TAX EVASION AND FICTITIOUS LEGAL ENTITIES

“Dodgers” in a new way

Changes were hooked, in particular, Art. 212 of the Criminal Code “Tax evasion, fees (mandatory payments)”. Recall that for deliberate tax evasion (fees) criminal liability is provided in the form of fines, deprivation of the right to occupy certain posts / engage in certain activities, confiscation. The specific measure of responsibility depends, inter alia, on the amount of underpayment to the budget (state trust fund).

  From September 25, 2019 (the date of entry into force of the amendments), an underpayment of a significant amount (part 1 of article 212 of the Criminal Code) must exceed the NSL 3,000 or more times, i.e., in 2019 – 2881500 UAH. and more. Previously – 1000 or more times.

Large-scale underpayment (part 2 of article 212 of the Criminal Code) – 5,000 or more times – 4802500 UAH. and more. Previously – 3,000 times or more.

Underpayment in a particularly large amount (part 3 of article 212 of the Criminal Code) – 7,000 or more times – 6,723,500 UAH. and more. Previously – 5,000 or more times.

As you can see, after the entry into force of the changes, the amount of underpayment for the appearance of the “criminal case” has grown significantly. Thus, the underpayment in the amount of less than 2881500 UAH. does not fall under tax evasion. At the same time, the amount of fines was changed (they are not tied to the NSL, but to the tax-free minimum – 17 UAH). Penalties increased several times. Now, for a significant amount of evasion, the fine is from 3 thousand to 5 thousand nnmdg (51000 UAH. – 85000 UAH.).

For a large amount of underpayment (or by prior conspiracy by a group of persons) the fine is from 5 thousand to 7 thousand nnmdg (51000 UAH. – 119000 UAH.).

The fine for a particularly large amount of underpayment has not changed and will be from 15 thousand to 25 thousand nnmdg (255,000 UAH. – 425,000 UAH.).

The amount of underpayment to the budget under art. 212 of the Criminal Code does not include additional penalties and fines (paragraph 11 of the resolution of the Plenum of the Armed Forces of 10.10.2004, No. 15). That is, “bare” unpaid taxes and / or fees (required payments) are calculated.

Recall that the presence of an audit report or a tax notice-decision (NUR) for the “criminal” amount does not mean that the case will be automatically “opened”. So, if the NUR is undergoing an administrative or judicial appeal, then in the general case, the payer cannot be immediately accused of tax evasion. To file a notice of suspicion of an offense under Art. 212 of the Criminal Code will need not only the controversial NUR, but also other evidence. Moreover, a report of suspicion of the commission of this crime cannot suspend consideration of the case against the NUR. About this we are told the provisions of paragraph 56.22 of the TCU.

Please note: even if the NUR has become agreed, then for the criminal liability it is necessary to establish the entire corpus delicti, in particular the intent of the perpetrator and the causal relationship between his actions and the non-receipt of money in the budget (state trust fund).

Important! With respect to the amount of underpayments, the retroactive effect of the law in time applies. That is, the new rules will apply to persons (part 1 of article 5 of the Criminal Code): who committed a crime under art. 212 of the Criminal Code before the entry into force of Law No. 101; serving sentences under this article; serving a sentence under Art. 212 of the Criminal Code, but having a criminal record. But for new fines, the retroactive effect of Law No. 101 will not apply.

“Fake Entrepreneurship”? He is no more

According to Art. 205 of the Criminal Code fictitious entrepreneurship is the creation or acquisition of legal entities with the aim of covering illegal activities or carrying out prohibited activities. Norm, of course, necessary. But in the past few years, this article has been used for their own purposes by regulatory authorities. How?

For example, to recognize transactions as unrealistic. It worked like this:
1) in the supply chain, the directors of one of them were interrogated. Such a director said that he was not related to the activities of a legal entity;
2) entrepreneurship was recognized as fictitious, the director and / or founders (participants) were charged with art. 205 Criminal Code;
3) the tax authorities went along the chain with checks up to the final consumer and recognized the operations as unrealistic, taking off expenses.

At one time, the Supreme Court expressed a tough stance on the reality of operations in this case. In particular, it was believed that documents issued by a fictitious legal entity could not confirm the reality of the operation. That is, the operation was automatically recognized as unrealistic (see the decision of the Armed Forces of 10.24.2018 in case No. 826/13586/13-a and of 08.28.2018 in case No. 826/147/14).

Although you can find the practice of the Supreme Court with a more balanced approach, where the judges understood whether the verdict under Art. 205 of the Criminal Code affects the reality of a particular business operation (see Decisions of the Supreme Court of 11/20/2018 in case No. 808/2858/16, of 11/08/2018 in case No. 826/15028/17; of 09/19/2018 in the case No. 809/2438/15, etc.).

Judicial practice was also encountered in which protocols for interrogating directors or founders (participants) of legal entities were used as part of investigative actions under Art. 205 of the Criminal Code. However, the Supreme Court in its “fresh” decisions says that such a protocol is not enough to declare the operation unrealistic (see the Supreme Court decision of 08/06/2019 in case No. 520/8681/18). With regard to the abolition of Art. 205 of the Criminal Code, the retroactive effect of the law in time.

  Of course, one cannot say that the norm of Art. 205 of the Criminal Code is bad due to the fact that it is used in their interests. This is primarily the illegal actions of regulatory and law enforcement agencies. But we have what we have. Maybe the abolition of Art. 205 Criminal Code opens the door to all kinds of fraudsters involved in fictitious business? Let’s not rush to conclusions – there are still a lot of other articles in the Criminal Code (for submitting false information, forging documents, etc.).

Author: Kristina Vorozhbitova

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