Cases of tax evasion and court decisions
Cases of tax evasion and court decisions
For the law to be effectively enforced, anyone who conducts business is required to pay taxes. Knowing what fees and taxes constitute the primary source of revenue in the state budget, we must be aware that its main contributors are its citizens. Suppose violations are found, and evidence and evidence establish that tax evasion has been committed against anyone. In that case, a court will be opened and proceeded by the rules and instructions provided by the Constitution of Albania and the legislation in force.
As tax and tax revenues form the state budget’s primary basis, collecting and managing them is one of the most critical challenges for operating relevant structures. Hitting tax evasion is one of the primary tasks of tax administration. The responsibility for initiating a criminal investigation against the taxpayer and making available to the prosecution all information necessary for the criminal investigation’s conduct rests with the tax administration structure. For all the above violations, the tax administration has a legal obligation to a criminal investigation and then refer it to the prosecutor.
One case of particular relevance to be presented as an example is the following situation: The carousel scheme referred to the Elbasan city prosecutor’s office in December 2010, which was finalized in mid-2012 with the arrest of the perpetrator’s system at an estimated $ 3 million. In the investigations that the prosecution undertook, it was found that the perpetrators had committed the crime of Hiding Revenue after showing false balance sheets declaring less income than they received. This offense is envisaged in Article 180 of the Criminal Code and constitutes a criminal infringement and is punishable by a fine of up to two years of imprisonment. In our case, the hidden value is $ 3 million, and when the tax liability is higher than eight million, it is punishable by four to eight years of imprisonment.
Since the offense object is to conceal the proceeds, the subjects were aware and fully aware of their unlawful actions as the hidden profits were 3$ million, so we cannot say that these acts were committed. Carelessly and the authors were not responsible for their actions. It is noteworthy that these actions require proper knowledge and finance skills, which the authors possessed best. The purpose is known that was the material benefit. In the plaintiff’s role, the prosecution charged the defendants with the offense of Hiding Revenue under Article 180 of the Criminal Code.
Another case dealing with Albanian case law about tax evasion is the Judicial Session of 28.05.2013, examined in civil court case no. 327:Plaintiff: Company “Albania Krypi” LLC. Respondent: Albanian Chrome Company LLC the object was required by the respondent party’s obligation to compensate for the damage caused by the delay in fulfilling the responsibility in the form of unearned profit from the use of this amount and the interests arising from the delay in fulfilling this obligation. The parties have submitted their claims in court. The respondent party submitted that the payment was not fulfilled because the supplying party (plaintiff) did not accompany and did not forward the tax invoice for the price eventually payable by it.
The trial court does not uphold the defendant’s claims that the payment was not made because the tax invoice is missing as this claim is not supported by law. Thus, in the recourse filed against the court of appeal’s decision and the appeal filed with this court to challenge the conclusion of the first instance court, the plaintiff essentially submits that the obligation to issue a tax invoice is a legal obligation. Of the plaintiff. Failure to pay the supply in the absence of a tax invoice results in the impossibility of accounting for the amount paid, and consequently, the impossibility of VAT refund, with the significant financial loss.
In the process, the primary object of forcing the respondent was not required to compensate for the damage caused by the delay in fulfilling the obligation. Still, this process revealed that the first instance court and the court of appeals legitimized the performance by their position. For tax evasion, they were justifying and protecting the law’s violation regarding the payment of taxes by taxpayers, bringing about the avoidance and concealment of taxpayers’ tax liabilities to the state as provided by Albanian legislation.
The case went to the trial of the Civil Court of the Supreme Court, which held that the plaintiff’s recourse submissions, that the filing of the tax invoice for the goods supplied, had not only fiscal effects on both litigants but also constituted a legal requirement that overturns the decisions of the first instance court and the court of appeals, finding that these courts have wrongly applied the law.
Being taxable persons both parties According to Article 13 of Law No. 7928, dated 27.04.1995, “the person who makes a taxable supply shall be obliged to issue an invoice for that supply when the goods are delivered …” and “when services are supplied on a regular or continuous basis, the supply of services shall be deemed to have been effected in each case for which an invoice is issued in respect of any part of that supply… ..”.
Thus, the plaintiff party, a taxable supply of periodic nature, has the legal obligation to issue a tax invoice for any supply made to the respondent party supplied. If you do not give your tax invoice, you will deal with administrative and criminal penalties for tax evasion.
This process was not subject to the lack of a tax invoice. Still, during the trial, it was found that both parties exchanged goods without presenting any invoice giving the description of the goods, the quantity, and the price, which is a liability for anyone who conducts commercial activity.
The parties in question cannot be prosecuted as they should have previously taken administrative action for failing to file a tax invoice. If convicted, they would be sentenced to a fine of up to one year in prison. Non-issuance of a tax invoice is due to non-declaration of total turnover, how much income these two companies earned. Unlike the criminal act of concealing the revenue carried out through actions, the non-issuance of the tax voucher by the object is committed by omission; the subject by its deletion does not enforce the law by not issuing a tax invoice. Being registered entities and qualified as legal entities must issue the tax invoice. On the objective side, this act has been intentionally committed.
Many individuals, also driven by the economic situation, create fictitious businesses to earn VAT. Such a case does not lack jurisprudence on how to handle such situations:
To benefit from VAT compensation, the accused allegedly registered fictitious commercial entities without any activity to withdraw VAT Tax Blocs by issuing fictitious sales VAT invoices. Commercial entities made fictitious purchases by companies operating in the food trade and then selling them, yes, fictitiously in companies operating in the field of construction.
Companies recorded as an example purchase of cheese, milk, yogurt, and other foodstuffs, which were then sold to companies operating in the construction business. Indeed, there was no actual product in the between but only on the bill throughout the transaction chain. This bill was then sold to another company until the fictitious invoices were submitted to the Taxation Department, which deducted a 20 percent VAT refund on each purchase that was made. From the tax investigation, it turns out that all subjects were related to each other for employees.
According to payroll in employee history, the same person in all 20 companies results in different functions, once as an administrator and at another point as a driver, storekeeper, cleaner, or manual worker. The same employees have been circulated as employees at different times in different functions in the same entities. This scheme was used to create the idea that the 20 companies were actual and conducted regular legal activity. Investigations showed that none of the subjects had the necessary human capacity to perform the registered action.
According to the prosecution, it is suspected that some accounting offices are also part of the fraud, which has enabled the adjustment of the trade balances of these fictitious companies. The subject of the offense, in this case, is the economic gain through fraudulent schemes such as fictitious purchases made by the companies concerned.
This criminal offense’s objective side is committed with active actions as the person had to act to accomplish his purpose. The subject is an adult who has reached 18 and has criminal responsibility for his unlawful acts.
The subjective side of this criminal offense was committed intentionally and for the direct purpose of profit. To achieve such fraudulent schemes, you must know the economic field, which the person in question did not lack as he knew what he was doing and was classified as illegal.
Apart from the cooperation between the Albanian institutions, it is essential that for the goods imported into the Albanian customs, the tax institutions should cooperate to avoid tax evasion as the fraudulent schemes cause substantial monetary losses that damage the state coffers. One such case was handled after an Italian company imported air conditioners destined for the Albanian market. To avoid paying taxes, this company produced two sales invoices where one set the actual price and the other the fictitious price. The income declared in the Albanian state by the false invoice was sent to the bank, and the rest remained in cash where it was sent in other ways to the Italian state.
There was no formal error in the documentation presented; it was pretty challenging to detect this fraud scheme. It took some cooperation between the Italian and Albanian authorities, who exchanged relevant information. When comparing the de-calcified bills, it was noticed that the actual value of these air conditioners was 800 euros, but that in the declarations made in our country and the price that was imposed. The bill was 600 euros. Tax documents include sales and purchase statements, bank accounts and transfers, income, and expenses.
Whereas in the Albanian State this company has submitted false documentation based on Article 180 of the Criminal Code according to the Albanian legislation: Hiding or evading payment of tax liabilities through failure to submit documents or failure to disclose necessary data under applicable law, the submission of false documents, or fraudulent statements or information, for material gain, for himself or others, through the incorrect calculation of the amount of tax, or contribution, constitutes a criminal offense and is punishable by a fine or imprisonment of up to one year.
In three years. When this offense is committed with the intent of concealing or avoiding payment of tax liability of more than five million lek, it is punishable by imprisonment of two to five years. When this offense is committed with the intent of concealing or avoiding payment of tax liability of more than eight million lek, it is punishable by imprisonment of four to eight years.
Although it is a company headquartered in Italy, it must comply with all procedures required by Albanian law and pay any liability for its activity in our place. All those caught with fictitious bills are punished with confiscation of goods and suspension of trade. The goal is known to be for the benefit of monetary earners. By their actions, this company’s administrators have willingly acted by creating two balances to avoid paying taxes.