The Provision in Article 359 of the Tax Procedure Law Is Not “Effective Remorse”

The two paragraphs added to Article 359 of the Tax Procedure Law by Law No. 7394 provide for a penalty reduction in return for payment in tax evasion offences. In practice, even in judicial decisions, this institution is consistently called “effective remorse”. That is wrong; and it is more than a matter of terminology.

Effective remorse (for example Article 168 of the Turkish Criminal Code) is the perpetrator’s outward expression of remorse, after committing the offence, through voluntary restitution or compensation. The perpetrator’s admission of the offence, even if implicit, is the logical premise of the institution; because what is regretted is an act the perpetrator is accepted to have committed.

Under the paragraphs added to Article 359, however, if the tax, the late payment interest, the late payment surcharge and half of the penalty are paid, the sentence is reduced by half at the investigation stage and by one third at the prosecution stage. The text contains no concept of “remorse”, requires no admission and says not a word about the perpetrator’s state of mind. Payment may also be made by third parties, and that payment is no bar to seeking annulment of the assessment before the tax court. The taxpayer can both benefit from the penalty reduction and fight in the administrative courts saying “I do not owe this tax”. No such situation is conceivable in classic effective remorse.

This institution is therefore sui generis; a mitigating ground peculiar to tax law, based on the interest of the treasury, tied to the collection of the public receivable rather than to the victim’s loss, and to a mechanical payment condition rather than to the perpetrator’s psychology. It resembles classic effective remorse only in the element of payment; its spirit, its dogmatic basis and its legal consequences are entirely different.

Despite this, when taking statements prosecutors ask the suspect “will you pay the tax and the penalty?” under the heading “effective remorse”. The implicit message is “if you pay, you are remorseful”. This carries a serious risk for the right to silence and the privilege against self-incrimination (Article 38 of the Constitution, Article 6 of the ECHR).

The correct usage should be “payment-based penalty reduction”. The suspect may pay the tax and still maintain his innocence; payment is no admission. If the name is set right, I believe the practice will fall into place too.