Income tax is a direct tax imposed on the income of an individual or entity. Tax laws allow for the deduction of expenses incurred in generating the income, so in practice, the tax is imposed on the profit. In addition to deductions for allowed expenses, there are situations where losses from previous years can be offset, and there are exemptions that can be utilized. Income tax offenses are divided into two main types in terms of the level of severity and potential punishment. It should be clarified that in any case, these offenses should not be taken lightly in terms of the consequences for those convicted of them. It should be clarified that in any case, these offenses should not be taken lightly in terms of the consequences for those convicted of them. Therefore, it is recommended that anyone who gets into trouble use the services of a lawyer who specializes in income tax offenses.
Offenses under the Income Tax Ordinance
Offenses under the Income Tax Ordinance are divided into two groups: technical offenses and substantive offenses. Of course, the definition of the type of offense you are charged with is significant, and the type of offense has a substantial impact on the outcome of the legal proceedings against you.
In the case of technical offenses, these refer to situations where a taxpayer or business acted in violation of the technical provisions of the Income Tax Ordinance, without any criminal intent or malice in their actions. Technical offenses relate to incorrect conduct, and their nature is not tax evasion. Examples of technical offenses include: failure to report or delayed annual reporting to the tax authorities, delay in submitting wealth declarations, maintaining accounting records in a manner that does not comply with the requirements, or not maintaining accounting records at all, incorrect handling of withholding tax, and more.
Offenses of this type are considered criminal offenses, but their severity is relatively lower. The Income Tax Ordinance stipulates that a person who commits a technical offense can be sentenced to imprisonment for up to one year. The circumstances of the case play a significant role in determining the punishment. If the deficiencies have been rectified, the tendency will be to impose a monetary fine rather than actual imprisonment, and there may also be a possibility of a suspended sentence.
In the case of substantial offenses, these are situations in which a taxpayer or business acted with criminal intent to evade or avoid paying the taxes they owe. Examples of substantial offenses include: deducting fictitious invoices, concealing or destroying information or books, artificially inflating expenses, hiding income, assisting others in tax evasion, and more.
Substantial offenses are serious and the punishment for them may, under normal circumstances, reach a prison sentence of up to 5 years and, in serious circumstances, up to 7 years. A heavy fine will usually also be imposed on the perpetrator of such offenses.
It should be noted that in certain cases, there is the possibility of paying a settlement fee as an alternative to a criminal indictment by submitting a well-reasoned settlement request to the tax authorities. If the request is accepted, a heavy financial penalty will be imposed for those offenses as an alternative to criminal sanctions, and the criminal record will be canceled.
In the field of income tax, the firm assists businesses and taxpayers, individuals, and companies in matters related to dealings with tax assessors across the country on the following topics:
- Classification of income (income from labor / capital income).
- Legal advice and support in assessment and review procedures, objections, and appeals to the Court of Appeal.
- Legal advice and guidance regarding deduction aspects.
- Legal advice and guidance regarding debt rescheduling and payments.
Professional legal advice in the early stages of the procedure may inevitably change the picture, whether the trader/taxpayer has been invited for an audit, whether an investigation has been opened against him or, God forbid, an indictment has already been filed against him. The classification of the offenses attributed is of great significance, with an emphasis on the element of intent, in the absence of which, as stated, the offenses and possible penalties may be lighter.
