The story of the famous gangster Al Capone being put behind bars because of tax evasion is perhaps one of the most famous examples of the legal consequences of lying or declaring less of the income actually obtained.
Also known as “the master of Chicago,” he served 11 years in prison for this crime and not for other he was murder, extortion and kidnapping.
Beyond this “famous case” and its arguments, there is one thing to highlight: tax evasion is a crime recognized in all international legal systems, and no one, not even artists, businessmen or Mafiosi, escapes from accounting for their income and wealth and their origin.
Some may think this is an exaggeration, that it only happens to celebrities and that the only cases we have seen in Cuba happen in movies or TV series. But tax evasion also exists here and it is a crime punishable under Law No. 62 of the Penal Code in force.
In fact, a few weeks ago, it was reported in the pages of Granma newspapers that the debt with the State Budget identified by the National Tax Administration Office (ONAT) amounted to more than 32,500,000 pesos, after the implementation of control actions against price increases.
In this sense, the largest debts were identified in relation to the understatement of income (declaring and paying less than what was actually obtained), amounting to more than 23,500,000 pesos, which the offenders had to pay.
But let's go to an even more recent fact. According to data provided by the ONAT to our newspaper, at the end of the first half of 2022, there were 38 reports of complaints, for those cases in which the Office has proven tax evasion, and they are currently under consideration by the courts.
WHAT DOES TAX EVASION CONSIST OF?
According to what Sonia Fernández Ramírez, legal director of the ONAT, explained to Granma, tax evasion is associated to behaviors in which there is clearly an intention to suppress or reduce the payment of taxes approved by law, which is considered to be a multiple offense as it also goes against the economic and social order of the country.
Since the enactment of Law 73 of 1994 on the Tax System, it appears in our legislation as a crime that directly attacks the Public Treasury, which allowed, at that time, to perfect the penal provisions and the sanctions to be imposed on natural and legal persons who evade the payment of taxes, contributions or any other obligation of this type, she added.
When we talk about tax evasion in Cuba, it is because the ONAT was able to demonstrate those evading conducts, and we have evidence to validate it, she pointed out.
It must also be taken into account that when a person evades their tax obligations, they almost always seek to hide their income and expenses so that the true sources of economic solvency are not perceived, and many times this is associated with other crimes such as illicit economic activity, corruption and money laundering, among others.
“How does a taxpayer incur in tax evasion?” she reflected. "When taxpayers lie in his sworn statement, when salary expenses to employees that are not recognized as hired in any document are detected in the ONAT controls, when there is double accounting, when assets (real estate, vehicles) obtained with income coming from that business are hidden; and when important elements of the accounting are eliminated, among other irregularities."
She also clarified that the tax evader is analyzed, mainly, in two moments: when the debtor has determined his debt, since it was demonstrated by the ONAT that they evaded the tax obligations, and when there is already a firm sentence, after a judicial process has been carried out.
To determine the tax debt, a comparison is made between the levels of income, expenses and many levels of information are intertwined. "This debt is composed of the tax that should have been paid or the understatement; the late payment surcharge, which is a compensation demanded by the State for not receiving the income within the established term; and the tax fine, which is a sanction for not complying with the payment obligation, among other things."
OF THE LEGAL PROCEEDING OF THE TAXPAYER'S RIGHTS
In order to process an accusation against a taxpayer for the crime of tax evasion, the courts require the ONAT to prove that it has complied with the established procedure to file the complaint, Fernández said.
Before reaching this moment, there is a whole procedure, validated in the current tax regulation Law 113 because the public administration cannot leave the taxpayer in a state of defenselessness.
In this sense, the tax office clarifies what the debt is and the claim channels available to the taxpayer, and if the error was of the tax office, it is rectified, Fernandez Ramirez emphasized.
Even, in the event that the taxpayer persists in their disagreement after having complained to both the municipal and provincial instances of the ONAT, they can go to the administrative chamber of the courts and enter into a judicial process, in which each party is called to testify. If the decision is ratified by the judge, the taxpayer becomes a debtor.
He explained that if that taxpayer continues to refuse to pay, "we have the power to file a denunciation report and the court may sanction them to up to five years of imprisonment".
There are other cases, in which there are weightier elements to consider such as fraud, false accounting records and the alteration or omission of data in the sworn statement, which may increase the penalty up to eight years, and it is also investigated criminally, since many times these are associated with more serious crimes.
However, she stressed out our main purpose will never be to blame or punish, but to make taxpayers understand the risks they are taking by engaging in this type of behavior.
A CONTRIBUTION THAT BENEFITS EVERYONE
The benefits and social conquests of the Revolution are equal for all people. Moreover, those services and benefits cost, they are public expenses, and a way to pay for them comes through tax collection, commented the Legal Director of the ONAT.
The lack of a tax culture and civic awareness and how these contributions matter because they are destined for society’s common welfare, for the communities where taxpayers live, would make it impossible to advance as we wish, she insisted.
"That is why we say that the people who evade their tax obligations are attacking the social order, since their contribution allows supporting important programs, such as the attention to mothers with more than three children, and to vulnerable people".
She also said that taxes in Cuba are determined in proportion to what the taxpayer earns and therefore, they are not high.
Taxes have not gone up, that is uncertain, she stressed. For example, prior to October 2021, a self-employed worker (TCP in Spanish), paid a quota every month, whether they made profit in their business or not, she explained.
It has changed now because they pay according to what they earn. If they were closed for a month, for whatever reason (minor repairs, illness or any other reason) and they did not earn any income, they do not pay taxes that month."
She emphasized that paying taxes on time also brings tax benefits, especially if they use electronic payment methods, such as Transfermóvil. There is also the use of the digital signature, which cuts down on paperwork and waiting times, which taxpayers can now obtain through the municipal offices of ONAT.
Likewise, she said, the Office's website provides access to all tax return and payment forms, as well as to the computer tools for filling them out and calculating taxes.
However, the ONAT must continue working to achieve more effective indicators and implement computer systems that help in the control of the tax debt; but it is also everybody’s responsibility, and especially that the taxpayers, to do their part, which more than an obligation is also a civic and moral responsibility.
IN CONTEXT
Some actions that a taxpayer must take in order not to incur in tax evasion:
- Taxpayers must fill out the affidavit, calculate the tax correctly and pay it within the established term.
- If the taxpayer makes a mistake when calculating the tax, and as a result they have paid less than the amount due, they can rectify voluntarily and contribute the missing amount to satisfy the debt.
- If taxpayers do not have enough money to cover the debt, they can request a deferral agreement, and once granted, they must comply with the agreed deadlines on time.
- Taxpayers must properly control the accounting of their business.
