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  Ihor Samsin
Judge of the Supreme Court of Ukraine
Chairman of the High Qualification Commission of Judges of Ukraine
PhD of Law
Honoured Lawyer of Ukraine

The article substantiates the need for effective legal regulation of tax disputes, which occupy one of the central places in the public law disputes system.

The author stresses the impossibility of effective regulation without clear understanding of the methodological nature of such disputes and principles of their solving, and offers his own investigation of the legal facts as a part of the tax disputes settlement mechanism.

Keywords: tax disputes settlement mechanism, legal fact, proceedings, omissions, administrative appeal.

According to Article 1 of the Constitution, Ukraine is a sovereign and independent, democratic, social, law-governed state. Part 3 of Article 8 of the Basic Law stipulates that the norms of the Constitution of Ukraine are norms of direct effect. By securing such constitutional provisions the state committed itself to guarantee effective mechanisms for protection of civil rights and freedoms of the individual to everyone who comes under its jurisdiction, which includes public legal relations.

The lion’s share of public legal disputes concerns tax issues. Tax revenues constitute an important component of budget revenues at all levels, and tax payment is always connected with compulsory alienation of part of the income or property of a payer. Thus, tax payment disputes between the state, represented by competent authorities, and taxpayers are inevitable.

Perfect legislature is indispensable for tax disputes resolution. Their regulation is impossible without clear understanding of the methodological nature of such disputes and principles of their resolution. Therefore, it is important to clarify the procedural mechanism for tax-legal regulation and single out some of its elements.

Many Ukrainian and Russian scholars, including I. Ye. Krynytskyi, M. P. Kucheryavenko, S. M. Mironov, A. V. Rudenko, O. P. Riabchenko, Ye. A. Usenko, N. V. Shevtsova etc. studied the issue of tax disputes resolution. However, the structure of tax-legal disputes settlement has not been fully investigated yet.

The purpose of this article is to clarify the mechanism for tax-legal regulation, single out its structural elements, and understand its place in the system of legal facts.

The term “mechanism” is generally understood as a set of intermediate states or processes of any event. In our opinion, the structure of legal regulation in general should be the first step in the study of tax disputes settlement mechanisms. According to O. V. Malko the mechanism of legal regulation consists of the following elements: 1) the rule of law; 2) the legal fact or body of facts within which the organizational and executive enforcement act is the crucial; 3) the legal relations; 4) the acts of rights and obligations realization; 5) the protective enforcement act (optional) [1, 57-60]. We believe that in general, this mechanism can be applied to the tax disputes regulation.

The initial stage of legal regulation is connected to the rule of law, which gives a certain form to general or tentative suggestions as to the conduct of participants. It aims at realization of interests of the participants and is fixed in a way specified by the law.

At the same time, procedural norms exist in general (in theory), prior to certain action or event. i.e. prior to certain legal fact. Thus, the main purpose of legal facts in the mechanism of tax disputes settlement is the "activation" of the process of tax-legal regulation. Occurrence of a certain legal fact triggers the effectuation of provisions of the corresponding legal norms, which results in predetermined consequences and leads to transition to the next stage of the tax adjustment procedure dynamics. Thus, legal facts are the driving force of tax dispute dynamics, and the grounds for rise of legal relations and their transition from one stage to another.

Among the legal facts scholars traditionally distinguish between actions and events. The latter do not depend on the will of participants, they just reflect the objective reality and come by themselves. For example, the death of a person is a legal event that leads to the termination of tax binding relations and relevant procedural consequences. In particular, in accordance with Article 157 of the Code of Administrative Procedure of Ukraine a court shall close proceedings in the event of death or announcement of death of a person that was a party in the proceedings, or liquidation of enterprise, institution or organization that was a party in the proceedings [2].

However, in the procedural regulation events are most often associated with the temporal course of tax proceedings. For example, the provisions of Section 95.2 of Article 95 of the Tax Code of Ukraine stipulate that collection of money and sale of property of a taxpayer shall be made no earlier than 60 calendar days from the date of sending of requirements to the taxpayer [3].  In this case, the 60 days that have passed since the date of sending of requirements of the supervisory authority is the legal fact-event, as a result of which the supervisory authority gets a right to appeal to court for the collection of money or for permission to repay the debt with taxpayer’s property.

At the same time, we should agree that the temporal course itself (without any connection to the situation) does not bear any content [4, 71]. In this case, it shall be stated that the temporal course of tax proceedings and tax events in general are a part of the actual taxation procedure, i.e. tax events influence the procedure of tax disputes settlement only in combination with other legal facts [5, 43-44]. Indeed, in the referenced example, the 60 days that passed is the term not only calculated after occurrence of some other legal fact (i.e. sending of tax requirements), but makes sense only if the act of sending occured.

Thus, we can state that the role of events as legal facts in tax-legal disputes is secondary. They are not always a part of the actual procedure. For example, the taxpayer’s right to appeal the decision of tax authority arises only after the act of its sending. In this case the relevant processual dynamics is caused by the other legal fact, i.e. the legal action, and is not influenced by the temporal course of tax proceedings or any other legal fact.

Legal actions, in contrast to legal events, represent the volitional behaviour of participants. According to S. S. Alekseev, a legal action is volitional behavior, the external expression of will and consciousness of citizens and public organizations [6, 168]. Generally agreeing with this definition, we consider it necessary to point out that the action as a form of legal fact is not always active in nature, as inaction of participants of tax-legal disputes can also have significant legal consequences. In particular, taxpayer's failure to meet their tax obligations may give rise to a tax dispute as such, and not appealing the decision of tax authority for crediting additional amount of tax or charging fines may significantly affect the dispute development process. Similarly, a plaintiff’s repeated no-show without reasonable excuse shall be a reason for leaving the claim without consideration [2]. It would be reasonable, by analogy with criminal law, that this kind of legal fact is referred by the term "act", which includes both action and inaction. We do not propose to change the established categories of the theory of law, but in our opinion, it is necessary to emphasize that the concept of "action" as a kind of legal fact in tax-legal dispute should encompass not only active behavior, but also inactivity of participants.

In the theory of law, legitimate procedural actions (legal concessions and legal acts) and illegitimate actions (tax violations) are distinguished among legal actions on the grounds of alignment with the tax legal regulations requirements [6, 168-171]. In this respect, it is necessary to make a comment. Based on the general theoretical understanding of legal action,  listing legal acts among procedural actions seems justified. However, taking into account the specifics of consideration of public legal disputes in general, and tax-legal disputes in particular, to identify procedural actions and legal acts is inappropriate to our mind. For example, the Code of Administrative Prosedure clearly distinguishes between these categories by using the construction "decisions, actions or inaction of state authorities" to refer to objects of appeal in administrative cases [2].

A tax dispute may be initiated by both, a taxpayer and tax authority. However, one should bear in mind that tax litigation initiated by a taxpayer can be done in two ways, either through an administrative appeal or in court. While tax litigation initiated by tax authority can be resolved only in court. It is difficult to agree with such position. According to some scholars, actions or inaction of a taxpayer can not be the grounds for a tax dispute initiation [7, 22-24; 8, 13-16]. This conclusion is based on the fact that the offense committed by a taxpayer shall not constitute the grounds for a dispute. In particular, the authors believe that the decision to bring a taxpayer to responsibility shall not be the grounds for a dispute. It is difficult to agree with such conclusion as it is unlawful actions (inaction) of a taxpayer that constitutes the legal fact which gives rise to differences in interests and is the basis for the subsequent actions of the parties (in terms of tax-legal dispute), including relevant decisions by tax authorities. However, in case of an unlawful decision by a tax authority, this very decision shall give rise to a tax dispute. At the same time it should be borne in mind that these disputes will have different subjects. For the former case it will be crediting additional amount of tax and application of relevant sanctions on a taxpayer, while in the second case it will be an appeal of illegal decision of tax authority.

Thus, decisions of tax authorities should also be regarded as legal facts that constitute an element of tax disputes settlement mechanism. The construction “acts of tax authorities” is quite common in literature. It refers to the documents concerning tax relations participants that are not normative and shall be approved by the signature of the head of tax authority or their deputy. Non-normative legal acts of tax authorities have the following specific features: a) the content of the documents refers to definite conclusions regarding rights or duties of tax relations participants (taxpayer, tax agent, etc.), b) it is formalized on the basis of corresponding order (e.g., includes a mandatory regulatory part) c) it is issued by the initiative of tax authority and formalized by the same tax authority, correspondingly, i.e. signed by the head or their deputy [9, 571]. The practice of tax disputes settlement in the Russian Federation allows to single out some approaches to generalize the meaning of the term “non-normative acts”. According to the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation № 5 from February 28, 2001, such act shall mean an act that can be challenged in arbitration court by presenting the requirements for declaring it invalid, the document of any name (requirement, decision, resolution, etc.), signed by the head (or their deputy) of tax authority concerning an individual taxpayer [10].

The construction “decisions, actions or inaction of state authorities” is used instead in the Code of Administrative Proceedings of Ukraine [2]. We consider that in the context of procedural law it is more appropriate to use the term “decisions”. Moreover, in order to fall within the definition of legal facts that affect the dynamics of tax-legal disputes, such decisions must create certain legal consequences for a taxpayer that violate their legitimate rights and interests (in case of an unlawful decision by a tax authority) or restore the violated interests of the state.

Inaction of tax authorities (such as a fail to send a copy of the tax audit certificate to a taxpayer, a pending application for amendments to tax returns, etc.) can also be regarded as a legal fact that affects the tax disputes settlement mechanism. Since the tax authority, as well as any other state authority, shall act only on the basis, within the limits of powers and in the manner prescribed by the law, the list of its duties is strictly regulated by law. Therefore, their failure to perform such duties that resulted in violation of rights or interests of a taxpayer may be grounds for declaring such inactivity of the tax authority as unlawful.


  1. Malko A.V. Mekhanyzm pravovoho rehulyrovanyya // Pravovedenye, 1996. – №3 (214). – C. 54–62.
  2. Kodeks administratyvnoho sudochynstva Ukrainy [Elektronnyy resurs]. – Rezhym dostupu: URL : http://zakon2.rada.gov.ua/laws/show/2747-15
  3. Podatkovyy kodeks Ukra]ny [Elektronnyy resurs]. – Rezhym dostupu : URL : http://zakon2.rada.gov.ua/laws/show/2755-17
  4. Ysakov V.B. Faktycheskyy sostav v mekhanyzme pravovoho rehulyrovanyya. M., 1986. – 267 s.
  5. Myronova S. M. Mekhanyzm razreshenyya nalohovykh sporov v Rossyyskoy Federatsyy (fynansovo-pravovoy aspekt): monohrafyya / S.M.Myronova. – M., 2007.
  6. Alekseev S.S. Obshchaya teoryya prava. T. 2. M., 1982.
  7. Nalohovye spory: teoryya y praktyka, 2004. – № 9.
  8. Nalohovye spory: teoryya y praktyka, 2004. – № 12.
  9. Nalohovoe pravo: uchebnoe posobye / pod red. S.H. Pepelyaeva, M., 2000. – 608 s.
  10. Vestnyk Vyssheho arbytrazhnoho suda RF . – 2001. – № 7.
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