Law. Fiscal.

Accountability

AL-Tax Center
Fiscal Documents
No. 2012/12/13
www.al-tax.org altax@constultant.com Date 24.12.2012 Tirane, Albania

CRIMINAL ACTIONS IN ECONOMY AND FISCAL SYSTEM AND INVESTIGATION OF TAX CRIME

This document is prepared from experts of AL-Tax Center and is part of series of Fiscal Documents 2012, aiming in to be a point of referement of disputes for all interested parties , or are linked with tax law and the administration of the tax laws. The copyright is of AL-TAX and everyone that will use this document is pleased to note the copyright in the papers that will put some paragraphs or sentences. The document is downloadable to the website www.al-tax.org If you need to have clarification or quetsions, please email us to: altax@consultant.com

Law. Fiscal. Accountability

CRIMINAL ACTIONS IN ECONOMY AND FISCAL SYSTEM AND INVESTIGATION OF TAX CRIME
Prepared and distributed By Aurela Gjokutaj

Abstract
Cases sent for criminal prosecution should comply with the requirements of these dispositions in order to attack and judge the ones who have committed these actions and not allow them to avoid their responsibility. Tax Office should adopt all tax procedures and make further investigations to make things easier for the prosecution. It is important to consider that: Investigation made from Tax Office does not exceed administrative procedures foreseen in the Code of Administrative Procedures in the Republic of Albania. In order to fulfill the procedures and investigation of criminal actions it is obligatory to appoint auditors who have the necessary basic knowledge to understand the content of the criminal action.

Keywords: Criminal prosecution, taxes, tax office, investigation, Albania tax economic crime, Administrative procedures, criminal actions

Law. Fiscal. Accountability

Criminal Code dispositions and those of the Criminal Procedures Code, respectively article 300 of Criminal Code and article 281/1 of Criminal Procedures Codes contain the obligation of government authorities and public officials to send for prosecution all criminal actions discovered during their activity. On the other hand, these provisions prescribe the right of prosecution authorities not to begin, to stop or refuse criminal prosecution, if the procedure is not complete and the case in supported with arguments. Therefore, before preparing a criminal prosecution case, state authorities should make administrative investigations and research in order to better pinpoint the framework for the criminal action. Cases sent for criminal prosecution should comply with the requirements of these dispositions in order to attack and judge the ones who have committed these actions and not allow them to avoid their responsibility. Tax Office should adopt all tax procedures and make further investigations to make things easier for the prosecution. It is important to consider that: Investigation made from Tax Office does not exceed administrative procedures foreseen in the Code of Administrative Procedures in the Republic of Albania. In order to fulfill the procedures and investigation of criminal actions it is obligatory to appoint auditors who have the necessary basic knowledge to understand the content of the criminal action. Criminal actions that auditors can encounter during an audit and which they should investigate, from the perspective of this manual are: Criminal actions committed in commercial companies, articles 100-167 of the Criminal Code are illegal actions committed in commercial companies in the economic area and in different forms, committed deliberately and foreseen as such in the criminal legislation, such as: Preparation of fake declarations in the case of company extension, not declaring the real situation of company capital in order not to pay taxes (if committed, regardless of consequences or not), article 163. Abuse of power by members of supervising council or company administrators in order to profit or favor another company in which they have interests including illegal actions violating their

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invested powers through transfer of funds or making favors to another commercial company at the expense of the interests of the company, article 164. Counterfeiting of signatures and payments and fake declaration of payments of company funds or payments to fake persons, article 165. Irregular emission of stock, article 166. Simultaneous holding of two capacities that of partner and authorized accounting experts, carries the risk of irregularities in the bookkeeping of the company and is punishable, whether it has brought consequences or not, article 167. Providing fake information about the situation of the company. In such case the crime is committed through illegal actions or failure to act, which are reflected in:

- Providing fake information about the situation of the company, e.g. increasing the amount of capital available or increasing the liabilities which lead to bankruptcy, and - Failure to denounce a committed crime to competent authorities when there are no exemptions from the criminal responsibility specified in the Criminal Code, article 168. Failure to make the obligatory notes by the company administrator or liquidator for entries and exits from the respective registers or other documents related to the activity of the company: This crime can be committed deliberately or because of carelessness, as a rule because of carelessness, article 170. - Criminal actions in the customs system Illegal, criminal actions affect state interests and are committed deliberately for profit purposes. The Criminal Code does not define the meaning of smuggling. This is done in Law Nr. 8449, dated 27.1.1999 of Customs Code, articles 276-284. The Criminal Code defines the meaning of smuggling forms, articles 171- 179: - Import, export or transit, partial or full disguise, incorrect customs declarations, fake declarations on the nature, type, quality, quantity, destination and price of product or other forms intended to avoid tax obligations for: prohibited goods entering or exiting the territory with every means and in every way; excise goods, goods requiring license from competent authorities, common goods, intermediate regime goods; 4

Law. Fiscal. Accountability

Smuggling made by customs employees or other employees related to the customs activity in

cooperation with other people as foreseen in the code, can compete with the crime of position abuse, corruption or falsification of documents, when elements of this criminal action are separate. - Criminal actions in the tax system, articles 180- 182 Illegal actions whether deliberate or not, intended to avoid the payment of taxes in different forms: - Disguise or false declaration of incomes or other objects subject to taxes: This crime includes actions to hide the sources of incomes upon which taxes are calculated or false declaration of incomes in respective documents. The conditions for this crime is that the taxpayer should have previously been subject to administrative measures for such actions, i.e. disguise of incomes. - Failure to pay taxes within the established deadlines: this crime mainly occurs as failure to take due actions to pay taxes in spite of the payment capacity of the taxpayer who has previously been subject to administrative measures for the same purpose. Failure to fulfill the duties related to collection of taxes within the established deadlines: This is a

crime committed by people working in the tax authority or other official positions charged with these duties. It is a special form of abuse of ones duty. In such a case there should be a direct correlation between the failure to fulfill ones duty and the damage caused to the state. - Changes or interventions with measurement appliances or cash registers, use or permission to use such irregular appliances by others for the purpose of avoiding taxes: This crime involves actions or failure to act which are committed in different forms. Falsification of documents Falsification of documents includes: - Presentation in official documents of circumstances and data which are known to be fake, or - Preparation of a completely fake document, and - Use of fake documents, articles 186 -192. 5

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When the falsification is committed by the person in charge of issuing the document, this action competes with that of abuse of duty. It also competes with other actions in the economic area such as smuggling, theft of property or fraud. Criminal actions in bankruptcy, articles 193 - 196 Criminal actions, whether committed deliberately or not, which lead to a legal entitys bankruptcy or intentional cause of bankruptcy involves financial actions which lead to a legal entitys bankruptcy. - Hiding the bankruptcy situation of a company by engaging in relations with third parties and not presenting the real situation. - Hiding property after bankruptcy in order to avoid bankruptcy consequences such as debts, loans or other obligations includes actions committed for the purpose of hiding the remaining property in order to avoid tax obligations. - Violation of obligation versus third parties, such as non-payment of debts, etc., failure to respect the contract or legal provisions in force. Criminal actions in games of fortune, articles 197 - 198 Organization of games of fortune or gambling or making premises available for organizing games of fortune in violation of legal provisions committed in different forms and intentionally. Criminal actions committed by citizens against the public sector Proposals for rewards, gifts or other benefits given to public officials to either do or not do something that relates to his duty or service, or to use his influence upon other authorities in order to ensure benefits, favors or any other type of benefits, article 244. Giving rewards to public officials to either do or not do something that relates to his duty or service,

or to use his influence upon other authorities in order to ensure benefits, favors or any other type of benefits, article 245.

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Obtaining a title or public official position accompanied with actions involving the holder of the title

or duty constitutes a criminal violation and is condemned with penalty or up to two years of imprisonment, when the action is committed for profit purposes or when it affects the freedom, dignity or other fundamental rights of a citizen, article 246. Criminal actions committed by public officials against the public sector These include actions against the law committed intentionally or due to carelessness by public officials in charge of duties in the public sectors because of their duty, which have consequences upon the interests of the state or citizens, (articles 248- 260). Abuse of duty - actions against the law committed intentionally or due to carelessness by public

officials in charge of duties in the public sectors because of their duty, which have consequences upon the interests of the state or citizens, articles 248. Obstruction or violation of correspondence secrecy Orders or actions by a public official in charge

of a duty or public service to eliminate, read or distribute mail correspondence or destroy, hinder, control or tap telephone correspondence or other types of correspondence, article 255. - Abuse of contributions, or financings from government institutions intended for activities of public interest, article 256. Illegal benefits of interests Cases of public officials direct or indirect withholding or taking of

whatever interests on an operation or company which he had the responsibility to supervise, administer or liquidate at the moment the action was committed, article 257. Violation of equality among participants in public tenders or auctions This involves public officials

who commit actions against the laws governing the freedom and equality of participation of citizens in public tenders and auctions in order to unfairly favor or privilege third parties, article 258. The request for bribery Actions committed by public officials to request or order rewards in

violation of law, article 259.

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Bribery rewards, gifts or other benefits to public officials to do or not something related to their

functions or duties or use their influence upon different authorities in order to ensure favors, benefits or jobs to third parties, article 260. Criminal actions against secrecy because of duty Revelation of secrecy by public officials in charge of maintaining this secrecy Revelation,

dissemination and information of facts, figures, content of documents or materials, which, according to the law, constitute a state secret, by the person in charge of secrecy or by someone who has come to know the secret because of duty, article 294. Loss of secret documents loss of documents or other materials which, according to the law,

constitute a state secret, by persons in charge or authorized to use them, article 296. Dissemination of personal secrets Dissemination of personal secrets of individuals by someone

obtaining it because of duty and is obliged not to disseminate the secret without prior authorization, article 122. - Obstruction or violation of correspondence secrecy Intentional actions by public officials eliminate, read or distribute mail correspondence or destroy, hinder, control or tap telephone correspondence or other types of correspondence constitute a criminal violation, article 123.