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GUILT and GOOD FAITH in Moldavian tax law

The Tax Code of Moldova has no definitions of guilt and good faith. "So what?"-you may say. OK, let me explain the reasons for my anxiety about it.

The conceptof guilt (or culpa, culpability) in our system of law reflects the relationship between one's person intention and a breach of law. That means that a person may be found guilty/culpable for a breach of law if he had an intention (direct or indirect) to violate any legal provisions. And the action of such a person must lead to a breach. That's actually a general and superficial definition of that concept (I'm not going deep into legal theory, there's no need for this here).

The concept of good faith is directly related to the previous one. It is "the mental and moral state of honest, conviction as to ... the rectitude or depravity of a line of conduct..." In the case of a breach of law we may say that a person act in good faith when he hadn't and couldn't objectively know that his actions may lead to a breach.

Now let's come closer to the tax legislation and see how these 2 definitions (or putting it more precisely, the lack of them) influence the way that Moldavian tax authorities operate.

One of the mostly widespread types of disputes between tax authorities and economic agents in Moldova relates to the false fiscal factures/invoices (facture fiscale). The problem is as follows: when a seller (registered as a VAT-payer) supplies any goods he must under the Tax Code to write out a fiscal facture (factura fiscala) for these goods and to present one original copy to buyer. Then, during the fiscal control the tax inspection finds out that a facture transmitted to buyer is false.

And try to guess what they do... They bring THE BUYERS (!!!) to account. Can you imagine it? They make them responsible for the actions committed by others, by those who write the documents out and hand them over to buyers. And buyers often haven't even known before the control takes place that the documents are false.

And that is why I started to talk about the necessity of the guilt and good faith concepts to be introduced into the Tax Code. Because when the buyer acquires goods he usually has no possibility to verify every document received from the sellers. He can't know whether a facture is valid or not. They are not culpable. They act in good faith. And bringing them to liability is not just unfair, it has no logic. But it is exactly what happens. The tax inspections impose immense sanctions to those who do not commit any breach of law. And in most cases the courts support position of tax authorities.

So, if the definitions of good faith, culpability, intention would be directly introduced to the Tax Code I think there would be much less such nonsense (cause I think it is) in such proportions. Maybe it would be easier for tax officials to understand that it's the supplier who should be brought to liability...

PS. I think I'll turn back more than once to the problems of taxation in Moldova because sometimes it reminds me the theatre of absurdity...

Full post as published by LAW IN MOLDOVA on November 13, 2006 (boomark / email).