code of Ukraine. However, given the existing practice the person who
has failed to pay tax unintentionally (for instance, due to the poor knowledge
of tax laws or their incorrect application) may incur criminal responsibility under
s. 367 of the Tax Code of Ukraine (neglect of official duty).
There
naturally arises a question as to how to determine that an intention aimed at tax evasion is in place?
Undoubtedly, the main guidance here is para 3 of the Resolution
of the Plenum of the Supreme Court of Ukraine dated 8
October 2004 No 15 "On Some Issues of Application of Tax Evasion
Legislation" (hereinafter - "Resolution No 15"). This paragraph comprises the non-exhaustive list
of circumstances that may indicate
the intention aimed at tax evasion, including:
• the absence of tax accounting records or keeping
them at variance with the established procedure;
• distortions in accounting or reporting records;
• failure to register cash received for services
rendered;
• maintaining dual (official and unofficial) accounting;
• the use of bank accounts not disclosed to the tax authorities;
• overstated cost of sales.
This very list is cited at almost all conferences,
seminars and similar events dedicated to
tax evasion matters.
Unfortunately, the aforesaid circumstances are not formulated
clearly enough to be safe in saying that there has been/has not been the intention
aimed at tax evasion in a particular situation. I decided to try to go beyond
the list and look at "live" criminal cases from the Unified State
Register of Judgments.
Some examples from this register are outlined below.
No
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Case
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Court
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Circumstances indicating the intention directed at
tax evasion
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1
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In re Vinspetsodyag,
2010,
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Zamostyanskiy District Court of Vinnytsia
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To substantiate the intention
aimed at tax evasion, the court, namely, referred to the following circumstances
from the Resolution No 15: (i) the keeping of tax accounting record in
defiance of the established procedure; (ii) distortions in accounting and
reporting records.
In the court’s opinion, the tax
accounting violations were evidenced by the declaration of deductable expenses/input
VAT deduction related to the transactions with fictitious companies.
The distortions in the accounting/reporting
documentation, according to the court, were confirmed by the expert report pursuant
to which the accounting was conducted improperly (confusions in line numbers
and irregularities in the cash book).
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2
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In re Oris, 2009 , http://reyestr.court.gov.ua/Review/7499249
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Chornuhynskiy District Court of Poltava Region
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The director’s failure to file annual
corporate income tax return as well as three monthly VAT returns was regarded
as an indicative of an intention leveled at tax evasion.
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3
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In re one private entreproneur, 2011,
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Andrushivskiy District Court of Zhytomyr Region
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The private
entrepreneur exceeded the revenue threshold allowed for the simplified system of
taxation and failed to shift to the general system of taxation.
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As you can see, even the rather modest sampling
features how inventive courts and prosecuting authorities can be while deciding
on the presence of the intention aimed at tax evasion.
