Cyprus Mail
Property

Violation of tax legislation

The taxation law gives the Commissioner of Taxation the discretionary power to demand from any person through a written notice to submit details regarding the tax object, which includes any movable and immovable property. Usually, a signed statement is demanded containing all the details of the assets and liabilities of the taxpayer either in Cyprus or abroad on December 31 of a given year or years, as well as the estimates of his taxable income for each year.

This statement should also include the assets of the taxpayer’s spouse and unmarried children, as well as a statement of expenses for each year stated in the notice, declaring separately the expenses for maintenance, for private car use, life insurance premiums, the total costs for his children’s studies in Cyprus or abroad, the rent payable for his residence, travelling expenses abroad, home repairs and others. The Commissioner of Taxation in his notice gives a time limit to the taxpayer to comply and warns him that if he fails to comply, legal steps will be taken against him.

With regard to the accounts and estimates, the Commissioner may not accept them if they haven’t been prepared and certified by an independent accountant. The law gives the Commissioner authority to call the taxpayer to appear before him and give evidence in relation to the tax object and to submit accounts, books and other documents in his possession or control.

The decision of the Commissioner to call for the submission of information and the taxpayer’s failure to comply constitutes the basis of establishing his obligations and criminal liability. The Supreme Court examined the matter in a judgement issued on 20.2.2018 in a Criminal Appeal filed by a taxpayer against the judgement of the Court of first instance, which found him guilty of failure to comply with the notice of the Commissioner to submit information and details.

The court imposed on him a fine of €3,500 and issued an order against him to submit a statement of assets and liabilities within one month. The taxpayer alleged that the court of first instance failed to examine the criminal nature of the offences and whether the so-called “offences” were committed in his case.

The Supreme Court held that the Commissioner has a wide discretion to take any action he deems necessary or proper for the compliance with the relevant provisions of the law and to demand through a written notice, the submission of details regarding the tax object of the taxpayer for any tax year he considers necessary. The court underlined that the law criminalises the refusal, omission or negligence to give notice or to submit declarations, lists or details or to comply with any other duty or obligation imposed by it. In addition, the court has the power to issue an order for compliance by the taxpayer with any omissions found.

The Supreme Court agreed with the court of first instance that it was established beyond any reasonable doubt that the taxpayer failed to comply with the obligation the Commissioner had imposed on him, which constitutes a criminal offence. It added that the non-reference of article 27 in the Commissioner’s notice through which information was demanded and its subsequent inclusion in the indictment did not affect its validity or mislead the taxpayer.

The knowledge of the taxpayer derived from the Commissioner’s notice as to what he was being asked to submit and the consequences of his omission. Furthermore, his accountant’s request for an extension of time suggests that he was fully aware of what was demanded. With regard to the appellant’s allegation that the sentence imposed on him was excessive, the Supreme Court highlighted what was mentioned by the court of first instance, which pointed out the seriousness of the offence committed for which the taxpayer was convicted.

 

George Coucounis is a lawyer specialising in the Immovable Property Law, based in Larnaca, Tel: 24 818288, [email protected]www.coucounislaw.com

 

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