Finance/Tax Bill: Finally a legal framework for out-of-court settlements
The conditions for out-of-court settlements in tax matters will soon be formalized in the General Tax Code. This type of agreement between tax authorities and taxpayers, which has always existed in practice, was governed by a panoply of reference documents without really constituting a complete legal basis: Public Debt Collection Code (Code de recouvrement des créances publiques) , Taxpayer’s Charter for Tax Audits ( Charte du contribuable en matière de contrôle fiscal), and the Circular Note No. 2/DCF/2016 on the regulation of out-of-court settlements of DGI ( General Tax Directorate) Circular ( Note circulaire sur l’encadrement des accords à l’amiable ).
The system will now be codified in article 221 ter of the General Tax Code (CGI). This stipulates that out-of-court settlements may relate to questions of fact concerning matters to be assessed by the tax authorities, and may not concern the interpretation of legislative or regulatory provisions. This is an extremely important clarification. “ The two concepts must not be confused. Questions of fact concern, for example, cases where the tax authorities reconstitute a taxpayer’s sales to determine the tax base, or the application of penalties and surcharges. These cases are open to discussion between the tax authorities and the taxpayers. On the other hand, when it applies, for example, a VAT rate of 14% instead of the 20% stipulated by the CGI, it is more a question of non-negotiable law or principle. The same reasoning applies to other categories of tax”, explained a tax expert. It should also be pointed out that this approach is not new in itself, since in all disputes between tax authorities and taxpayers, the debate essentially revolves around the assessment of tax elements as evaluated by the DGI.
The philosophy behind this provision aligns the rules of the game relating to out-of-court settlements with the provisions of the articles of the General Tax Code (CGI) dealing with the scope of action of the three levels of appeal (local tax commissions, regional tax appeal commissions and national tax appeal commission). These three bodies are required to declare themselves incompetent when it comes to interpreting legislative or regulatory provisions relating to taxes. A field of competence that falls within the prerogatives of the administrative courts.
Hassan EL ARIF
