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Ivan Bozhko, attorney at Ilyashev & Partners Law Firm
Source: UNIAN

On December 21, 2016, the Verkhovna Rada of Ukraine adopted the Law No. 1797-VIII “On the Amendments to the Tax Code of Ukraine concerning the Improvement of Investment Climate in Ukraine”. The document, inter alia, excluded the Section ХVIII2. It seems to be an ordinary amendment, except that this Section of the Tax Code set forth the legal status and regulated the activities of the tax militia in Ukraine.

According to certain parliamentarians, the adoption of the Law No. 1797-VIII in the respective version occurred unexpectedly, and the tax militia was to be liquidated not earlier than the adoption and the enforcement of the law on the authority to substitute the tax militia (for instance, the tax police according to the Law No. 4228). But happened what was to happen.

Based on the mission of the tax militia, which have been envisaged by the Article 348 of Section ХVIII2 of the Tax Code of Ukraine (prior to its exclusion), the following functions remained without the state regulation: the prevention of criminal and other offences in tax and budget area; crimes’ detection, investigation and proceedings on the administrative offences; the search for persons hiding from investigation and court for committing the crimes and other offences in tax and budget area; corruption prevention and counteraction within the regulatory authorities and corruption facts detection; ensuring the security of the regulatory authorities officers, their protection from unlawful encroachments related to their duties.

The tax militia and its officers without the legal status and the law regulating their activities are at least unable to hold the pretrial investigation. First of all there are questions to the further legal procedures for the investigations conducted by the tax militia before January 1, 2017. The «liquidated» state authority under the Articles 38 and 216 of the Code of Criminal Procedures of Ukraine was responsible for the investigation of a number of crimes including the unlawful storage, sale or transfer for sale of excisable goods, fake entrepreneurship, the forgery of documents provided for the state registration of legal entity or sole proprietorship, the evasion of taxes, duties, compulsory pension insurance payments, unlawful manufacture and forgery of control marks, forcing the bank to insolvency and causing the bankruptcy.

Taking into consideration the provisions of the Article 19 of the Constitution of Ukraine, which obliges the public authorities to act exclusively on the grounds, within the powers and in the way determined by the Constitution and the laws of Ukraine, the tax militia and its officers not having the legal status and the law regulating their activities are not able even to conduct the pretrial investigation.

Under these circumstances we hardly may speak about the pressure decrease on business. In such a way, since the date of the respective amendments to the Tax Code enforcement, the conduct of any investigatory actions by the tax militia investigators shall be illegal, and any evidences obtained within the course of these actions shall further be deemed by the courts as inadmissible.

It is the most likely that in the nearest future the files of criminal proceedings being investigated by the tax militia shall be transferred to the prosecutors exercising procedural control over these cases. As the acting criminal law of procedure provides for the prosecutor to conduct independently the investigatory and prosecution actions, the pretrial investigation shall be held by the prosecutor’s office, until the issues of criminal proceedings’ transfer to other law enforcement authorities and/or their units, or the restoration of the tax militia powers are regulated by law.

In this situation we may hardly speak about the decrease of the pressure of business, as practically the investigation shall be conducted by those who just yesterday exercised the procedural control and directed the efforts of the tax militia investigators.

Therewith, it is worth to mention that the actual decision on the liquidation or the reorganization of the tax militia has never been adopted. Therefore, today we may observe the situation when the state law enforcement authority with the staff of 5000 employees exists without any legal status, functions and powers.

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