A Critical Analysis of Effectiveness of Tax Offences Control Mechanisms Under Rwandan Law

II.3. Contradictory and Assessment without notice

II.3.1 Contradictory procedure

This procedure is applied when the Tax Administration discovers a miscalculation, an omission, a misrepresentation, an understatement of income or any other error in the tax declaration or an assessment. In such a case, the tax administration has the right to issue an adjusted assessment through submission of rectified declaration form to the taxpayer.

In case the tax declaration form is rectified, the Tax Administration sends a rectification note to the taxpayer. The note contains a draft of the adjusted assessment and all the elements leading to the adjusted assessment. The rectification note contains fines determined by the Tax Administration in case of non-compliance with the tax laws.

The taxpayer has the right to give his or her written opinion on the rectification note within thirty (30) days. The taxpayer may also transmit additional evidence or information to indicate that the adjusted assessment is incorrect. The taxpayer has the right to a hearing on condition that he or she requested for it in his or her reply.

The rectification note may be issued in a period of three (3) years, starting from the day of the filing of the tax declaration. A rectification note has to be issued at least on the last day of the three year period. The prescription period is interrupted if the taxpayer has been informed to be audited by the Tax Administration, when there has been an affidavit thereof or by other deeds of acknowledgement by the taxpayer concerning the tax liabilities and all other provisions provided in the other laws.

A rectification note is definitive after:

· a period of thirty (30) days, in case the taxpayer has not replied to the rectification note;

· the Tax Administration has sent a notification to the taxpayer declaring that none or a part of the observations or remarks of the taxpayer are uphold;

· the hearing of the taxpayer followed by a written notification by the Tax Administration to the taxpayer declaring that none or just part of the observations or remarks of the taxpayer are upheld.

II.3.2 Assessment procedure without notice procedure

The law on tax procedure provides different case when assessment procedure without notice can be started; that is when:

· no tax declaration has been made;

· a tax declaration was filed after the day mentioned in the Law on Taxes and there was no proof given of «force majeure» justifying the delay in filing;

· the tax declaration was not signed by a competent person;

· the tax declaration was not accompanied by all necessary documents;

· the taxpayer was unwilling to cooperate with a tax audit officers or did not provide the information requested;

· books and records were not kept as provided by law; or

· there are serious indications of tax fraud.

In the event of the assessment procedure without procedure, the Tax Administration sends a note of an assessment procedure without notice to the taxpayer. The note contains all reasons why the assessment procedure without notice was conducted. It may also contain fines in case of non-compliance with the tax law. All proofs available to the Tax Administration can be used to carry out an assessment procedure without notice.

The taxpayer has the right to give written observations and remarks to the note of an assessment without notice in a period of thirty (30) days. He may also transmit additional evidence to the Tax Administration to prove that the assessment procedure without notice was not effectively conducted.

The assessment procedure without notice may be conducted in a period of five (5) years, starting from January 1st, following the tax period. A notice of assessment procedure without notice has to be issued at least on the last day of five (5) year period.

If there are serious indications of tax fraud, the Tax Administration can issue an immediate assessment without notice.

An assessment without notice is definitive:

· after thirty (30) days, if the taxpayer does not reply the assessment procedure without notice;

· After the Tax Administration has sent a notification to the taxpayer declaring that none or part of the observations or remarks of the taxpayer are upheld;

· After written or verbal explanations of the taxpayer of which the tax administration notified the taxpayer that none or part of the observations or remarks of the taxpayer are upheld;

· After the conduct of an immediate assessment without notice.

Finally, it should be noted that in case of assessment without notice, the burden of proof lies with the taxpayer. In other words, the taxpayer should give the proofs that contest the elements appearing in the assessment without notice^41(*).

* ⁴¹ Article 45 of LTP