On June 23, 2009, the Upper House passed the “Fourth tranche of the General Administrative Law Act (“GALA”)” and the “Amendments to the fourth tranche of the GALA.” The “Fourth tranche of the GALA” bill contains three themes: administrative debts, administrative enforcement – in particular the administrative penalty – and attribution. The most important theme for tax law is the administrative penalty. Tax lawyers and in-house tax counsel could also be subject to penalties, as of July 1, 2009.
The General Tax Act (“GTA”) allows for the imposition of penalties on taxpayers or withholding agents. It will be possible, effective July 1, 2009, to impose penalties on co-principals. Conduct that is set out in the GTA as leading to the imposition of a penalty will henceforth be designated as an “offence.” The offender is the principal or co-principal in committing the offence. With regard to tax penalty law, tax lawyers or in-house counsel can be considered as co-principals. Being a co-principal ties in with criminal law and requires conscious and deliberate collaboration and joint execution. The legislation also states that offences can be committed by natural persons and legal entities. For legal entities, this means that the actual manager, for example, the in-house tax counsel, can be penalized.
High penalties
The level of the penalties to be imposed on co-principals will probably be fixed at the same amounts and percentages as are applied to taxpayers. No separate policy with regard to the imposition and moderation of penalties on tax lawyers or in-house tax counsel is known or has been announced at present.
It was stated on behalf of the Minister of Justice, in the Upper House, that there is definitely no intention to develop specific policy aimed at penalizing tax lawyers or in-house tax counsel.