Introduction
Tax crimes may be defined, in short, as economic crimes perpetrated against the “public treasury.” Through the commission of a criminal act, the interest of the public treasury, in a wider sense, the interest of the general public is violated. The aim of the penalty is, therefore, the timely payment of taxes due. The principles pertaining to tax crimes and penalties are regulated under the Tax Procedure Code (“TPC”). Some of the crimes and penalties stipulated under the TPC solely concern the tax law, and tax offices can directly apply these penalties without further need of a judicial decision. The acts within this scope are evaluated as “financial crimes and penalties.” On the other hand, other crimes and penalties regulated under the TPC are crimes according to criminal law, and are punishable by restricting freedom. These are determined as “criminal crimes and penalties”[1].
Types of Tax Crimes and Penalties
Financial Crimes and Penalties
As exemplified with loss of tax revenue and non-compliance, these types of tax crimes, which are punishable by monetary fines and detected and applied by tax offices, are crimes within the sense of “tax law.” These crimes may be committed without deliberate intent.
Loss of tax revenue is defined in Art. 341 of the TPC as “Loss of tax revenue means late or incomplete accrual of tax due to the non-performance or ill-performance of a taxpayer of a liable person of their obligations regarding taxation. Incomplete accrual of tax or unlawful return of tax because of misleading declarations of personal, marital status of familial situation, or other reasons shall also be deemed as loss of tax revenue.”
Art. 344 defines a criminal act of the loss of tax revenue: “Given that the tax revenue is lost due to the reasons listed under Art. 341, the taxpayer or the liable person shall be fined with the amount of tax revenue lost. If the loss of tax revenue occurs as a result of an act stipulated under Art. 359, a triple fine shall be applied, and to those who are complicit in the act, a single fine is applied.”
Non-compliance is stipulated under Art. 351 et seq. of the TPC. Accordingly, “non-compliance” means the failure to comply with the material and procedural rules of tax laws. As a result of the loss of tax revenue, some tax is evaded; whereas, in the event of non-compliance, the tax is not yet lost. Instead, through their non-compliance with formal or procedural tax rules, taxpayers, or the liable persons are trying to create a feasible environment for such loss. Art. 352 et seq. of the TPC lists the relevant acts of non-compliance and their respective penalties. These crimes are categorized as 1st Tier, 2nd Tier, and are acts that garner a special penalty. The non-compliant acts are penalized in accordance with the tiers specified in the code and with the table provided therein. Given that the described act of non-compliance requires ex officio discretion, the relevant fines shall be doubled. 1st Tier non-compliances are as follows: Failure to make tax payments and fee declarations in a timely fashion; Failure to keep the books deemed necessary in accordance with the TPC; Incomplete, non-compliant, and unorderly keeping of the books to the extent that they renders a clean tax audit impossible; Non-acceptance of the invitation made by village councilmen and community council pursuant to Art. 245, by farmers; Non-compliance with the rules of bookkeeping set out in the TPC; Not declaring the commencement of work on time; Failure to certify one of the books that is required to be certified (Certification that is made 1 month after the legal period has expired shall be deemed non-existent); Failure to levy a tax, even though the levy period has passed; Declaring inheritance and transfer tax within the time periods specified under Art. 342/2.
2nd Tier non-compliances are as follows: Declaring the inheritance and transfer tax within the time periods specified under Art. 342/1 after the expiry of their declaration periods; Failure to provide the seeding and counting declarations in time, or wholly; Failure to make the necessary written declarations specified in tax laws (except the commencement of work declaration); Failure to obtain the tax card although the period within which to obtain the same has expired for 15 days; Certifying the books that are required to be certified within 1 month after the expiry of their certification period; Failure to comply with the rules regulating the form and content of tax declarations, notifications, documents and copies and their annexes; Non-existence or non-declaration of some documents and copies, provided that this does not disturb the correctness and clarity of the account or transactions.
“Special Non-Compliances” can be exemplified as the failure to give or receive receipts, non-compliance with other formal or procedural rules, non-compliances pertaining to Stamp Taxes, and the failure to furnish information and non-compliance with Art(s). 256, 257 and 257 bis.
Criminal Crimes and Penalties
As stated above, the TPC stipulates that some tax crimes shall be adjudicated by the criminal courts, and these shall be penalized by restricting of freedoms.
The first of these is the “Tax Evasion” stipulated under Art. 359 et seq. In tax evasion, taxpayers, liable persons, and those who are complicit in the act, engage in deceitful activities that result in the loss of tax revenue. These acts are listed in the same provision: To engage in accounting and financial fraud in books and records, distorting, hiding, destroying books and records; Forging documents and copies, and using forged documents and copies; and Unauthorized printing of documents and using such documents, each of which may incur a prison sentence of 18 months to 5 years. It is clearly stated that these acts shall be punishable with punishments restricting freedom, and “fault” is necessary for the commitment of these crimes. In other words, material and subjective elements of criminal law are taken into consideration in determining acts that constitute tax evasion in accordance with the TPC.
Another tax crime in a criminal sense is the “Violation of the Secrecy of Taxes.” Pursuant to Art. 362 of the TPC, among persons who shall abide by the secrecy of taxes as listed under Art. 5 of TPC, and those who violate this provision, are punishable in accordance with Art. 239 of the Turkish Criminal Code (“TCC”). These persons are as follows: Public officers who conclude tax transactions and audits, the officials of tax courts, regional administrative courts and Council of State, members of the commissions formed in accordance with tax laws, as well as experts of tax transactions. These persons, as a result of the work they do, cannot declare or use for their own benefit, or for the benefit of third parties, the information they are privy to, pertaining to the identities, transactions and account statuses, works, businesses, wealth and professions of the taxpayers and persons in relation to taxpayers. This prohibition continues even though the said persons leave their work. As per Art. 239 of the TCC, a person who commits this crime shall be sentenced with imprisonment for one to three years, and with a monetary fine of up to five thousand days. A person who forces another to declare such information and documents by coercion and threat shall be punished with imprisonment for three to seven years.
The last paragraph of Art. 6 of the TPC regulates the crime of “Conducting Personal Work of Taxpayers.” Accordingly, public officers who conclude tax transactions and audits, and the officials of tax courts, regional administrative courts and Council of State, shall be prohibited from conducting accounting, communications, and other personal work of taxpayers regarding the application of tax rules, even for free. Violation of this provision shall result in imprisonment for a period of 6 months to 2 years, as per Art. 257/1 of the TCC entitled “Professional Misconduct.”
General Provisions Regarding Tax Crimes and Penalties
When considered from the perspective of “Complicity,” as a general principle of criminal law, tax crimes and penalties, it is necessary to identify persons who commit acts of tax evasion as shall be punished as per the provisions of the TCC regarding complicity. Every person who jointly commits the act shall be liable as proprietor, and those people who influence these persons shall be punished with the same penalty. Provided that those persons who are complicit in tax evasion do not financially benefit from the crime, the punishment shall be reduced by half as per the provisions regarding secondary complicity.
In criminal law, “Repetition” means a person charged with committing a crime commits another crime in a specified time period. As per Art. 339 of the TPC, this applies also to tax crimes, and the penalties are increased by half if the loss of tax revenue is repeated within 5 years, and by one-quarter if non-compliance is repeated within 2 years.
The principle of “Unification” in criminal law means the commitment of more than one crime through one act, and is also applicable to tax crimes and penalties.
[1] Prof. Dr. Mualla Öncel - Prof. Dr. Ahmet Kumrulu - Prof. Dr. Nami Çağan, Vergi Hukuku, Ankara 2015, p.209 and following.
Introduction
Tax crimes may be defined, in short, as economic crimes perpetrated against the “public treasury.” Through the commission of a criminal act, the interest of the public treasury, in a wider sense, the interest of the general public is violated. The aim of the penalty is, therefore, the timely payment of taxes due. The principles pertaining to tax crimes and penalties are regulated under the Tax Procedure Code (“TPC”). Some of the crimes and penalties stipulated under the TPC solely concern the tax law, and tax offices can directly apply these penalties without further need of a judicial decision. The acts within this scope are evaluated as “financial crimes and penalties.” On the other hand, other crimes and penalties regulated under the TPC are crimes according to criminal law, and are punishable by restricting freedom. These are determined as “criminal crimes and penalties”[1].
Types of Tax Crimes and Penalties
Financial Crimes and Penalties
As exemplified with loss of tax revenue and non-compliance, these types of tax crimes, which are punishable by monetary fines and detected and applied by tax offices, are crimes within the sense of “tax law.” These crimes may be committed without deliberate intent.
Loss of tax revenue is defined in Art. 341 of the TPC as “Loss of tax revenue means late or incomplete accrual of tax due to the non-performance or ill-performance of a taxpayer of a liable person of their obligations regarding taxation. Incomplete accrual of tax or unlawful return of tax because of misleading declarations of personal, marital status of familial situation, or other reasons shall also be deemed as loss of tax revenue.”
Art. 344 defines a criminal act of the loss of tax revenue: “Given that the tax revenue is lost due to the reasons listed under Art. 341, the taxpayer or the liable person shall be fined with the amount of tax revenue lost. If the loss of tax revenue occurs as a result of an act stipulated under Art. 359, a triple fine shall be applied, and to those who are complicit in the act, a single fine is applied.”
Non-compliance is stipulated under Art. 351 et seq. of the TPC. Accordingly, “non-compliance” means the failure to comply with the material and procedural rules of tax laws. As a result of the loss of tax revenue, some tax is evaded; whereas, in the event of non-compliance, the tax is not yet lost. Instead, through their non-compliance with formal or procedural tax rules, taxpayers, or the liable persons are trying to create a feasible environment for such loss. Art. 352 et seq. of the TPC lists the relevant acts of non-compliance and their respective penalties. These crimes are categorized as 1st Tier, 2nd Tier, and are acts that garner a special penalty. The non-compliant acts are penalized in accordance with the tiers specified in the code and with the table provided therein. Given that the described act of non-compliance requires ex officio discretion, the relevant fines shall be doubled. 1st Tier non-compliances are as follows: Failure to make tax payments and fee declarations in a timely fashion; Failure to keep the books deemed necessary in accordance with the TPC; Incomplete, non-compliant, and unorderly keeping of the books to the extent that they renders a clean tax audit impossible; Non-acceptance of the invitation made by village councilmen and community council pursuant to Art. 245, by farmers; Non-compliance with the rules of bookkeeping set out in the TPC; Not declaring the commencement of work on time; Failure to certify one of the books that is required to be certified (Certification that is made 1 month after the legal period has expired shall be deemed non-existent); Failure to levy a tax, even though the levy period has passed; Declaring inheritance and transfer tax within the time periods specified under Art. 342/2.
2nd Tier non-compliances are as follows: Declaring the inheritance and transfer tax within the time periods specified under Art. 342/1 after the expiry of their declaration periods; Failure to provide the seeding and counting declarations in time, or wholly; Failure to make the necessary written declarations specified in tax laws (except the commencement of work declaration); Failure to obtain the tax card although the period within which to obtain the same has expired for 15 days; Certifying the books that are required to be certified within 1 month after the expiry of their certification period; Failure to comply with the rules regulating the form and content of tax declarations, notifications, documents and copies and their annexes; Non-existence or non-declaration of some documents and copies, provided that this does not disturb the correctness and clarity of the account or transactions.
“Special Non-Compliances” can be exemplified as the failure to give or receive receipts, non-compliance with other formal or procedural rules, non-compliances pertaining to Stamp Taxes, and the failure to furnish information and non-compliance with Art(s). 256, 257 and 257 bis.
Criminal Crimes and Penalties
As stated above, the TPC stipulates that some tax crimes shall be adjudicated by the criminal courts, and these shall be penalized by restricting of freedoms.
The first of these is the “Tax Evasion” stipulated under Art. 359 et seq. In tax evasion, taxpayers, liable persons, and those who are complicit in the act, engage in deceitful activities that result in the loss of tax revenue. These acts are listed in the same provision: To engage in accounting and financial fraud in books and records, distorting, hiding, destroying books and records; Forging documents and copies, and using forged documents and copies; and Unauthorized printing of documents and using such documents, each of which may incur a prison sentence of 18 months to 5 years. It is clearly stated that these acts shall be punishable with punishments restricting freedom, and “fault” is necessary for the commitment of these crimes. In other words, material and subjective elements of criminal law are taken into consideration in determining acts that constitute tax evasion in accordance with the TPC.
Another tax crime in a criminal sense is the “Violation of the Secrecy of Taxes.” Pursuant to Art. 362 of the TPC, among persons who shall abide by the secrecy of taxes as listed under Art. 5 of TPC, and those who violate this provision, are punishable in accordance with Art. 239 of the Turkish Criminal Code (“TCC”). These persons are as follows: Public officers who conclude tax transactions and audits, the officials of tax courts, regional administrative courts and Council of State, members of the commissions formed in accordance with tax laws, as well as experts of tax transactions. These persons, as a result of the work they do, cannot declare or use for their own benefit, or for the benefit of third parties, the information they are privy to, pertaining to the identities, transactions and account statuses, works, businesses, wealth and professions of the taxpayers and persons in relation to taxpayers. This prohibition continues even though the said persons leave their work. As per Art. 239 of the TCC, a person who commits this crime shall be sentenced with imprisonment for one to three years, and with a monetary fine of up to five thousand days. A person who forces another to declare such information and documents by coercion and threat shall be punished with imprisonment for three to seven years.
The last paragraph of Art. 6 of the TPC regulates the crime of “Conducting Personal Work of Taxpayers.” Accordingly, public officers who conclude tax transactions and audits, and the officials of tax courts, regional administrative courts and Council of State, shall be prohibited from conducting accounting, communications, and other personal work of taxpayers regarding the application of tax rules, even for free. Violation of this provision shall result in imprisonment for a period of 6 months to 2 years, as per Art. 257/1 of the TCC entitled “Professional Misconduct.”
General Provisions Regarding Tax Crimes and Penalties
When considered from the perspective of “Complicity,” as a general principle of criminal law, tax crimes and penalties, it is necessary to identify persons who commit acts of tax evasion as shall be punished as per the provisions of the TCC regarding complicity. Every person who jointly commits the act shall be liable as proprietor, and those people who influence these persons shall be punished with the same penalty. Provided that those persons who are complicit in tax evasion do not financially benefit from the crime, the punishment shall be reduced by half as per the provisions regarding secondary complicity.
In criminal law, “Repetition” means a person charged with committing a crime commits another crime in a specified time period. As per Art. 339 of the TPC, this applies also to tax crimes, and the penalties are increased by half if the loss of tax revenue is repeated within 5 years, and by one-quarter if non-compliance is repeated within 2 years.
The principle of “Unification” in criminal law means the commitment of more than one crime through one act, and is also applicable to tax crimes and penalties.
[1] Prof. Dr. Mualla Öncel - Prof. Dr. Ahmet Kumrulu - Prof. Dr. Nami Çağan, Vergi Hukuku, Ankara 2015, p.209 and following.
