INTRODUCTION
When faced with a tax dispute, it is often difficult, even for the initiated, to determine with precision the procedure to carry out the tax dispute in question, with the risk of foreclosure or of being dismissed, in case of an inappropriate referral.
This is due to the fact that the concepts of tax law, tax proceedings and tax litigation have always been unclear to most taxpayers and have given rise to contradictory interpretations. This is not surprising, especially since the “protagonists of the tax drama”, the tax authorities and the taxpayers, have opposite interests by nature; thus, they interpret the tax provisions each in their own way, in their own interest, especially in the case of tax litigation.
The term “tax litigation”, in the broadest sense of the term, refers to any dispute with a tax-related purpose, which may include appeals for excess of power directed against a regulatory act with a tax-related purpose, appeals on the responsibility of the State, or even the penal repression of tax offences. But, in a more limited conception, litigation relating to an individual dispute concerning either the assessment or the liquidation of the tax, or its collection, must be considered as fiscal[1].
In this context, after a detailed analysis of the various legal and regulatory texts relating to the resolution of disputes in general and in tax matters in particular, it seemed appropriate to enlighten our readers on the litigation relating to the collection of debts by the tax authorities as opposed to the litigation relating to the tax base or taxation, which will be the subject of the second part of our analyses.
The analysis of the collection litigation is dictated by the need to provide the taxpayer with rapid legal means to contest the tax debt that is claimed from him and to have the regularity of the collection procedures reviewed by an impartial authority. This is made even more imperative by the complication and the innumerable difficulties of application of the tax laws.
In order to understand the litigation of debt collection by the tax administration, we will first develop some key notions on the general mechanisms of taxation (I), before addressing the question of the mechanisms of tax collection (II) and drawing our conclusions (III).
- KEY CONCEPTS OF GENERAL TAXATION MECHANISMS[2]
Regardless of the tax concerned, the implementation of a tax takes place in three stages. The first step is to determine the tax base (I.1.), i.e. what is taxed. In the second step, the tax is liquidated (I.2.), which is the calculation of the amount. Finally, in a third step, it is collected by the tax authorities (I.3.).
I.1 Determination of the tax base
The tax due by each taxpayer is the result of a multi-stage tax process. This process involves designating the taxable persons, establishing the taxable matter, the tax base and the occurrence of the taxable event.
The respect of the principle of tax legality implies that the taxpayer of the tax is designated by the law. The law thus determines the categories of natural or legal persons who are obliged, on pain of prosecution or even sanctions, to pay a given tax levy[3].
The taxable matter is the economic element on which the tax is based. It may be an asset (e.g., a vehicle subject to vehicle tax or land subject to property tax), an income (e.g., rental income tax), or a transaction or operation (e.g., a sale subject to value added tax).
If the tax must necessarily be based on a given matter called taxable matter, it is important to determine the economic element that serves as the basis for calculating the tax, which is called the tax base or the taxable base. For example, the basis of taxation for a vehicle may be the power of its engine or its tonnage, while the basis of taxation for a property may be the area of the taxable property.
In addition, the existence of the taxable matter and the tax base does not in itself entail any tax consequences, but the taxable event must occur. This is understood to be the event or act which gives rise to the tax claim for the State[4] and which brings the taxpayer within the scope of the tax law. For example, the mere fact of owning a vehicle is not sufficient to be liable for tax on the vehicle; the vehicle must be driven on the public highway. The fact that the vehicle is being driven on a public road is therefore the triggering event for the vehicle tax.
Once the tax has been assessed, it must be settled.
I.2 Liquidation of the tax
Liquidation consists of determining the tax debt of the taxpayer by applying a tax rate or a tariff to the tax base that has been previously determined.
However, as the Congolese tax system is declarative, the taxpayer calculates the amount of tax he declares to the Administration himself. This is known as a self-liquidating declaration. Nevertheless, the Administration proceeds to the verification of the declared amount.
The liquidation leads to the determination of a tax claim that calls for recovery.
I.3 Tax collection
The collection is the payment of the tax debt. It is carried out at the initiative of the taxpayer when he has himself settled the tax in his declaration, and by means of a notice of collection when the settlement has been carried out by the Administration. Sometimes, the collection will be carried out by a third party, charged with a withholding tax[5].
The collection of the tax can therefore be either amicable or forced.
The collection is amicable if the tax debtor pays the tax within the time limit set by law, without being forced to do so.
In case of failure of the amicable collection, the tax administration is authorized to proceed to the forced collection to obtain the payment of the tax, by using means of constraint related to the exorbitant character of this public debt. And the taxpayer, for his part, can contest the forced collection. This is therefore where the collection dispute arises.
In the DRC, there are two types of tax litigation which are the most common, namely: litigation concerning the tax base or taxation and litigation concerning collection.
As indicated above, in this first part we will only deal with collection litigation, while litigation concerning the tax base will be analyzed separately.
- MECHANISMS OF TAX COLLECTION
It should be remembered that it is the enforced collection of taxes that can give rise to collection litigation. The mechanisms by which the Administration ensures the enforced collection of the various taxes are very complex. In order to understand them, it is necessary first to specify the basis for enforced collection (II.1.), then to note that the tax administration has the power to create enforceable debt instruments (II.2.) and finally that taxpayers have the right to contest the tax by following the legal remedies provided (II.3).
II.1 Basis for enforced collection
As mentioned above, the tax collection process is generally smooth if, after the declaration, the taxpayer meets his obligations and pays the tax without delay.
If the taxpayer fails to comply with his tax payment obligations, the Administration is entitled to implement binding procedures called forced collection against him. These procedures are autonomous and lead to a dispute whose object and settlement are subject to specific rules.
The reason for enforced collection is that the tax is due. Payability is understood to be the period within which the Treasury can validly claim the tax from the debtor.
II.2 Power of the tax administration to create an enforcement order
The enforcement of tax claims requires the existence of a prior enforceable title.
The tax administration is not an ordinary creditor. It does not need to go to court to order its debtors to pay their debts. It has the right to issue titles or deeds that are directly enforceable.
These acts are credited with a presumption of legality, by virtue of the privilege of the preliminary[6] and which offers public persons a power of unilateral action in the general interest.
In addition to being justified by the presumption of legality attached to administrative decisions, this privilege is explained by the need to ensure the continuous and regular functioning of administrative action and, in this case, to collect taxes[7].
According to the law reforming tax procedures, taxes are assessed in priority by the taxpayers themselves in their self-assessment declarations. It is only during an audit or ex officio taxation that taxes are claimed by means of a notice of assessment (AMR).
Thus, the acts of taxation, i.e. those which establish the tax, are: self-liquidating declarations and AMRs. When they are not followed by payment within the deadline, these acts are subject to collection proceedings initiated directly by the tax collector[8].
There are three types of legal action: third-party notices, seizures and temporary closure of establishments. It is therefore against these three acts that a taxpayer can initiate a collection dispute.
In addition, in this procedure, the debtor may also criticize the acts of taxation as well as any act preceding[9] the prosecution measures. In this case, the debtor must not at any time contest either the validity of the taxes imposed on him or the regularity of the procedure that established them[10].
II.3. Remedies in the recovery dispute and procedure to be followed
II.3.1. Remedies in collection proceedings
The tax law provides the taxpayer with several means of appeal enabling him to oppose the proceedings initiated against him by the Administration. The litigation arising from the collection of taxes has two branches which relate either to the form of the proceedings or to the existence of the obligation to pay[11]. 11] These are therefore two branches of tax collection litigation.
In the words of Professor Robert Herzog, “tax collection litigation is the final and decisive phase of the taxation process. Since the taxpayer cannot contest either the validity of the taxes imposed on him or the regularity of the procedure that established them, he can only discuss the regularity of the conditions under which the administration intends to force him to pay”[12].
For this purpose, the two branches of the collection litigation are now called “litigation on the obligation to pay” and “litigation on oppositions to proceedings”[13].
In litigation concerning the obligation to pay, the addressee of the proceedings criticizes the validity of the proceedings by contesting “the existence of the obligation to pay the amount of the debt, taking into account the payments already made, the due date of the sum claimed, or any other reason that does not call into question the basis of assessment and calculation of the tax”[14]. 14] The taxpayer therefore objects to the proceedings on the grounds that they are without cause.
The taxpayer may challenge the existence of his obligation to pay by arguing, for example, that no tax has been assessed[15] or, conversely, that the tax has been fully paid and his obligation to pay has, at the same time, disappeared[16]. He will also contest the collection on the grounds that he is exempt from the tax imposed on him[17].
He may also – without questioning the results of the tax assessment – contest the amount of the debt claimed from him, mainly on the grounds that the amounts claimed by the collector do not take into account payments previously made. The taxpayer may argue, for example, that he or she has made instalment payments that have not been taken into account.
The taxpayer may argue that the proceedings are improper because the amounts claimed by the collector are not due and payable at the time of the proceedings. He may also claim to have regularly obtained a suspension of payment in a summary tax procedure[18] which still produces its suspensive effects, or he may claim to have benefited from a delay of payment granted by the Administration. The taxpayer may challenge the statute of limitations of the collection action[19].
In the litigation of oppositions to prosecution, the addressee requests the cancellation of the prosecution of the collector by criticizing “the formal regularity of the act of prosecution”. The latter invokes formal defects affecting the act of prosecution in question. The taxpayer does not contest the proceedings by invoking their absence of cause but criticizes the form of the acts and the procedure they follow or their terms. More generally, this dispute concerns the regularity of the enforcement procedure.
Indeed, the admissible means here can be linked to the application of rules foreign to tax law. For example, the request for cancellation of a seizure – sale can be requested on the grounds that the debtor is not the owner of the seized goods. An order to pay may be contested on the grounds that it is tainted by an error in the spelling of the debtor’s name; or again, an action directed against a third-party notice on the grounds that its execution would have indirectly led to the seizure of a salary account, which, moreover, is unseizable.
The same applies to a challenge by which a garnishee requests the annulment of the act on the grounds that he is not a debtor of the debtor or that the garnishee notice had not been served on him[20].
In addition, the debtor may also oppose the debt collection proceedings and rely on the incompetence of the collector who is the author of the proceedings[21] ; or challenge the very procedure for initiating the proceedings, such as, in particular, the failure to respect the time limits separating the act of assessment from the first act of proceedings[22].
Thus, when the dispute concerns the existence of the obligation to pay and the regularity in form of the acts of prosecution, i.e. the notices to third parties, seizures and seals, the application falls within the competence of the Administrative Court[23].
23] However, with the installation of this court, the Tribunal de grande instance assumes the interim jurisdiction although no legal text gives it this competence.
II.3.2. Procedure in collection litigation
There are two phases in the collection procedure: the claim before the tax authorities (A) and the referral to the court (B).
- The claim before the tax authorities
The novelty introduced in this type of litigation, by the reform contained in the Finance Law n° 17/005 of June 23, 2017 for the fiscal year 2017, lies in its non-judicial nature. Indeed, the legislator has imposed the referral of the administration before possibly turning to the judge.
This requirement makes the procedure more cumbersome and poses serious problems of delay. For example, a notice to third parties must be executed within eight days of its receipt. However, the collector also has eight days to investigate a claim.
In such a context, and taking into account the time required to draft a claim, the taxpayer would certainly have already paid the tax debt before a possible appeal to the courts, during which he might have contested the existence of his obligation to pay.
The collection litigation is thus a labyrinth of litigation in which the taxpayer, even with the help of enlightened advice, may have difficulty in completing it. This is why the assistance of an expert in the field appears to be indispensable.
This procedure of the preliminary complaint is called to play a role of litigation filter, intended to relieve the courts by allowing to settle certain disputes according to simplified forms, to be deprived of jurisdictional character.
The non-respect of this rule is radically sanctioned. Indeed, as with tax assessment litigation, an appeal brought directly before the collection judge in the absence of a claim is always inadmissible[24]. Moreover, the absence of a prior claim cannot be rectified in the course of the proceedings.
In principle, the claim is lodged with the competent tax collector, i.e. the one who has established the contested tax assessment, taking into account the place of taxation.
The tax collector who has the appropriate powers to investigate the claim is, in principle, obliged to reply to the claim within eight days of the date of receipt of the claim.
- Referral to the Tribunal[25]
If no decision is taken within the eight-day period or if the decision is not satisfactory, the taxpayer must, on pain of foreclosure, initiate the jurisdictional phase of his claim before the Administrative Tribunal within one month.
Before this judge, only the means questioning the regularity of the existence of the obligation to pay and the form of the legal proceedings are admissible.
In the event of a legal recourse, the legal proceedings are suspended until the court decision as soon as the court declares itself seized.
The Court shall decide exclusively on the basis of the evidence submitted in support of the claim to the Administration. The taxpayer may not submit to the court any supporting documents other than those already submitted in support of his claim, nor may he invoke new facts.
The Tribunal’s decision must be rendered within thirty days from the date of referral. In the absence of a decision within this period, the suspension of the execution of the prosecution measure is lifted.
III. CONCLUSIONS
All in all, we note that:
- The organization of tax litigation aims at balancing the exorbitant prerogatives of the tax administration in order to preserve the rights of the taxpayers. The collection litigation as examined allows the taxpayers to have quick legal means to have the regularity of the collection procedures reviewed by an impartial authority.
- The collection litigation, at the origin of numerous litigations, obeys to particular rules. It is based on the fact that the tax is due. It falls within the jurisdiction of the Administrative Tribunal. Pending its installation, the Tribunal de Grande Instance exercises, although without a legal basis, the powers devolved to it.
- The novelty introduced by the 2017 reform in this type of litigation is undoubtedly its non-jurisdictional nature. The obligation to refer to the Administration before resorting to the administrative judge. The administration first, the judge later. As has been pointed out in this study, this requirement makes the procedure more cumbersome and poses serious problems of delay.
- In this type of litigation, the taxpayer only discusses the regularity of the conditions under which the administration intends to force him to pay. He cannot contest the validity of the taxes imposed on him or the regularity of the procedure that established them. This dispute, which arises from the forced collection of taxes, therefore only concerns the existence of the obligation to pay the tax debt and the form of the legal proceedings, i.e., the third-party notices, seizures and seals. However, the taxpayer has the possibility to criticize also the acts of taxation as well as any act preceding the measures of pursuit without however calling into question the base and the calculation of the tax.
By Trésor Ilunga Tshibamba
Lawyer at the Court of Appeal
1] J.L ALBERT et Aliis, Dictionnaire de droit fiscal et douanier, ed. Ellipses, Paris, 2007, p. 431
[2] E. CIBAMBA DIATA, Cours de droit fiscal général, ULK, 2012-2013
[3] A. MAITROT DE LA MOTTE, Droit fiscal, 1st ed. by PUF, Paris, 2011, p. 53
4] J. LAMARQUE et Alliis, Droit fiscal général, 2nd Ed. 2011, LexisNexis, Paris, p. 613
5] J. GROSCLAUDE and Ph. MARCHESSOU, Droit fiscal général, 11th Ed., Dalloz, Paris, 2017, p. 18
6] F. VUNDUAWE te PEMAKO, Traité de droit administratif, De Boeck & Larcier, Brussels, 2007, p. 663 et seq.
[7] A. MAITROT DE LA MOTTE, op.cit. p. 282
8] articles 63-66 of the Law on the reform of tax procedures as amended and completed to date
9] The acts preceding the acts of prosecution include the constraint, the formal notice and the commandment.
10] R. HERZOG, Le juge fiscal, Economica, Paris, 1988, p. 28
11] Article 104 Organic law n° 16/027 of 15 October 2016 on the organization, competence and functioning of the administrative courts; See also article 72 of the law on tax procedure reforms.
12] HERZOG R., op. cit. p. 28
13] J. LAMARQUE et Alliis, op. cit. p. 1370
14] Article 72 of the Act to reform tax procedures.
15] See RC 110.671 Mr Mwamba T. co/ HVK, TGI/Gombe
16] The taxpayer may also argue that he or she has obtained, in the assessment litigation, a total discharge of a tax previously imposed on him or her or that the tax subject to the proceedings has given rise to a payment in full discharge of the tax debt.
17] See RC 111.540 Institut de Pétrole et de Gaz co/ HVK, TGI/Gombe
18] Read articles 316 to 318 of the Organic Law n° 16/027 of October 15, 2016 on the organization, competence and functioning of the administrative courts
19] Read article 73 of the Law on the reform of tax procedures
20] See RC 110.999 Société SULU Group co/ the Receiver of the DGRK or RC 109.355 Société Celtel Congo co/ the Receiver of the DGRK, TGI/Gombe
21] See RC 109.458/108.860 Université Libre de Kinshasa co/ HVK, TGI/Gombe
22] See RC 116.464 Kamoa co/ RDC, TGI/ Gombe
23] Article 72 of the Law on tax procedure reforms
24] It has been judged that no request for annulment can be received if the applicant has not first lodged a complaint with the administrative authority from which the incriminated decision emanates (RA 21 – 12/05/1976 (Source: BA 1976, p. 124), cited by Emery MUKENDI WAFWANA et al, Contentieux administratifs, Collection Juridocs, Kinshasa, 2010, p. 19
25] In French law, with respect to collection litigation, disputes involving the obligation to pay are brought before the tax judge. They are therefore subject to the jurisdiction of the administrative or judicial order, depending on the nature of the tax at issue. As for disputes concerning the validity of the form or the methods of prosecution, they are brought before the judicial enforcement judge, regardless of the nature of the tax in question.
