Tax Council warns TC decision could affect future tax collection

He Tax advice (CF) warned that the judgment of the Constitutional Court (TC) which provides for the prohibition of the application of default interest once the legal deadlines for resolution of tax disputesmay affect future tax collection.

With regard to the recent decision of the CT which provides, under certain conditions, for the non-application of default interest to tax debts In the controversy, the autonomous public sector entity, through a statement, said that it coincides with the purpose of the sentence to seek a solution to the problem caused by the excessive delay in the resolution of tax disputes.

However, the CF Autonomous Commission considers that the decision of the CT It can generate perverse incentives negatively affect the culture and collection of taxes the future.

There TB judgment provides for exemption from default interest wing Tax debt when the legal deadlines for response are exceeded. This applies to processes in administrative proceedings (before the Sunat and the Tax Court), in accordance with current regulations, as well as for contentious administrative processes in class.

The latter is controversial and the CF think it deserves a review. This is in line with the requests for clarification, from a legal and technical point of view, made by the National Superintendence of Customs and Tax Administration (Sunat) and the Ministry of Economy and Finance (MEF).

Also, the committee of heart rate He said the fiscal effect of the penalty is halved. The first relates to the still unresolved controversies that arose before the changes in the Tributary code who dropped the charges default interest out of time in administrative procedures.

According to Sunat’s calculations, the value of the disputed debt would be reduced by about 12 billion Ugandan shillings (equivalent to about 1.3 percent of the PBI of 2022).

The second effect is related to future controversies. “By extending the ban on collection of default interest to the processes that are in the judicial system, not only are doubts generated but also perverse economic incentives“said the entity.

In addition, the entity clarified that, on the one hand, the notion of legal deadlines applied to Judicial authoritywhen in practice they do not exist to solve the tax prosecution.

On the other hand, the ban on collection of default interest It will lead the court-ordered debt to retain its nominal value, which implies a loss of value over time.

In this sense, the CF believes that the sentence can negatively affect collection of taxes the future, by generating incentives for taxpayers to prosecute and delay tax litigation.

As stated above, the heart rate reiterates that it agrees with the CT in which the controversies in tax question they must be resolved within a reasonable time, because delaying them excessively causes damage to both taxpayers and the State, in addition to fostering a less secure business environment.

Consequently, the heart rate urges the authorities of the three powers of the State to work towards the establishment of a system favoring the punctual payment of tax obligations and ensuring that disputes are resolved in a timely manner, thereby ensuring better and fairer recovery.

Finally, the heart rate reiterates the urgency of implementing effective policies aimed at reducing high levels of tax non-compliance in order to increase the collection of taxes permed.