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The role of judicial cooperation in the fight against tax evasion and tax avoidance in the CEMAC zone


par Frank Patrick MEUTCHEDJI FONGANG
Institut des Relations Internationales du Cameroun (IRIC) - Master II 2018
  

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SECTION II: THE URGENT NEED TO REVITALISE SUB-REGIONAL JUDICIAL COOPERATION

It is crystal clear that, judicial cooperation is the soft spot of the fight against tax evasion and tax avoidance. The amorphous nature of the said judicial cooperation is due to absence of a harmonised tax legislation at the community level, the absence of institutions coordinating the said cooperation as well as the reluctance of member states of the sub region to release part of their competence on tax issues due to sovereignty motivations. Therefore, the enhancement of judicial institutions in charge of fight against tax evasion and tax avoidance (paragraph II) as well as the harmonisation of sanctions (paragraph I) will be a giant step in the process of revitalising sub regional judicial cooperation.

PARAGRAPH I: THE HARMONISATION OF SANCTIONS AGAINST TAX OFFENCES

The disparate manner of states to sanction tax related offences has shown its limits. There is now a growing need for states to harmonise these sanctions. This is because, by leaving States to determine the sanctions for Community tax related offences, there is a risk that very disparate sanctions will be adopted. The penalty for the same conduct may be moderate in one State while it is very severe in another. This great heterogeneity of sanctions might lead to injustice. Another reason put forward, which is a corollary of the first, is to avoid certain States from becoming tax havens because of the flexibility of their legislation. The hypothesis is easy to imagine, it is obvious that if a State takes very flexible sanctions compared to others, this could be a source of motivation for fraudsters who will choose to establish themselves in this State. As such, there is an urgent need to harmonise community sanctions (A) via specific technics (B)

A: The harmonisation of sanctions by the community legislator

There has been a significant change in the attitude of the community legislator, particularly with regard to the offence of money laundering and terrorist financing. In these areas, the Community legislator has not only incriminated these behaviours, but also accompanied them with criminal sanctions. This is has been possible thanks to Title V of Regulation N° 01/03-CEMAC-UMAC on the prevention and suppression of money laundering and terrorist financing in Central Africa. According to article 46 of this text, anyone who intentionally commits one or more of the acts relating to the definition of money laundering shall be punished by imprisonment for 5 to 10 years and a fine of up to five times the amount of money laundered, but not less than CFAF 10,000,000. This article also punishes the attempt, complicity, participation in an association or agreement to commit money laundering.

The offence of terrorist financing is punishable by a minimum of 10 years' imprisonment and a fine of up to 10 times the amount of the funds involved, but not less than FCFA 10,000,000. It is not even necessary for the funds to have been actually used to commit a terrorist act for the offence to be committed.201(*) Accompanying measures to the initial sanctions have also been provided. They include confiscation, fines and permanent or temporary bans.

The CEMAC legislator has made a giant step in incriminating money laundering and terrorist financing as well as the harmonisation of related sanctions. This is an endeavour, which ought to be encouraged. This initiative should be extended to all types of tax related offences reason being that it will render judicial cooperation in the said domain more effective. However, the technic to be adopted for such a harmonisation of sanctions is still to be defined.

B: The techniques of harmonisation of community sanctions

In terms of content, it is generally accepted that harmonisation of sanctions should only concern offences that have been harmonised at Community level and should mainly concern prison sentences and fines. That said, several methods can be adopted for the harmonisation of these penalties. Among these methods, the system of a minimum base for the maximum penalty, the system of a range and the system of standardisation are the most advanced.202(*)

First of all, with regards to the system of a minimum base for the maximum penalty, the Community legislator must lay down minimum thresholds for the maximum penalty. In other words, it is a question of determining a floor above which the States must set the minimum penalty. Here, Community law criminalises a behaviour and sets a minimum penalty below which the States must not go.203(*)

Secondly, with regard to the range system, it requires the Community legislator to provide a framework for the States' initiative by setting minimum and maximum limits for the penalty. Community law therefore sets both the minimum and the maximum penalty and leaves the States free to take initiatives which nevertheless respect these limits. The merit of this solution is that it avoids both excessive flexibility in punishment and excessive severity.204(*)

Finally, the system of uniformity of punishment appears to be the most radical approach. According to this system, Community law incriminates and lays down uniform penalties, which are imposed in all Member States without any intervention by the national legislator. This technique has the merit of imposing a uniform Community sanction in all Member States while also avoiding the injustices that may result from a heterogeneous application of sanctions to violations of the same Community standards. Although the most appropriate, this technique of standardising sanctions is nevertheless the most difficult to accept and to achieve.205(*) Thus further justifying the need to enhance the institutions in charge of judicial cooperation.

PARAGRAPH II: THE ENHANCEMENT OF JUDICIAL INSTITUTIONS

The enhancement of judicial institutions in charge of fighting against tax evasion and tax avoidance will entail the consecration of the principle of mutual recognition of courts decisions(A) on one hand and on the other hand the proposal of some recommendations(B)

A: The consecration of the principle of mutual recognition of courts decisions by the CEMAC member States

The principle of mutual recognition of court decisions is one of the fundamental principles of judicial cooperation. This principle was easily enshrined in the CEMAC framework. It is the work of the Agreement on Judicial Cooperation between the Member States of CEMAC. In any case, this principle as enshrined by the CEMAC legislator allows the judicial decisions of one State to be not only res judicata in the other States (1) but to be enforceable (2).

1: the application of the principle of res judicata in tax matters

In principle, Res judicata206(*) in one Member State is binding should be binding on the others. That is, judgments of one State Party may have both positive and negative authority in the other States Parties.

Res judicata is said to be positive when it can be taken into account to produce certain effects. This is the case, for example, with section 15(a) of the Cameroon Criminal Code, which provides that foreign criminal sentences «shall be taken into consideration as previous conviction for the purposes of aggravation of sentence, of preventive confinement, of suspension, of sentence or revocation of such suspension of revocation, of release on license, of rehabilitation and of amnesty». This means that foreign criminal decisions that have become final can be taken into account to qualify recidivism or to decide on rehabilitation or on the amnesty of a person.

Secondly, the negative authority of res judicata is simply an application of the principle of "non bis in idem". This principle prohibits any new prosecution in a State for the same acts if they have already been the subject of a conviction in another Member State. The negative authority of res judicata thus prohibits any new prosecution for the same acts against a person who has already been acquitted or convicted in a decision that has become final. This solution is retained at the domestic level by section 15 para 2 of the Cameroonian penal Code. However, in order to be applied, a threefold identity of object, cause and parties is required.207(*)

In any case, whether it is a question of positive or negative res judicata, the decision in question must be in order. It must have been given by a competent court following due process and must be final. The extension of this principle to tax related offences will be very beneficial for judicial cooperation within the framework of the fight against tax evasion and avoidance in the CEMAC zone.

2: the consecration of executory force of courts decisions delivered at the community level

The agreement on judicial cooperation between the CEMAC member states recognises the enforceability of the criminal decisions of one state party in the others. Indeed, Article 9 of this text provides that: "the high contracting parties undertake to enforce in their prisons, at the request of the judicial authorities of the requesting State, sentences involving deprivation of liberty, whatever their duration, pronounced by the courts of the requesting State against any person, regardless of nationality, who is found in the territory of the requested State". Any conviction that has become res judicata in accordance with the criminal law provisions in force in the territory of the requesting State may therefore be enforced in any of the other Member States208(*). The same applies to financial sentences enforced on request by the recovery servicesof thecompetent recovery authorities of the requesting State209(*).

The solution thus proposed is much broader than that adopted by section 16(1) of the Cameroonian penal Code. Indeed, this text reserved the enforcement in Cameroon of foreign criminal sentences to decisions involving Cameroonian nationals and residents. With the judicial cooperation agreement, an adaptation of the national legislation is necessary to the exigencies of community norms becomes necessary. However, by virtue of the principle of the primacy of the Community criminal law, Community provisions excludes national provisions that are incompatible or contrary to it.

B: Recommendations for an efficient judicial cooperation

Judicial cooperation within the framework of the fight against tax evasion and tax avoidance in the CEMAC zone could be enhance through the creation of a financial legal department at the community level (2) and the creation of community institutions in charge of coordinating judicial cooperation (1).

1: the creation of community institutions in charge of coordinating judicial cooperation

It has been realised that, one of the things limiting effectiveness of judicial cooperation in fighting against tax evasion and tax avoidance is the absence of institutions in charge of coordinating the said cooperation. This state of things calls for the creation of such an institution. This can be done based on the European model where we have EUROJUST.

The European Office of Justice (Eurojust) was established by a decision of the Council of Europe on 28th February 2002 . It is a body with legal personality whose mission is to prevent all forms of organised crime such as:Terrorism, Cybercrime, Trafficking in human beings, Drug trafficking, Crimes against the financial interests of the EU members, Migrant smuggling, Environmental crime, Money laundering, Swindling and other types of fraud . It is composed of prosecutors, magistrates or police officers from the Member States of the European Union, one from each country. Eurojust works with national authorities to combat a wide range of serious and complex cross-border crimes involving two or more countries. The Agency leads the judicial response to growing threats in Europe, enabling the Member States to keep one step ahead of criminals, mainly focusing on organised crime groups. 210(*).

Eurojust has jurisdiction in the 27 EU Member States. It intervenes when the crimes concern at least two EU Member States, or a Member State and third countries. Its tasks are based on three major objectives which are:

- To promote and improve the coordination of investigations and prosecutions between the competent authorities of the Member States

- To improve cooperation between these authorities, in particular by facilitating the implementation of international mutual legal assistance and the execution of extradition requests

- To support national authorities in order to enhance the effectiveness of their investigations and prosecutions.211(*)

The creation of a similar body within the CEMAC framework might prove to be very useful in enhancing the effectiveness of judicial cooperation in the fight against the aforementioned crimes. These magistrates and judicial police officers, present within the institution it will make it possible to strengthen teamwork between judicial authorities and to put an end to the sometimes illusory obstacle of the divergence of judicial culture between the different Member States. Moreover, the development of this body could lead to the creation of a genuine Community prosecution service.

2: the creation of a financial prosecutors office at the community level

The financial prosecutor's office212(*) (PNF) has been effective in France since December 2013. This organ has jurisdiction over the entire national territory and material jurisdiction limited to the most serious economic and financial offences. It takes charge of highly complex cases concerning the fight against tax evasion, corruption and stock exchange cases (stock exchange offences, price manipulation offences), which fall under the exclusive jurisdiction of the new financial prosecutor. Indeed, the establishment of the financial prosecutor's office allows for the specialisation of the public prosecutor's office, enabling it to increase its action against very serious economic and financial crime, including complex tax evasion.213(*)

The creation of such and institution at the community level will be of great help in the fight against tax evasion and tax avoidance. However, its success will require enormous sacrifices on the part of the member States with regard to their sovereignty, the recognition of all the financial offences falling within the competence of the future Community prosecutor's office and the harmonisation of both substantive and procedural rules.

Pending the implementation of such a solution, which requires a great deal of effort on the part of the Member States, another solution that would be much easier to implement would be the creation of a judicial cooperation department in the prosecutor's offices of the various national jurisdictions, which would deal with requests for mutual legal assistance.

* 201 Article 52 Regulation No. 01/03-CEMAC-UMAC.

* 202 Théophile NGAPA, Op.cit.

* 203 Ibid.

* 204 Ibid.

* 205 Ibid.

* 206The principle of res judicata is applied in both civil law and common law legal systems. According to this principle, a case in which there has been a final judgment and is no longer subject to appeal; and the legal doctrine meant to bar (or preclude) relitigation of a claim between the same parties. In the case of res judicata, the matter cannot be raised again, either in the same court or in a different court. A court will use res judicata to deny reconsideration of a matter.

* 207 Théophile NGAPA, Op.cit.

* 208 Section 10 Agreement on judicial cooperation between the CEMAC Member States.

* 209 Section 13 alinéa 2 ibid.

* 210 https://www.eurojust.europa.eu/ accessed on 26/04/22.

* 211 Ibid.

* 212 The parquet National Financier(PNF) has been very successful in the fight against economic and financial crimes in France. CEMAC member states could inspire themselves from such an institution in other to enhance the role of judicial cooperation in the fight against tax evasion and tax avoidance in the sub region.

* 213 https://www.economie.gouv.fr/files/files/PDF/circulaire-lutte-contre-fraude-fiscale.pdf accessed on 26/04/22.

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