The “ghost”\u00a0is haunting Ukraine: the “ghost” of Tax militia. It seems, that all have agreed, that the framework for activity of tax militia has ceased to be in force from 01.01.2017, and according to the law there are no other units with investigative functions within the tax authorities.<\/p>\n
However, in practice even now we see the actions within the criminal proceedings, which are carried out by investigation units within the tax authorities. For example, the application from such authorities to the enterprises with the reference to Art. 93 of Criminal procedure Code of Ukraine, the application to the courts with the petitions for temporal access to the documents of the enterprises within the criminal proceedings, and, in fact, delivering the decisions on granting such access, etc.<\/p>\n
What are the consequences of such actions, how to deal with it and whether can it be counteracted? We examine these issues in this information letter.<\/p>\n
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<\/p>\n
1.<\/p>\n
Let’s start with the fact, that the abovementioned actions, according to the law, can only be conducted by the party of the criminal proceeding, as stipulated by Art. 93 “Collection of evidence” and Art. 159 (on temporary access to objects and documents) of the Criminal procedure Code (hereinafter – “CPC”).<\/p>\n
According to the CPC of Ukraine (para. 19 part 1 of Art. 3), the party of the criminal proceeding from the side of prosecution is the investigator, head of the pre-trial investigation and prosecutor.<\/p>\n
That is, the same temporary access can be provided only to the prosecutor or the body of pre-trial investigation represented by the investigator or the head. This is logical in terms of the application of the measure for the purpose for which it is intended, i.e. ensuring the pre-trial investigation.<\/p>\n
List of pre-trial investigation bodies is stipulated by Art. 38 of the CPC. According to para. 3) part 1 of Art.\u00a0 38 of the CPC pre-trial investigation bodies include in particular investigation units of “authorities supervising compliance with the tax legislation”.<\/p>\n
However, does the legislation today provide such investigation units of controlling bodies that supervise the compliance with the tax legislation?<\/u><\/p>\n
2.<\/p>\n
Functions and legal basis of activity of tax controlling bodies, its competence, powers and duties of its officials are provided in the Tax Code of Ukraine (hereinafter \u2013 the “TC of Ukraine”), (para. 1.1. of Art. 1).<\/p>\n
The edition of the TC of Ukraine that is effective from 01.01.2017, gives the clear determination of the right to conduct pre-trial investigation (subpara. 350.1.2. of Art. 350 of Section XVIII-2 of the TC of Ukraine), which was given to relevant unit of tax militia as to special units that carry out control over compliance with tax legislation (as it was determined by para.348.1 of Art. 348 of the TC of Ukraine).<\/p>\n
However, since 01.01.2017 the whole Section XVIII-2 of the TC of Ukraine has become invalid, and as of the date of this letter the Tax Code of Ukraine does not provide any tax authority or unit that carry out control over compliance with tax legislation, with the right to conduct pre-trial investigation.<\/p>\n
In practice, the tax office in its documents indicate the investigation department of financial investigations (hereinafter \u2013 the “IDFI”) of the respective tax body in the capacity of respective unit. In accordance with part 2 of Art. 19 of the Constitution of Ukraine “state authorities and local government bodies, its officials shall act only on the basis, within the powers and in the manner envisaged by the Constitution and laws of Ukraine”.<\/p>\n
Whereas at present the Tax Code of Ukraine as the law which determine competence, functions and rights of controlling bodies that carry out control over compliance with tax legislation does not provide the abovementioned authorities or its units with the powers to conduct pre-trial investigation, the stated above investigation department also does not have the right and powers to conduct pre-trial investigation under the law.<\/p>\n
Thus, such investigative departments do not meant to be the pre-trial investigation body and, accordingly, the party of the criminal proceeding, which would have had right of temporary access or right to address a request on provision of documents pursuant to Art. 93 of the CPC.<\/p>\n
Accordingly, the investigator of such department is not the investigator of the pre-trial investigation body and therefore is not the party of the criminal proceeding. Consequently, UNDER THE LAW, the temporary access cannot be granted to the mentioned person, as well as this person does not have the right to address a request pursuant to Art. 93 of the CPC.<\/p>\n
Additionally, it should be noted, that even the clearer special situation arises, when the investigators of the IDFI of STI address a request in the districts. Here is the argument regarding the absence of the respective status of these persons under the law:<\/p>\n
According to the para. 3) part 1 of Art. 38 of CPC, the relevant investigation unit in order to be considered as the pre-trial investigation body should be a unit of the authority supervising compliance with the tax legislation\u00bb<\/em><\/p>\n According to Art. 19-3 of the edition of the TC of Ukraine that is effective from 01.01.2017, state tax inspections conduct only support and registration service of taxpayers (providing administrative, consulting, reference, informational, electronic and other services, para. 14.1.226-1 of the TC of Ukraine). That means that such inspections from 01.01.2017 are not the bodies that carry out control over compliance with tax legislation.<\/p>\n So, this is another reason why from 01.01.2017 investigation units, which would have had right to conduct a pre-trial investigation cannot exist UNDER THE LAW within the district tax inspections, which are no longer belong to bodies that carry out control over compliance with tax legislation<\/em>.<\/p>\n What conclusions from the abovementioned can be made first of all?<\/p>\n Such actions are illegal, since they are conducted not by the party of the criminal proceeding. Therefore, documents and materials that were received in this way, and not in accordance with the procedure established by the CPC<\/em>, cannot be considered as admissible “evidence”, pursuant to Art. 86 of the CPC.<\/p>\n So these actions can turn out to be only a “noise” from the procedural point of view, and the cases formed in this way can go to pieces in the courts, even based on formal grounds.<\/p>\n If they understand it, why do they act in such a way? Another answer that to put pressure on business does not come to mind.<\/p>\n 5.<\/p>\n Can we deal with it if you directly face it?<\/p>\n For example, deal with the court (investigative judge) ruling, which has already granted the right of temporary access to the documents of Your enterprise.<\/p>\n We think that there are all grounds for denial of access, even if such a court decision is delivered. Although the court decisions are subject to absolute execution, they must be legal and realistic for execution.<\/p>\n Thus, for example, it will not evoke a surprise if the documents are not provided because they are missing in the enterprise.<\/p>\n Or another example, that is closer to the topic of discussion: if the investigator who has been given the right to access by the court ruling, has already quit his job in the “authorities”, but has come to the enterprise and required the access to the documents and has been waving the court ruling, we think that no doubts that the Enterprise shall deny the access to the investigator as he is no longer the party of criminal proceeding (and access is provided only in a certain “capacity”, which it should have under the law). This capacity is qualification as the “party of the criminal proceeding”, which can be provided with the temporary access only under the law (see Art. 159 of the CPC).<\/p>\n But if the party is no longer the party of the criminal proceeding under the law (as discussed above), then there are no legal grounds for providing the temporary access to this person. In accordance with part 1 of Art. 19 of the Constitution, nobody shall be forced to take actions which are not provided for by the law. And the law provides the temporary access only to the party of the criminal proceeding, which as defined by the law, is not the part of the tax authorities.<\/p>\n Thus, in our opinion, the denial to provide the temporary access in this case would be rather justified.<\/p>\n Another possible approach is to provide access, but we recommend to clearly specify the unlawfulness of conducted access in the protocol. And also to indicate that such actions are conducted after clarifying its unlawfulness and inadmissibility as evidence for the purposes of criminal proceeding, received in this way. The value of the material received in this way for the investigation is under the big question and may be the reason for the “breakdown” of the case in the court, if it gets in there.<\/p>\n 7.<\/p>\n In the case of denial to the temporary access, it is worth trying to explain the reasons in writing. Also, it is worth to file the application to the court (the investigative judge) who has delivered the respective court ruling for the purpose of clarifying the reasons why this court ruling is not being executed. Such actions may block the “tax militiamen” to obtain from the court the permission for the search, which according to the general rule (Art. 166 of the CPC) may be provided in case of failure to comply with the court ruling on the temporary access.<\/p>\n According to the law, the right on the search is also provided only to the party of the criminal proceeding. Therefore, the abovementioned arguments can be used in this case too. However, it is better to avoid the “confrontation”, and to try to preclude it to the full at the court level.<\/p>\n 8.<\/p>\n Actually, such problems arise rather in those situations when the courts (the investigative judges) take a relaxed look at\u00a0the wishes of the party, which files the petition on the temporary access, and consider the petition without the participation of the party in possession of which the documents are kept.<\/p>\n If the person is invited for consideration of the petition, then all the stated above arguments may be given during such a consideration.<\/p>\n We hope that the abovementioned eventually will become available and obvious to all judges, and then the “ghost” will not scare anyone.<\/p>\n 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.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" \u00ab\u041f\u0440\u0438\u0432\u0438\u0434\u00bb \u0431\u043b\u0443\u043a\u0430\u0454 \u0423\u043a\u0440\u0430\u0457\u043d\u043e\u044e: \u00ab\u043f\u0440\u0438\u0432\u0438\u0434\u00bb \u043f\u043e\u0434\u0430\u0442\u043a\u043e\u0432\u043e\u0457 \u043c\u0456\u043b\u0456\u0446\u0456\u0457. \u0417\u0434\u0430\u0454\u0442\u044c\u0441\u044f, \u0432\u0436\u0435 \u0432\u0441\u0456 \u043f\u043e\u0433\u043e\u0434\u0438\u043b\u0438\u0441\u044f, \u0449\u043e \u0431\u0430\u0437\u0430 \u0434\u043b\u044f \u0434\u0456\u044f\u043b\u044c\u043d\u043e\u0441\u0442\u0456 \u043f\u043e\u0434\u0430\u0442\u043a\u043e\u0432\u043e\u0457 \u043c\u0456\u043b\u0456\u0446\u0456\u0457 \u0432\u0442\u0440\u0430\u0442\u0438\u043b\u0430 \u0447\u0438\u043d\u043d\u0456\u0441\u0442\u044c \u0437 01.01.2017 \u0440., \u0430 \u0456\u043d\u0448\u0438\u0445 \u043f\u0456\u0434\u0440\u043e\u0437\u0434\u0456\u043b\u0456\u0432 \u0437\u0456 \u0441\u043b\u0456\u0434\u0447\u0438\u043c\u0438 \u0444\u0443\u043d\u043a\u0446\u0456\u044f\u043c\u0438 \u0443 \u0441\u043a\u043b\u0430\u0434\u0456 \u043f\u043e\u0434\u0430\u0442\u043a\u043e\u0432\u0438\u0445 \u043e\u0440\u0433\u0430\u043d\u0456\u0432 \u0437\u0430 \u0437\u0430\u043a\u043e\u043d\u043e\u043c \u043d\u0435\u043c\u0430\u0454. \u041e\u0434\u043d\u0430\u043a \u043d\u0430 \u043f\u0440\u0430\u043a\u0442\u0438\u0446\u0456 \u0431\u0430\u0447\u0438\u043c\u043e \u0439 \u0437\u0430\u0440\u0430\u0437 \u0434\u0456\u0457 \u0432 \u0440\u0430\u043c\u043a\u0430\u0445 \u043a\u0440\u0438\u043c\u0456\u043d\u0430\u043b\u044c\u043d\u0438\u0445 \u043f\u0440\u043e\u0432\u0430\u0434\u0436\u0435\u043d\u044c, \u044f\u043a\u0456 \u0432\u0447\u0438\u043d\u044e\u044e\u0442\u044c\u0441\u044f \u0441\u043b\u0456\u0434\u0447\u0438\u043c\u0438 \u043f\u0456\u0434\u0440\u043e\u0437\u0434\u0456\u043b\u0430\u043c\u0438 \u0443 \u0441\u043a\u043b\u0430\u0434\u0456 \u043f\u043e\u0434\u0430\u0442\u043a\u043e\u0432\u0438\u0445 \u043e\u0440\u0433\u0430\u043d\u0456\u0432. \u041d\u0430\u043f\u0440\u0438\u043a\u043b\u0430\u0434, \u0437\u0432\u0435\u0440\u043d\u0435\u043d\u043d\u044f […]<\/p>\n","protected":false},"author":280,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[88,116,78],"class_list":["post-6611","post","type-post","status-publish","format-standard","hentry","category-exclusive","tag-unified-authority-for-investigation-of-economic-crimes","tag-podatkova-militsiya","tag-tax-other"],"_links":{"self":[{"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/posts\/6611"}],"collection":[{"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/users\/280"}],"replies":[{"embeddable":true,"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/comments?post=6611"}],"version-history":[{"count":14,"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/posts\/6611\/revisions"}],"predecessor-version":[{"id":20279,"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/posts\/6611\/revisions\/20279"}],"wp:attachment":[{"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/media?parent=6611"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/categories?post=6611"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/tags?post=6611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}