No Special Irregularity Penalty on the Presumption of Using False Documents

Ankara 7th Tax Court

What does a taxpayer found to have used false invoices face? The VAT deduction is refused, an assessment on the difference in the tax base is issued, a threefold tax loss penalty is imposed and a criminal complaint is filed under Article 359 of the Tax Procedure Law. Why, on top of all this, is a special irregularity penalty also imposed under Article 353/1?

The administration’s logic runs as follows; since you used a false invoice, you did not obtain a document for your real purchase, so you also committed the act of failing to obtain a document. A pure presumption. There is not a single concrete finding as to which goods were bought from whom without a document. Yet Article 353/1 is a provision created to protect the documentation order at the moment of the transaction; the inspector arrives, sees that no invoice is issued, draws up a report and writes the penalty.

In a recent decision the Ankara 7th Tax Court stressed this point once more; “under the general principle of criminal law that the perpetrator cannot be punished unless all elements of the act requiring the penalty are present, there is no possibility of imposing a penalty by presumption or analogy.”

The picture I observe in practice is that almost all special irregularity penalties imposed by this method are set aside by the tax courts. If the judiciary consistently lifts this penalty, on what ground does the administration keep imposing it? The taxpayer pays the court fee, sues, waits; the court lifts the penalty; the administration pays the costs and the attorney fee. The only thing left for the administration is to internalise the principle of legality of the offence.