Act dated 10 September 1999 Tax Penal Code (Journal of Laws of 1999, item 930) has been amended by Article 56d. This article provides for criminal liability for the provision or concealment of the truth in statements related to the new rules for the collection of withholding tax (WHT). The new rules are further intended to safeguard the reliability of the statements made, providing for severe criminal sanctions for the lack of proper application of preferential taxation rules.
The penalties are provided for incorrect data in statements made in order to benefit from the possibility of applying preferential withholding tax, i.e.
in the case of a declaration by the payer that he has the appropriate documents necessary to make a declaration and in the case of a verification of the conditions of application of the reduced rate of tax or exemption from tax.
Penalties will also be imposed for incorrect data in a statement by the payer or the taxable person as to the fact that the facts set out in the request are correct in order to give the tax authority an opinion on the applicability of the WHT tax.
Criminal sanctions are also provided for in the case of concealing or misrepresenting a tax refund application, as well as where the payer has collected the tax without applying a reduced rate or exemption.
New responsibilities of board members
In the Tax Penal Code under Article 56d penalties are provided for the most serious tax offences i.e.:
- • tax avoidance – Article 54 k.k.s.,
- • tax fraud – Article 56 k.k.s.,
- • Extortion – Article 76 k.k.s.,
These provisions provide for fines and imprisonment for up to years 5. Nor can it be excluded that the above-mentioned regulations will not be applied in conjunction with other criminal standards, in particular concerning the non-collection of taxes by the payer within the meaning of Article 78 k.k.s., including regulations Act dated 6 June 1997 Criminal Code (Journal of Laws of 1997, item 553)such as:
- • fraud committed against the Treasury - Article 286 k.,
- • making false statements - Article 233(6) k.k.
The new withholding tax legislation provides that the head of an entity or a board member should sign a statement of ownership of documents and carry out appropriate verifications for the purposes of applying preferential WHT tax. This would make it impossible for a proxy to make such a statement, and thus the criminal liability for providing false data in the statements indicated would rest with the members of the company's board of directors.
Responsibility for the act fully aware
It should be mentioned that criminal liability will be based on the principle of intentional guilt.
This would mean that, in order to effectively bring a person to the tax penalty, it would be necessary to demonstrate not only the defectiveness of the statement, but also that the person wanted to commit a prohibited act or to make a false statement, or, in providing for such a possibility, agreed to it.
From the point of view of criminal liability, it will be essential to determine whether a member of the board of directors has been aware or has accepted that the declaration signed by him contains falseness.
Such a situation can be compared to a situation where criminal courts assume that the mere fact of signing a declaration does not prejudge the criminal liability of a given member of the board, as is the case where the tax return is made by persons specialised in tax settlements and then, in accordance with the principles of company representation, that declaration is signed by a member of the board.
The introduction of appropriate compliance procedures may reduce the risk of criminal liability in the event of a statement being called into question, given the complexity of the tax rules introduced, they may internally regulate the organisation of the withholding tax collection process. In order to avoid committing a prohibited act, such procedures should, in particular, provide for the assignment of appropriate tasks to competent persons and lay down rules on the supervision of their performance.
Author: Paweł Boś, Law student at Leon Kozminski Academy in Warsaw, employee Russell Bedford