Fiscal Sanctions

Normative Resolution No. 10-0032-15 of November 25, 2015, of the Board of Directors of the National Taxes Service, mentioned in the previous edition of our newsletter, sorts and details non-compliance of Formal Duties of passive taxpayers or third parties responsible; defines the sanctions for each breach of Formal Duties and Establishes disciplinary procedures.

Below we highlight some aspects of the resolution that deserve attention, especially those related to the implementation of sanctions and procedures that would allow the taxpayer or third parties responsible to lower the fine or penalty that might be generated by non-compliance of Formal Duties. In particular, we refer to Article 5 which under the name of “generalities” establishes certain regulatory clarifications that merit the following comments:

a) Said article states that “The payment of the tax debt does not exempt compliance of Formal Duties“. This means that if the taxpayer or third responsible party pay the tax debt later or partially a fine is also generated for failure to comply with Formal Duties, in accordance with Article 47 of the Tax Code that includes the payment of the fine defines as one of the components of the tax debt.

For example, when the taxpayer files a Tax Declaration out of time and / or files a Rectifying Form resulting in an increase of the value of the tax in favor of the Tax Office, the resolution under consideration states that the Tax Administration may generate a Sanction for such failure to comply. In both situations, although the legislation does not make clear as to what fines apply, we understand that they are related to Fines for Non-compliance of Formal Duties, because there is no failure to pay taxes, but a late payment or a rectified amount in favor the Tax Office.

b) “The payment of the fine for non-compliance of Formal Duties does not release the taxpayer or third parties responsible from complying with the formal duty.“ The rule is not clear when it refers to “formal duty”. We understand the rule refers to the compliance of the formal obligation itself, ie the presentation of the Tax Form, the correction of the tax base or the presentation of information in general that must be submitted in a timely manner according to the tax rules applicable

c) “an activity or omission that gives rise to a breach of formal duty already sanctioned shall not be sanctioned more than once”. While this provision complies with the principle “non bis in idem”, meaning that the taxpayer cannot be punished twice for the same act, contraventions that could be sanctioned by the Administration involve actions or omissions that may have been incurred by the taxpayer more than once for the same act or omission. Such is the case of omitting filing tax forms in the same fiscal period when they refer to different taxes or the error to declare them also in the same period. The Administration will rate each omission or error with a fine for non-compliance of formal duties.

Although the taxpayer may have made the same act of omission of filing tax forms, a fine will be applied to each of them, contradicting the principle referred to above. In that sense the Resolution states in Article 8 that: “II. The imposition of sanctions for non-compliance of Formal Duties does not inhibit the ability of the tax authorities to determine the existence of other tax obligations, whether the breach is related or not to the same tax and fiscal period.“

From reading this provision, the Administration could qualify more than one violation in the same tax or fiscal period were, making it clear that the principle Non Bis in Idem lacks a uniform effective implementation guideline and application.

d) “in case of the same tax obligation the imposition of a fine for non-compliance of Formal Duties filed out of time does not apply when a fine was already imposed for failure to submit the forms“. This rule is not clear as to what it pretends to establish. It is not clear if the reference to the “same tax obligation“ is related to more than one tax obligation of payment of taxes and omission of payment thereof is sanctioned with a fine for omission of payment and therefore a Fine for non-compliance of Formal Duties does not correspond or if the formal tax obligations such as presentation of forms that generate a sanction and therefore no new fine is applicable for non-compliance of Formal Duties for the delay in its filing.

e) “In debugging tax credit towards Value Added Tax, default by improper registration of invoices, fiscal notes or equivalent documents that were observed in the Books of Purchases VAT and / or Form 110 are not subject to sanction, when the bill observed was debugged “. Under the principle of material truth, if the bill contains an expense that is reasonably linked to the taxable activity of the taxpayer in strict application of Article 8 of Law 843, the formal errors - precisely because they relate to requirements - should not affect the actual content of the tax credit. This provision should contain a different sense so that the bill which content is related to the taxable activity, if containing errors they will not be liable to a fine for breach of non-compliance of Formal Duties.

f) Article 11 of the Resolution establishes under No. 3.2. “the reduction of the sanction by fifty percent (50%)”. To access this benefit the resolution indicates that “if the taxpayer sends the information through the established means in the specific regulations within twenty (20) days following the notice of the administrative act that initiates the sanctioning procedure, the sanction shall be reduced by fifty percent (50%), in the cases indicated in Annex I to this Resolution and the Final Resolution of the Initial Proceedings or the Sanctioning Resolution shall indicate such situation”. If the taxpayer presents documentation with regards to the alleged omission that the Tax Administration pretends to sanction and said documents relate to the presentation of the information requested by said authority, the assumptions that led to the contravention would have disappeared, since the taxpayer would have rectified in time and form, for the sanctioning proceeding foresees a stage for presenting documentation. Therefore, this fine should be reduced in 100% under the understanding that the alleged facts for the violation would have been rectified by the taxpayer.

If the omission of payment of taxes (material obligation) allows that in the first act of the Administration in a fiscalization proceeding, the taxpayer may pay such tax in order to access to the reduction of the fine in a 80% for omission of payment, why is the same reasoning for non-compliance of Formal Duties not applied? And being of a formal nature, why not a reduction of 100%?

g) Article 12 of the Resolution establishes the procedure of imposition of sanctions for presentation of Tax Forms with arithmetic errors. Paragraph b) establishes that “if the arithmetic error is translated into a balance in favor of the taxpayer, the Tax Administration will determine the real balance that will be considered in future tax periods”. Even if the determination of the tax obligation results in favor of the taxpayer, being this matter foreseen in Article 12, even if the error does not imply a damage to the state, the taxpayer will still be liable to the fine for non-compliance of Formal Duties.

BUFETE AGUIRRE Soc. Civ. BOLIVIA. www.basc.com.bo | [email protected]

Bufete Aguirre Soc. Civ.