укр eng рус est


Recent news
Chambers Europe

“The team was recently visible advising on a number of pharmaceutical cases. Sources agree that the team is “moving in the right direction” and are particularly impressed by its work in the pharmaceutical sector”.


Think for Yourself, Decide for Yourself: How Deliberate Concealment of Property Threatens Government Officials


Galyna Melnyk, lawyer at Ilyashev & Partners Law Firm


And what is the difference between e-declaration and tax return

On October 31, 2016, the term expires for submission of “anti-corruption” electronic declarations for 2015 for senior government officials (president, prime minister, people’s deputies, head of the NBU, public servants of categories “A” and “B”, etc.). All other officials (e.g. heads of state-owned enterprises and deputies of local councils) will file electronic declarations for 2016 up to April 1, 2017. Responsibility for declaration of deliberately false information (to which in some cases willful failure to submit the return can be equated) has been strengthened: for it criminal responsibility up to imprisonment for up to two years is envisaged. How the lawmakers propose to determine the intent of concealing income, and why we should not equate anti-corruption and tax declaration, explains the lawyer Galyna Melnyk specifically for Forbes.

The term for submission of electronic declarations for 2015 expires, but officials are in no hurry to file returns and disclose their assets. Quite often the reason for such slowness is complexity and incomprehensibility of declaration form and the procedure for its filling, interruptions in operation of the system on the anti-corruption agency website (either interface for filling in the declaration does not load, or the completed form can not be sent), and the most courageous officials justify their inactivity by the fact that the form of the declaration approved by the office does not comply with the law.

However, due to introduction of criminal liability for failure to submit the declaration and concealment of information in it, the government officials should think how the above excuses can protect them from such unpleasant consequence as a criminal prosecution. Recall that intentional failure to submit the return, and indication in the submitted declaration of deliberately false information (that diverge from the true one by more than 344,500 hryvnias), may result in criminal liability up to imprisonment for up to two years.

The key point in this case is the intent of the declarant, i.e. he had either not to submit the return intentionally, or conceal or distort the information specified in it deliberately. Intentional failure to submit the return will take place when the person could actually submit the declaration, but did not do it deliberately. To bring the government official to criminal liability, the law enforcement authorities will have to prove in the course of the investigation that the declaration could be filed.

In turn, the official will be able to refer to the fact that he made every attempt to submit the declaration, but for objective reasons could not do it. For example, the system did not work, or he could not do it due to state of health. The question is how the particular judge, who will hear the case, will assess such arguments. And if a long-term illness can still be understood appropriately, the reference to failures in the system, in the presence of a significant number of successfully submitted declarations, is unlikely to work.

The anti-corruption agency explains that intent in respect of concealment of objects in the submitted declaration means that the declarant was aware of inaccuracy of the declared information. That is, direct intent is meant, and erroneous judgments about the value of any property for the purposes of its declaration are not considered.

How to prove that the official was not mistaken in good faith, but concealed assets with malicious intent and, accordingly, should be subjected to criminal punishment?

Direct intent that the anti-corruption agency is talking about means that the declarant knew or should have known that he indicated incorrect information in the declaration. It all depends on the specific object of declaration, on how it was acquired, whether its assessment, which was known to the declarant (e.g. as the person who ordered such assessment) was made, whether the declarant spoke before witnesses about the cost of a particular object or his possession of the objects that later were not mentioned in the declaration. For example, if the official was a party to the agreement, which specified value of the asset (e.g. purchase and sale agreement), or in connection with which such asset was assessed, it is hardly possible to say that he did not know its value.

Further, they will take into account record of transactions and objects in the tax returns submitted by the official (the declaration of property status and income of individuals). They, in addition to income earned, also contain information about real estate, land, transport vehicles purchased and sold securities and corporate rights. Indication by the declarant of such information in the previously filed tax returns may also evidence that some objects were deliberately concealed in the anti-corruption declaration.

It is important to note that the tax return and the anti-corruption declaration are two completely different documents that are not directly related to each other.

Firstly, tax return is filed by all individuals (including government officials) in the cases determined by the Tax Code of Ukraine (not necessarily every year, it all depends on whether the declared parameters are available), and anti-corruption declaration is submitted only by the government officials defined by the Law on prevention of corruption, and in any case the annual submission of such declaration is required.

Secondly, tax return is filed to the tax authorities for payment of tax, and anti-corruption declaration is submitted to the National Agency for prevention of corruption for monitoring compliance with the anti-corruption legislation by the officials.

Thirdly, anti-corruption declaration is placed for public access of unlimited number of people (only some personal data are hidden), and tax return is not subject to public disclosure.

Fourthly, submission of one declaration does not exempt from submission of the other declaration. Surely, the information specified in each of them may be used to cross-check accuracy and completeness of the other declaration, but use of such information has not yet been approved at the regulatory level.

In conclusion, it should be noted that electronic declaration as a completely new field of legal regulation needs improvement and coordination of many issues, including those connected with ensuring the completeness of disclosure of the declared information. How it will work in practice, we will see in the near future.


© 2019 Ilyashev & Partners / Mobile version