Statistics on investigation of criminal proceedings under Article 212 of the Criminal Code of Ukraine within the period of the year 2013 or “tax racket in order of the new Criminal Procedural Code of Ukraine”

06 March, 2014 Newsletters

1.

As a result of entering of the new Criminal Procedural Code of Ukraine into legal force the considerable increase of opened criminal proceedings’ number and, respectively, an increase of pressure on taxpayers on the part of the law enforcement bodies, and especially on the part of tax police, occurred. As a confirmation of the abovementioned there was an official statistics on investigations of criminal proceedings within the period of the year 2013, published by the General Procurator’s Office of Ukraine and the State Judicial Administration of Ukraine.

In particular, such novelty of the Criminal Procedural Code of Ukraine as obligatory registration in the Unified Register of Pre-trial Investigations of all criminal infringements, signs of which were discovered by the investigators or prosecutors, considerably increased the number of criminal proceedings initiated under Article 212 (tax evasion) of the Criminal Code of Ukraine.

What is also of importance in this issue is the mechanism, stipulated in subpara. 2.5 of the Methodical Recommendations regarding the Procedure of Cooperation between Subdivisions of Authorities of the State Tax Service upon Organization, Conduction and Fulfillment of the Materials of Taxpayers’ Audits, adopted by the Order of the State Tax Service of Ukraine as of 31.10.2012 No. 948, according to which upon results of tax audits tax inspectors are obliged to submit to theoffices offinancial investigations data on all discovered infringements of tax legislation, additional accruals upon which reach “threshold” of criminal liability (in 2013 the amount is UAH 573,5 thousands, for the year 2014 – UAH 609 thousands). Tax police, in its turn, upon such notifications, pursuant to Article 214 of the Criminal Procedural Code of Ukraine, registers the proceeding in the Unified Register of Pre-trial Investigations and initiates pre-trial investigation.

In practice such automatic mechanism of opening a criminal proceeding works only regarding taxpayers. Upon infringement of taxpayers’ rights by the officials of tax authorities, the officials of home affairs authorities and of the prosecutor’s office do not register in the Unified Register of Pre-trial Investigations any justified applications of commitment of crimes by tax authorities’ officials, regardless the imperative nature of the provision of Article 214 of the Criminal Procedural Code of Ukraine. Detailed information you can find in article as of August 20, 2013 “Where one is capable of doing, another is not allowed: selectivity of the data entry into the Unified Register of Pre-trial Investigations”.

Functioning of automatic mechanism of opening a criminal proceeding has resulted into the fact, that during the year 2013 in Ukraine the authorities of pre-trial investigation registered 3069 new criminal proceedings under Article 212 of the Criminal Code of Ukraine. It is worth mentioning, that this is only such proceedings, which were logged into the Unified Register of Pre-trial Investigations within the period from January 1, 2013 till December 31, 2013. But this is not all proceedings, which were processed by authorities of pre-trial investigations, since many proceedings were registered in 2012 and continued to be investigated in 2013 (upon entering of the new Criminal Procedural Code of Ukraine into legal force all criminal cases existing at that moment were massive registered in the Unified Register of Pre-trial Investigations).

2.

To understand real scope of the issue and to make conclusions regarding effectiveness of work of authorities of financial investigation it is worth to define general number of criminal proceedings under Article 212 of the Criminal Code of Ukraine which were investigated in 2013.

For this reason one should refer to statistics of issued procedural decisions upon already registered criminal proceedings.

Thus, within the period from January 1 till December 31, 2013 3662 criminal proceedings were closed (including pursuant to part 1 of the subpara. 1, 2, 4, 6 of Article 284 of the Criminal Procedural Code of Ukraine – 3655 proceedings). We would like to note that the number of closed proceedings exceeds the number of registered within the year 2013 new criminal proceedings (3069). Such state of facts can be explained with “rakingof the Augeanstables” by authorities of pre-trial investigations.

At the same time regarding 2600 of the registered criminal infringements on tax evasion by end of the year 2013 no relative procedural decision was issued (on ending or close), i.e. upon the date of December 31, 2013 existed 2600 proceedings, which were just “hanging” without their submission to the court or closure of the case.

Herewith, according to the statistical data, the notification of suspicion in 2013 was filed only in commitment of 482 crimes under Article 212 of the Criminal Code of Ukraine. 437 criminal proceedings of which were submitted to the court.

Thus, taking into account the aforementioned official data one can define the general number of criminal proceedings under Article 212 of the Criminal Code of Ukraine, which were under investigation in 2013 by the following formula:

general number of proceedings in 2013 = number of proceedings, regarding which no decision was issued by the end of the period (2600) + number of proceedings, regarding which the proceeding was closed (3662) + number of proceedings, regarding which the proceeding was stopped (10) + number of proceedings, regarding which the proceeding was submitted to the court (437).

Thus, in general, as shown, there were 6709 (2600+3662+10+437) criminal proceedings regarding intentional tax evasion under investigation of the authorities of pre-trial investigation in 2013. 

3.

Now regarding the efficiency of criminal proceedings’ investigation under Article 212 of the Criminal Code of Ukraine. Only in 482 proceedings out of 6709, which were under investigation in 2013, the individuals were notified of suspicion. In other words, only in 7% of proceedings under Article 212 of the Criminal Code of Ukraine individuals were notified of suspicion.

We would like also to note, that materials upon 272 crimes under Article 212 of the Criminal Code of Ukraine were submitted to the court with the application for exemption from criminal liability. From the experience the submission of the case to the court with the application for exemption under part 4 of Article 212 of the Criminal Code of Ukraine is also used as means of pressuring taxpayer, since such exemption from liability foresees recognition of criminal infringement and obligatory payment of all additionally accrued tax liabilities. For more detailed information regarding peculiarities of exemption from criminal liability under part 4 of Article 212 of the Criminal Code of Ukraine see the Newsletter as of October 31, 2012 “Peculiarities of the exemption from criminal liability under part 4 of Article 212 of the Criminal Code of Ukraine, according to the New Criminal Procedural Code of Ukraine”.

Only 165 proceedings under Article 212 of the Criminal Code of Ukraine were submitted to the court with the bill of indictment (less than 2,5% of inquired proceedings).

Thus, general statistics of criminal proceedings’ investigations under Article 212 of the Criminal Code of Ukraine within the period of the year 2013 is the following:

within the period general number of criminal proceedings within a year number of registered criminal proceedings in 2013 number of closed + stopped proceedings within a year
2013 6709 3069 3662 + 10
number of arranged notifications on suspicion from which were submitted to the court (437)
with the bill of indictment with the application for exemption from criminal liability
482 (7%) 165 (2,5%) 272 (4,5%)

4.

It is worth mentioning, that according to the statistical data for the year 2013, courts adopted in general 113 convictions in proceedings under Article 212 of the Criminal Code of Ukraine. At the same time in 2013 in criminal proceedings upon prosecution in tax evasion courts adopted only 6 acquittals. Thus, the proportion of acquittals upon signs of crime of tax evasion, in relation to convictions constitutes only 5%.

Furthermore, in relation to the general number of proceedings, which were by authorities of pre-trial investigation within the year, the share of convictions (113) under Article 212 of the Criminal Code of Ukraine constitutes only 1,6% from the general number of proceedings.

5.

Such statistical data eloquently testifies both to inefficiency of mechanism of opening a criminal proceeding regarding tax evasion automatically only upon conclusions of tax audit acts, and to inefficiency of work of authorities of pre-trial investigations. As a result of this only 2,5% of proceedings reach the stage of court hearing, in other words only 2,5% of proceedings have the signs of real crimes, and only in 1,7% of proceedings courts deliver a judgment. Other part of criminal proceedings under Article 212 of the Criminal Code of Ukraine (97,5%) is nothing else as means of influence and intimidation of taxpayers.

Thus, taking into account the data analyzed for the year 2013 one can come to a conclusion, that investigation of criminal proceeding upon signs of tax evasion is aimed only at “filling” the state budget and it is so to say “tax racket”, since the presence of opened criminal proceeding is used as means of pressuring taxpayers with the purpose to force them to pay additionally accrued tax liabilities, and not for real struggle against white collar crimes as it should be.

 Footnotes:

This topic was to some extent researched by our firm in previous years. In particular, one of the blocks of article “Tax code as an epitaph”, which was published in the portal “Ekonomichna pravda” on 08.07.2010, was dedicated  to such kind of statistics compared to some other countries.  The respective part of the article, which relates to this topic, is shaded:

Download pdf-file of the article in Ukrainian (208 Kb)

The above commentary presents the general statement for information purposes only and as such may not be practically used in specific cases without professional advice.

Kind regards,

© TOV "KM Partners", 2014

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