Date: 02/11/2017

Briefing Session on Criminal Liability for Tax Evasion

On November 2, AmCham organized a Briefing Session on the subject of Criminal Liability for Criminal Offence of Tax Evasion.

The panel consisted of the representatives of all main authorities involved in the criminal prosecution of tax fraud: Ms. Sena Papak on behalf of Tax Administration, Ms. Nada Novosel the Chief Inspector of Tax Police and Ms. Smiljka Stojanović, Deputy Public Prosecutor. The event was organized in cooperation with the law firm MIM Law, Ms. Tanja Unguran and Mr. Nemanja Ilić who moderated the event.

The question at the table was when irregularities established in routine tax audits can trigger criminal prosecution of management in Serbian companies. The question was provoked by a growing trend of Tax Police and Tax Administration to file criminal charges against directors of companies almost automatically, in all cases in which tax inspectors establish irregularities in tax controls, even where it is evident that the irregularity resulted from misinterpretation of tax laws, rather than an intent to avoid tax. This has put much insecurity on directors of Serbian companies who often do not have direct responsibility for administration of tax, but may nevertheless face criminal charges for mistakes made by their finance departments. In addition, the time period in which it is decided whether the criminal complaint will be rejected or the charge will be raised, is long and leaves the management in uncertainty whether they will be prosecuted for a serious crime.

Ms. Unguran, the co-moderator of the event concluded that while it is evident that at this point there are no criteria on the basis of which relevant authorities can make a selection of cases which do qualify as tax fraud from those which are a matter of simple mistakes in interpretation of tax laws, it seems that both Tax Authority and Tax Police have recognized the need to introduce some more clarity in this area. Ms. Novosel, the Chief Tax Inspector noted that this problem could be solved by introduction of changes in tax regulations which could give more guidance to both tax inspectors and tax policeman as to how to separate simple tax misdemeanors from tax fraud. Such guidelines would help not only taxpayers, but would also help Tax Police rationalize its resources and focus on real tax fraud which is otherwise a vide spread phenomenon in Serbia.

This event was the opportunity for AmCham members to have an open and constructive discussion with representatives of both tax authorities and public prosecutor about this worrying trend. Some of the questions raised at the event were related to the notifications of the interrogated persons after pre-investigative actions, evasion of the income tax of physical persons with an foreign element, the indictment against legal persons for the criminal offenses of tax evasion, the issue of international assistance in relation to these crimes etc.