Tax Reform: Amendment to the Criminal Tax Law

1. Introduction

Law No. 24,769 ("Criminal Tax Regime, Law or Criminal Tax Law") was enacted on December 19, 1996 and promulgated on January 13, 1997, replacing Law No. 23,771.

The main aspects were simple and aggravated tax evasion, among others, with a limit of ARS 100,000 and ARS 1,000,000 respectively for each type, without prejudice to the existence of other aggravating aspects that could generate the application of the aggravated type, such as the commission of the crime through an intermediary.

Likewise, article 16 of the Law included a provision by means of which a taxpayer charged for the crime of evasion could be released from the process by paying the total amount of the evaded amount.

On December 28, 2011, Law No. 26,735 was published in the Official Gazette, modifying the Criminal Tax Law especially in three aspects:

a) It raised the minimum amounts provided as an admissibility condition for the prosecution of a criminal case;

b) It incorporated as an aggravated criminal type the evasion through the use of apocryphal invoices or similar documents;

c) It repealed the possibility of requesting the release by paying in full the amount at issue unless it was made on an spontaneous basis and;

d) It included accessory sanctions to companies regardless of the imprisonment punishment for its members.

2. Main amendments

Among the most relevant amendments, the following aspects should be mentioned:

a) The established amounts provided as admissibility conditions, that is, the conditions according to which there is a minimum amount to initiate criminal action, are raised.

It is expected that the minimum amount for the ordinary evasion crime will rise from ARS 400,000 pesos to ARS 1,000,000 pesos.

The minimum amount for the aggravated evasion crime will rise from ARS 4,000,000 million pesos to ARS 10,000,000 million pesos.

 

b) A minimum amount is included for the criminal type of aggravated evasion through the use of apocryphal invoices or equivalent documents.

We emphasize that since the enactment of Law 26,735 various judicial causes based on this topic were initiated under the discussion as to whether the use of a single apocryphal invoice had already triggered the application of the aggravated figure or whether there had to be at least a minimum amount of ARS 400,000 pesos through the operation of this modality to be able to apply it.

With the bill, a minimum amount of ARS 1,000,000 pesos is foreseen, so  the discussion would be settled.
 

c) A minimum amount is included for the crime of fraud simulation of cancellation of obligations (today, willful payment simulation)

An amount of ARS 500,000 pesos per year is included as an admissibility condition for the crime renamed as fraud simulation of cancellation of obligations and sanctions or a minimum of ARS 100,000 per month in the case of social security resources and their sanctions.
 

d) The specific sanction for legal persons consisting on a fine equivalent to 2 to 10 times the amount of the verified debt is eliminated.

We understand the elimination is correct since the same sanction is established at the administrative level in Article 46 of the Tax Procedure Law, so it generated the discussion regarding the application to the case of the non bis in idem guarantee .
 

e) Once again the possibility of requesting the release from the criminal process in exchange for the total payment of the involved amounts is included.

In cases of evasion of both, taxes and social security resources as well as the figure of undue use of fiscal benefits, it is foreseen that criminal action will be extinguished, if the evaded obligations are accepted and canceled unconditionally and fully, or improperly collected and its accessories, up to thirty (30) business days after the procedural act by which the made criminal charge is faithfully notified.

This benefit will be granted only once in a lifetime for each obligated natural or legal person.}

 

f) Limits are imposed on the tax authorities for the formulation of a criminal complaint.

It is foreseen that the tax authorities will not formulate a criminal complaint in cases where there are issues of normative interpretation and/or technical accounting aspects of liquidation. The amount of the obligation supposedly evaded in relation to the total tax obligation in the taxpayer's fiscal period must also be taken into consideration.

Nor should a criminal complaint be made in cases of tax or social security assessments based on presumptions without existence of other elements.

The determination not to file a criminal complaint must be adopted by means of a decision based on the opinion of the corresponding legal service, by the officials to whom said competence has been expressly assigned and following the procedure of the comptroller established in the regulations.

 

3. Conclusion

We consider that the proposed amendments intended for the Criminal Tax Regime are correct and also in line with the corresponding case law on these matters. Indeed, the fact that the extension of the minimum admissibility amounts will probably reduce the flow of current and future cases submitted to the courts.

Likewise, we judge correct the explicit instruction to the tax authorities not to report cases where issues of normative interpretation and technical aspects of the tax are at stake since, currently, there is no such previous analysis generating a costly and exhausting criminal process for the taxpayers and their managers.

It should be remembered that until now only the bill of law was submitted to the Congress. This proposal, if approved, will become effective as of its publication in the Official Gazette or at the moment in which it is passed by the future law.