{"id":15053,"date":"2019-10-11T15:37:44","date_gmt":"2019-10-11T13:37:44","guid":{"rendered":"https:\/\/kmp.ua\/?p=15053"},"modified":"2020-05-26T08:44:26","modified_gmt":"2020-05-26T06:44:26","slug":"decriminalization-of-tax-evasions-on-amount-uah-2-881-500-retroactivity-of-the-effective-version-of-article-212-of-the-criminal-code","status":"publish","type":"post","link":"https:\/\/kmp.ua\/en\/analytics\/exclusive\/decriminalization-of-tax-evasions-on-amount-uah-2-881-500-retroactivity-of-the-effective-version-of-article-212-of-the-criminal-code\/","title":{"rendered":"Decriminalization of tax evasions on amount < UAH 2 881 500
Retroactivity of the effective version of Article 212 of the Criminal Code"},"content":{"rendered":"

As known, the provisions of the Law of Ukraine On Amendments to the Criminal Code of Ukraine and the Criminal Procedure Code of Ukraine on Reducing Pressure on Business as of September 18, 2019 No. 101-IX (hereinafter \u2013 the Law No. 101-IX) came into force on September 25, 2019.<\/p>\n

Within the public and among lawyers, the Law No. 101-IX is better known as the “Law on Decriminalization of Sham Business” considering that according to its provisions Article 205 \u201cSham Business\u201d was excluded from the Criminal Code of Ukraine (hereinafter – the Criminal Code).<\/p>\n

However, the actual decriminalization of part 1 of Article 212 of the Criminal Code in the version effective until September 25, 2019 was unreasonably left unattended. In particular, according to the previous version of Article 212 of the Criminal Code the following thresholds for criminal liability were set forth:<\/p>\n

\"\"<\/p>\n

That is, the \u201cstarting point\u201d for bringing a person to liability for tax evasion in 2019 was non-receipt by the budget of taxes in amount of UAH 960,500.<\/p>\n

Meanwhile, Article 212 of the Criminal Code was amended by the Law No. 101-IX, and the following thresholds for criminal liability are set as of today:<\/p>\n

\"\"<\/p>\n

That is, as of today failure to pay taxes to the budget in amount of < UAH 2 881 500<\/strong>, which according to the previous version of the Criminal Code was considered as a crime provided for in part 1 of Article 212 of the Criminal Code \u2013 starting from September 25, 2019 shall not be considered as an act of crime.<\/strong><\/p>\n

1.<\/strong><\/p>\n

Moreover, according to the general rule provided by part 2 of Article 4 of the Criminal Code, the criminality and punishability and other criminal consequences of an act shall be determined according to the law on criminal liability, effective as of the date of commission of this act.<\/strong><\/p>\n

However, Article 58 of the Constitution of Ukraine establishes that laws and other legal acts do not have a retroactive effect, except for when they mitigate or abolish the liability of the individual.<\/p>\n

These provisions were also specified in part 1 of Article 5 of the Criminal Code, which establishes the rule of retroactive effect of the law on criminal liability in time:<\/p>\n

\u00ab1. The criminal liability law which abolishes a crime<\/strong>, mitigates criminal liability or otherwise improves the situation of an individual, shall have a retroactive effect, in other words it shall be applied to individuals who have committed respective acts before the law came into force<\/strong>, including those individuals serving sentences or the ones having served sentences, but still having a criminal record\u00bb.<\/span><\/p>\n

That is, the criminal liability law which abolishes a crime, has a retroactive effect and shall be applied to individuals who have committed the respective acts prior to the enactment of such law.<\/p>\n

According to the explanation of the Supreme Court of Ukraine, set forth in the Letter as of September 1, 2015, \u201cAnalysis of the judicial practice of applying the retroactive effect of the law in time\u201d (hereinafter – the Letter of the Supreme Court of Ukraine), it was further clarified that (quotation):<\/p>\n

“The abolition of an act of crime means its decriminalization<\/strong> (full or partial), which can be achieved by:<\/em><\/p>\n

a) abolition of the provisions of the Special Part of the Criminal Code;<\/em><\/p>\n

b) amendments to the provisions of the Special Part of the Criminal Code, that is inclusion to the dispositions of additional elements or exclusion of elements contained in the previous version of the provision;<\/em><\/p>\n

c) amendments to the provisions of the General Part of the Criminal Code (for example, supplementing the relevant article of the Criminal Code with an additional circumstance that excludes crime of action, or supplementing the Criminal Code with the provision stipulating that preparation for a minor offence shall not entail a criminal liability);<\/strong><\/em><\/p>\n

d) a new official interpretation of the criminal law that changes the scope of conduct prohibited by this provision without changing its content (without changing the \u201cletter of the law\u201d). According to Article 147 of the Constitution of Ukraine the official interpretation of the laws of Ukraine shall be provided by the Constitutional Court of Ukraine”.<\/em><\/p>\n

In this case, the change in the thresholds for criminal liability in accordance with the Note to Article 212 of the Criminal Code resulted in the cancellation of criminal act, which led to the failure to pay to the budget of up to UAH 2 881 500 \u2013 meaning decriminalization of acts, which until September 25, 2019 were qualified under part 1 of Article 212 of the Criminal Code.<\/strong><\/p>\n

Therefore, since the new version of the law on criminal liability (the Criminal Code) as of September 25, 2019 abolishes the criminal act provided for in part 1 of Article 212 of the previous version of the Criminal Code as of before September 25, 2019 \u2013 the current version of Article 212 of the Criminal Code shall have a retroactive effect.<\/strong> Thus, the criminal proceedings initiated under part 1 of Article 212 of the Criminal Code (as amended by September 25, 2019) are subject to be closed on the basis of paragraph 1 of part 1 of Article 284 of the Criminal Procedure Code of Ukraine due to absence of a criminal event.<\/strong><\/p>\n

These conclusions are confirmed by the example given in Section 2.2 of the Letter of the Supreme Court of Ukraine, which states (quotation):<\/p>\n

\u00abIn view of the changes that took place as regards Article 368 of the Criminal Code, in admeasuring the penalty, the courts shall thoroughly analyse the aforementioned changes, draw attention to the fact when the crime was committed, its elements and their relation to the new changes in the criminal law.<\/em><\/p>\n

Thus, M. was found guilty of claiming and receiving a bribe of UAH 3 thousand on May 31, 2012 by the Verdict of the Kerch City Court of the Autonomous Republic of Crimea as of June 27, 2013 (the Law \u2116 221-VII has already entered into force). The actions of the convicted person were reasonably qualified under part 3 of Article 368 of the Criminal Code (as amended by the Law \u2116 3207-VI) as bribery, and therefore he was sentenced to five years of imprisonment with deprivation of the right to occupy positions or be engaged in activities related to the performance of organizational, administrative and administrative-economic duties in the field of veterinary medicine, for a period of three years without confiscation of property, and on the basis of Article 75 of the Criminal Code, M. was released from serving a primary punishment upon two years of probation period.<\/em><\/p>\n

It should be noted that in accordance with the Note 1 to Article 368 of the Criminal Code<\/mark> (as amended by the Law \u2116 221-VII) an improper advantage of a large scale is a benefit one hundred times exceeding the tax-free minimum income of citizens, while according to Article 368 of the Criminal Code<\/mark> (as amended by the Law \u2116 3207-VI) a bribe of a large scale is such a bribe which five or more times exceeds the tax-free minimum income of citizens. <\/mark><\/em><\/p>\n

Therefore, an increase of a margin amount starting from which an individual shall be brought to liability for receipt of an improper advantage of a considerable amount (part 3 of Article 368 of the Criminal Code as amended by Law \u2116 221-VII) shall have a retroactive effect\u00bb.<\/mark><\/em><\/strong><\/p>\n

In this case, changes to the Notes to Article 212 of the Criminal Code, introduced by the Law No.101-IX, also increased the margin amount starting from which an individual shall be brought to the liability for tax evasion, and therefore, the aforementioned explanations of the Supreme Court of Ukraine confirm once more the correctness of the conclusions on the retroactive effect of the abovementioned changes.<\/p>\n

2.<\/strong><\/p>\n

There is one more interesting issue as regards the application of retroactive effect of part 2 and part 3 of Article 212 of the Criminal Code, since the Law No. 101-IX also amended the scope of punishment under Article 212 of the Criminal Code:<\/p>\n

\"\"<\/p>\n

Part 2 of Article 212 of the Criminal Code<\/strong><\/p>\n

That is, on the one hand, the crime qualified under the thresholds set forth by part 2 of Article 212 of the Criminal Code in the previous version (before September 25, 2019) should be requalified under part 1 of Article 212 of the Criminal Code in the version after September 25, 2019. Meanwhile, the punishment provided by part 1 of Article 212 of the Criminal Code in the version after September 25, 2019 (setting a fine in amount of 3 to 5 tax-free minimum incomes of citizens) is more severe than the one provided by part 2 of Article 212 of the Criminal Code (setting a fine in amount of 2 to 3 tax-free minimum incomes of citizens) in the previous version before September 25, 2019.<\/p>\n

In this case, part 2, part 3 of Art. 5 of the Criminal Code shall be applied, stipulating the following:<\/p>\n

\u00ab2. The law on criminal liability establishing an act of crime, which strengthens the criminal liability<\/strong> or anyhow otherwise degrades an individual\u2019s situation shall not have a retroactive effect<\/strong><\/span>.<\/span><\/p>\n

3. The law on criminal liability, partially mitigating criminal liability or anyhow otherwise improving the situation of an individual, while partly strengthening criminal liability<\/strong> or anyhow otherwise degrading the situation of an individual, shall have retroactive effect only insofar as it mitigates criminal liability<\/span><\/strong> or anyhow otherwise improves an individual\u2019s situation”.<\/span><\/p>\n

Hence, despite of the change in the threshold of criminal liability, in the case of qualifying a crime under part 2 of Article 212 of the Criminal Code in the previous version before September 25, 2019 \u2013 the new version of part 1 of Article 212 of the Criminal Code as of September 25, 2019 shall not be applied to the aforementioned act, since it increases the criminal liability (punishment) for the respective act.<\/p>\n

Part 3 of Article 212 of the Criminal Code<\/strong><\/p>\n

However, for crimes qualified before September 25, 2019 under part 3 of Article 212 of the Criminal Code, a reduction of criminal liability \/ an improvement in the situation of an individual occurred, since:<\/p>\n

(i) as regards the thresholds, such a crime shall be requalified under part 2 of Article 212 of the Criminal Code;<\/p>\n

(ii) the sanction shall be reduced from “15,000 to 25,000 tax-free minimum incomes of citizens” to “5,000 to 7,000 tax-free minimum incomes of citizens”.<\/p>\n

Hence, the retroactive effect of the current version of Article 212 of the Criminal Code shall be applied to crimes qualified before September 25, 2019 under part 3 of Article 212 of the Criminal Code.<\/p>\n

* * *<\/p>\n

Therefore, the amendments introduced by the Law No. 101-IX are of considerable importance not only due to decriminalization of Article 205 of the Criminal Code, but also due to the changes introduced to Article 212 of the Criminal Code, which results in:<\/p>\n