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

SECTION I: THE POLITICAL AND LEGAL DIMENSION OF JUDICIAL COOPERATION

The framework of judicial cooperation is not to exclude or set aside the political dimension of the cooperation. This is because it turns out to be one of the most important, reason being that, it is often subject to clashes resulting from the differences in the political convictions of member states.^60(*) Furthermore, another very important consideration is the availability of a legal framework. Indeed, to fight effectively against tax evasion and tax avoidance, it is necessary to modernize the existing legal framework in order to improve cooperation. In that light, legal differences were most often singled out as one of the main reasons for blocking the implementation of judicial cooperation^61(*). Therefore,an efficient fight against tax evasion and tax avoidance will require the putting in place of adequate institutions and reforms at the political level (Paragraph I). In this light, politicians and all those in charge of drafting Community laws must provide judges, tax and police officers with a legal framework (Paragraph II) conducive for the exercise of their missions.

PARAGRAPH I: THE POLITICAL DIMENSION OF JUDICIAL COOPERATION

Tax law and tax procedures are two domains refractory to any external interference because they are marked by the seal of sovereignty. By uniting themselves under a community, States had intended to keep the essential attribute of this sovereignty. In this light, within the framework of the cooperation that characterises the relationship between CEMAC members, their political bodies have arrogated to themselves the privilege of determining the community policy. This has been done through the representative of the executive within CEMAC on one hand (A), by the council of ministers of OHADA (B) on the other hand without leaving out the considerable influence of GABAC and FATF (C).

A: The active role of the representatives of the executive within the CEMAC zone

The distribution of competences between the various institutions and bodies of CEMAC was done by the addendum to the CEMAC treaty relating to the institutional and legal system of the community. Pursuant to section 20 of this treaty,the Conference of Heads of State adopts additional acts to the Treaty (1) and the Council of Ministers as well as the Ministerial Committee adopts regulations, directives, take decisions and formulate recommendations or opinions (2).

1: The conference of Heads of State

The Conference of Heads of State of CEMAC is the supreme decision-making body of the community. According to section 3 of the addendum to the CEMAC treaty, it determines the policy of the community and directs the action of the council of ministers of UEAC and the ministerial committee of UMAC.^62(*)It is based on this prerogative that the conference of the Heads of State can legislate by way of additional acts^63(*). These acts are annexed to the treaty of the CEMAC and supplement this one without modifying it. These additional acts are binding on the institutions of the community as well as on the authorities of the Member States.

Over the past few years, it has adopted several texts aimed at strengthening and facilitating judicial cooperation between member States. For example the agreement of judicial cooperation and the agreement of extradition between the members States of CEMAC. The purpose of these two texts is to facilitate cooperation between the member States so as to deal with the growing rise in the phenomena of organized and transborder crime.In in defining the policy of judicial cooperation, some prerogatives were also attributed the Council of Ministers of UEAC and the Ministerial Committee of UMAC.

2: The Council of Ministers of UEAC and the Ministerial Committee of UMAC

The Council of Ministers of the UEAC and the Ministerial Committee of the UMAC are political bodies of CEMAC made up of the representatives of the executive power of Member States^64(*). In the exercise of their mission, these two bodies can legislate by means of regulations. These regulations are binding in their entirety and directly applicable in all States except framework regulations, which are directly applicable, only on some elements. The Council of Ministers of UEAC and the Ministerial Committee of UEAC also adopts directives, take decisions which can also have in certain circumstances a legislative value.^65(*)

Furthermore, the regulations of the Council of Ministers of the UEAC and of the Ministerial Committee of the UMAC have as object the facilitation of the mutual legal assistance between the Member States in order to fight effectively against criminality. These regulations generally aim to create or strengthen institutions involved in judicial cooperation, or even to enact certain offenses, which will then have to be integrated into the internal criminal law of Member States. This is also the case for the penal provisions enacted by the OHADA legislator.^66(*)

B: The council of ministers of OHADA

With regard to the provisions of section 6 of the OHADA treaty, the Permanent Secretariat (1) and the Council of Ministers (2) of OHADA play an important role in the definition of the Community policy thereby affecting the process of judicial cooperation between the CEMAC member states, all parties to the OHADA treaty.

1: The Permanent Secretariat: role in preparing the Uniform Acts

Uniform acts are prepared by the permanent secretariat in consultation with the governments of the States parties^67(*). It is therefore the organ in charge of preparing Uniform Acts and submitting them for adoption to the Council of Ministers. By harmonising business rules in Africa through Uniform Acts, the permanent secretariat has also created a framework for judicial cooperation in fighting against tax evasion and tax avoidance.

2: The Council of Ministers: role of deliberation and adoption

The Council of Ministers of OHADA is an institution made up of ministers in charge of justice and ministers in charge of finances of the Member States. It is this institution that has decision-making power and most of the normative power. The council of ministers adopts Uniform Acts after the deliberations of member States and the opinion of the common court of justice and arbitration.After adoption of the uniform acts by the Council of Ministers, it will enter into force in accordance with the terms of section 9 of the OHADA Treaty thereby being applicable and binding in the States parties notwithstanding any contrary provision of domestic law, prior or subsequent to it. In this light a uniform Act containing provisions aimed at fighting against tax evasion and avoidance can enter into force and be binding on individuals thanks to sole initiative of the executive power. What of the influence GABAC and FATF?

C: The influence GABAC and FATF

The Task Force on Money Laundering in Central Africa (GABAC)^68(*) and the Financial Action Task Force (FATF)^69(*) are two institutions in charge of fighting against illicit financial flow, the financing of terrorism as well as other transborder criminal activities at the international and sub-regional levels.

1: GABAC

The Task Force on Money Laundering in Central Africa (GABAC) is an organ of CEMAC. It was created in the year 2000 with the mandate to coordinate, stimulate and evaluate the actions undertaken within the member States in the context of the fight against money laundering and the financing of terrorism. GABAC also organizes technical assistance for its member states and facilitates international cooperation.^70(*)

GABAC has a permanent secretariat whose attributions are determined by a CEMAC regulation.^71(*)Among other things, the permanent secretariat of GABAC promotes cooperation between the National Financial Investigation Agencies (ANIF) and is responsible for coordinating their actions aimed at preventing money laundering and the financing of terrorism. To this end, it brings them together in plenary session at least once a year,^72(*)conducts mutual evaluations and ensures the implementation of the recommendations contained in the mutual evaluation reports as part of a monitoring and evaluation process in accordance with the FATF methodology and Regulation No. 03. /CEMAC/UMAC/CM of 2^nd October 2012, establishing a manual of procedures for mutual evaluations at GABAC.^73(*)

2: FATF

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.^74(*)

With more than 200 countries and jurisdictions committed to implementing them.  The FATF has developed Recommendations, or Standards which ensure a co-ordinated global response to prevent organised crime, corruption and terrorism. They help authorities go after the money of criminals dealing in illegal drugs, human trafficking and other crimes.  The FATF also works to stop funding for weapons of mass destruction.^75(*) Furthermore, it is worthwhile noticing that, despite being political, judicial cooperation also has a legal dimension.

PARAGRAPH II: THE LEGAL DIMENSION OF JUDICIAL COOPERATION

As mentioned supra, the exigencies of globalisation have required CEMAC members States to adapt their disparate national rules, which were gradually replaced via adjustments, a growing institutionalization and by supranational rules aimed at reinforcing community governance. These legal differences between the laws of member States have always been identified as one of the main obstacles to the practice of judicial cooperation in fighting and tax evasion and tax avoidance in the CEMAC zone. The harmonisation of tax legislation in the CEMAC sub region will prevent one member state to become a tax heaven for others.^76(*) Though not expressly mentioned in the CEMAC treaty, it is worthwhile noticing that, the legal dimension of judicial cooperation is characterised by community (A) and OHADA rules (B). Added to these rules it will be worthwhile looking at the constitutive elements of tax evasion and avoidance(C).

A: The rules adopted by the CEMAC legislator

In order to secure the sub region economically and politically, member states have resolutely committed themselves to the fight against the most serious forms of organized crime such as terrorism and money laundry. They thus adopted several conventions containing both preventive and repressive measures. These conventions contained for some of them real penal incriminations. The erection of these behaviours into crimes by Community law lead us to the communitarisation legal rules whose implementation has been facilitated by the Judicial Cooperation Agreement between CEMAC member States. Some of these community rules inter alia include; Regulation N° 08/05-UEAC-057-CM-13 of 7^th February 2005 adopting the convention relating to the fight against terrorism in Central Africa, Regulation N°01/03-CEMAC-UMAC of 4^th April 2003 on the prevention and repression of money laundering and the financing of terrorist in Central Africa, Regulation N° 02/02/CEMAC/UMAC/CM of 14^th April 2002 on the organization and functioning of the action group against money laundering in Central Africa, Regulation N° 4/CEMAC-069-CM-04 of 21th July 2000 adopting the cooperation agreement in matters of criminal police between the member States of Central Africa.^77(*)

The harmonization of the above-mentioned incriminations have enhanced of judicial cooperation. First of all, because of the seriousness of some of these offences and secondly because it has simplified the cooperation mechanisms between the various authorities responsible for its implementation thereby making it effective.

B: The harmonisation of sanctions provided by OHADA

As we have already had the opportunity to underline, States have always been reluctant to transfer the right to punish to an external authority reason being that it is an essential attribute of their sovereignty. However, in other to ensure a good business climate and attract foreign investors to Africa, section 5 of the OHADA Treaty has made it possible for Uniform Acts to provide, alongside civil and economic sanctions, criminal charges even if it leaves it up to the Member States to determine the appropriate sanctions. It is on the basis of this aforementioned section 5 that several incriminations can be detected in the eight Uniform Acts already in force in OHADA. The abundance of material does not allow us to make an overall study of these incriminations contained in the Uniform Acts. What must be retained at this juncture is that the harmonization of incriminations by the OHADA legislator has proven to be of considerable importance in the implementation of judicial cooperation between Member States.^78(*) As these incriminations are imposed on the member states including those of CEMAC which are all parties to the OHADA treaty. Added to the CEMAC and OHADA rules are the constitutive elements of tax evasion and avoidance.

C: The constitutive elements of tax evasion and tax avoidance

These constitutive elements can be legal, intentional and material as far as tax evasion is concerned (1) and it they can further include the manipulation of tax law in other to exploit its loopholes concerning tax avoidance (2).

1: tax evasion

Tax evasion has a legal, material and intentional element.

a- the legal element

The definition of the tax base and the collection of the various taxes being an aspect of sovereignty, each Member State of CEMAC has its own tax legislation. Though this legislation is not harmonised, it however remains that, tax evasion is punished and denounced by all of them. This is true when looking at section M107 of the Cameroon's general tax code andsection P-1024 and P-1025 of the Gabon's «livre des procédures fiscales du Code Général des Impôts». The same logic prevails even out of the sub region as seen in article 1741 of the French general tax code and article 186 of the Swiss direct federal tax book (LIFD).

b- the material element

The material element consists in increasing the costs and/or reducing the company's income. This element must however be demonstrated by the tax authorities in the event of a control.^79(*)On the Material level, tax evasion can generally be divided into two categories. Firstly, the omission or express refusal to make the declarations within the prescribed time limits. This form of evasion results from simple abstention. Secondly, the concealment of part or all of the sums subject to the tax referred; this concealment can be done through the production fake documents or simply the refusal to pay due taxes.^80(*)

c- the intentional element

This is the most important element because it is the most difficult to prove. The offense is constituted when the taxpayer who is accused of fraud has done so deliberately. At this level, it is necessary to make the difference between the voluntary act, therefore fraudulent, and the involuntary act. It is then a question of distinguishing, in the application of the tax law, the good or the bad faith of the taxpayer, the good faith being the involuntary error (we can also talk about simple error) and the bad faith being the fraudulent act.^81(*) This situation is different from what obtains in tax avoidance.

2: tax avoidance

Tax avoidance is the obvious manifestation of the "manipulation" of the tax law by the taxpayer. The taxpayer manages to avoid the tax, that is to say, he voluntarily reduces the taxable base (either by increasing expenditure or by decreasing revenue) without violating the tax law. For this, he will carefully read the tax legislation then take advantage of certain of its loopholes or by using, the many possibilities offered to him at the sub-regional or international level. We can simply say that in tax avoidance, there no violation of the tax law by the taxpayer.^82(*)

Even though these tax evasion and tax avoidance appear to be different, it leads to the same results. This is the reason why some refuse to make the distinction between the two and believe that it is better to correct the legal vacuum by revising the existing tax law, though this is easier said than done, especially when the we are faced with their mechanisms of operation.

* ⁶⁰Théophile NGAPA, Op,cit.

* ⁶¹Ibid.

* ⁶² Section 20 addendum to the CEMAC Treaty.

* ⁶³Section 21, addendum to the CEMAC Treaty.

* ⁶⁴According tosection 9 of the addendum to the CEMAC Treaty, the UEAC Council of Ministers is made up of representatives of the Member States, including the ministers in charge of finance, and economic affairs.

* ⁶⁵ Théophile NGAPA, Op,Cit.

* ⁶⁶Ibid.

* ⁶⁷ Section 6 of the OHADA Treaty

* ⁶⁸ Refered to in French as « Groupe d'Action contre le blanchiment d'Argent en Afrique Centrale »

* ⁶⁹ Refered to in French as « « Groupe d'action financière »(GAFI)

* ⁷⁰ www.fatf-gafi.org/fr/pages/gabac.htmlaccessed on 28/02/22

* ⁷¹ Regulation N°02/CEMAC/UMAC/CM of 14^thApril 2002, as amended by Regulation 01/CEMAC/UMAC/CM of 2^ndOctober2010.

* ⁷² http://spgabac.org/les-attributions-du-secretariat-permanent/ accessed on 28/02/22

* ⁷³ Ibid.

* ⁷⁴ www.fatf-gafi.org/about/ accessed on 28/02/22.

* ⁷⁵Ibid.

* ⁷⁶ Théophile NGAPA, Op,Cit.

* ⁷⁷ www.cemac.int accessed on 02/03/2022.

* ⁷⁸ Théophile NGAPA, Op,Cit.

* ⁷⁹ http://porgo.unblog.fr/la-fraude-et-levasion-fiscale/ accessed on the 02/03/22

* ⁸⁰Felix Ateck A Djam, Op.cit.

* ⁸¹ Op.cit. note 70.

* ⁸² Ibid.