A man was sentenced to 12 months probation as well as payment of ISK 158 million fines to the Treasury for submitting materially incorrect VAT declarations for years, for not declaring VAT-related activities of his business to the Norwegian Tax Authority until just over four months ago after the start of operations and for failing to keep the accounts required under the Accounting Act, as well as for failing to keep supporting documents and other accounting documents in an adequate manner.
The case concerned value added tax in the amount of 64.7 million for the years 2016 and 2017.
The man clearly confessed to his crimes and as a result the case, which was tried in Reykjaness District Court, was treated as a confession case and went to court without further evidence after the prosecution and defense had the opportunity to comment briefly on the decision on sanctions and legal issues.
The man had not been punished previously according to his existing criminal record. So that was factored into the sentencing, along with the fact that he openly confessed to his crimes. The judge also took into account that some time has elapsed since the offenses took place.
Nevertheless, it is clear that the violations are considered to be on a large scale.
Therefore, an appropriate sentence would be 12 months, but the judge felt it was fair that the sentence be conditional.
The judge felt that the man should also be fined and pointed out that for a certain period of the offenses such a fine should be based on three times the amount of underpaid taxes, but for other periods it should be based on twice the amount.
If the result was that he should be fined ISK 158 million and if the fine is not paid within four weeks of the publication of the judgment, the man will have to serve 360 days in prison .
Risk of non-payment of fines
Recently, the National Audit Office drew attention to the fact that the rate of collection of judicial fines, as imposed in the above-mentioned case, is considerably low in this country, and the rate is decreasing as the fines are high, so the higher the fine, the lower the likelihood that the fine will be paid.
Expiration of fines and disbarment are significant and the situation in prisons is such that there is a negligible chance that those who do not pay their fines will be allowed to serve the alternative sentence.
The National Audit Office has drawn attention to the fact that although the Penal Code stipulates that in the event of a major tax offense, it is possible to sentence up to six years in prison, this is rarely done, in fact the most rarely is a firm prison sentence in such cases. In them, high fines are preferred, which, on the other hand, are not levied.
See also: National Audit Office Black Report Shows Tax Evaders Avoid Paying Hefty Fines Despite Convictions – Surprised by Department’s Lack of Interest