OPEN FORUM

Paul Mahú
Partner of Serrano's Lawyers

Tax compliance: a good intention, that does not convince

Finally, the Executive presented indications to the project of tax compliance, within the so-called fiscal pact. The market and investors are attentive to what can happen, and that is why it is key to review some of the proposed changes.

Within the directions are relative to the General Rule Circumvention (NGA), which is incorporated into our legislation in the year 2014, and it seems that the administrative application of the NGA has been ruled out, which is good news.

In the last time, the SII has initiated a number of audits on the basis of the NGA, so that the administrative application does not seem to be necessary for an effective control of the obligations of the taxpayers. In addition, the application of the rules to the specific case it is up to the judge, tax and customs, as a third impartial. In contrast, the tax authority is a party to this judgment (and with all legitimacy and reason).

Another point on which there remain doubts related to the burden of proof in the NGA. The adoption of the proposed text, article 4 would provide that the SII also prove the facts that constitute child abuse or simulation. For its part, the taxpayer, in dealing with cases of abuse and the facts, acts or business specified by the administration, must prove the legal effects or economic relevant to the taxpayer or a third party, that may be different from the merely tributaries.

That is to say, it will be loads of IBS test for such effects, legal or economic, in order to prove that they do not produce results relevant legal.

On the other hand, the same art. 4 bis establish that the taxpayer must prove the existence of economic effects, legal or relevant other than merely a tax, or that their operations are within the reasonable option of alternative behavior referred to in the tax legislation.

In practice, this means that both the IBS as the taxpayer must prove the results of effects of legal or economic acts questioned. As I have stated on other occasions, this wording could have pointed out that the obligation of the IBS does not grind to a halt, but that the taxpayer (as indicated by the general rule of art. 21 of the Tax Code), you must cooperate expressly in the burden of proof. Or, you might simply have chosen to leave the burden of proof on those who argue the abuse or the simulation, as in the ordinary trial, thus applying the general rule of the distribution of the test under the civil law (art. 1698 of the Civil Code).

While we appreciate the progress that can mean the latest indications of the Executive, it is still hard not to think that the fiscal pact is still complex and may end up not being a help for taxpayers or for the development of the country. Thus, it is seen that, even with good intention, there will be more traffic jams that end with repel new and necessary investments.