The Constitutional Court initiated a case on reduction of a fine in tax matters
On 28 September 2012, the Second Panel of the Constitutional Court initiated a case “On Compliance of the Words “if the taxpayer agrees to the additional amount of estimated tax, fee or other State-established payment [including a late charge that is calculated for the period of tax payment delay staring from the following day after the setting in of the term of payment of the tax up to the starting date of a tax audit] and, within 30 days as from the day when a decision of the tax administration on results of the tax audit is taken, pays the total sum of calculated tax, fee or other State-established payment into the budget at the amount of 15 per cent of the basic tax debt” of the Wording that was effective before 9 November 2011 with Article 1 of the Satversme of the Republic of Latvia”.
The Part of the Contested Norm (in Italics)
„The head of the highest institution of the tax administration or its authorized official shall take a decision to reduce the fine in respect to tax payers imposed in the result of tax audit at the amount established in the present section, if the taxpayer agrees to the additional amount of estimated tax, fee or other State-established payment [including a late charge that is calculated for the period of tax payment delay staring from the following day after the setting in of the term of payment of the tax up to the starting date of a tax audit] and, within 30 days as from the day when a decision of the tax administration on results of the tax audit is taken, pays the total sum of calculated tax, fee or other State-established payment into the budget at the amount of 15 per cent of the basic tax debt.” The particular wording of the Contested Norm was in force up to 9 November 2011.
Legal Norm of a Higher Legal Force
Article 1 of the Satversme: Latvia is an independent democratic republic.
The Facts
The Administrative Case Department of the Senate of the Supreme Court of the Republic of Latvia reviews a case, in the frameworks of which a businessman registered abroad contests the stipulated duty to pay the enterprise income tax, the fine and the late charge estimated by the State Revenue Service, as well as contests its amount.
The applicant, the Administrative Case Department of the Senate of the Supreme Court holds that the Contested Norm fails to comply with the principle of proportionality enshrined in Article 1 of the Satversme. The Applicant indicates that the Contested Norm prohibits a person to contest the decision of the tax administration because, in case if he or she would do so, this would prevent the tax administrator to take advantage of the only possibility to reduce the imposed fine. Namely, the tax administration can reduce the fine only in case if the person, in respect to whom the fine is imposed, agrees with the amount of estimated tax and the late charge.
Legal Proceedings
The Saeima was asked to provide, before 28 November 2012, a reply on the facts of the case and legal substantiation thereof.
The term of preparation of the case is 28 February 2013.
Linked case: 2012-18-01