Through the ruling corresponding to Cassation No. 4646-2019, the Supreme Court rules on the application of these concepts. Learn about the impact of this new pronouncement.
The Supreme Court has established through the judgment issued in Cassation No. 4646-2019, which corresponds to the application of default interest and a fine for the modification of the coefficient of payment on account of income tax, product of a modification of the determination of the annual income tax of previous years.
Through the judgment corresponding to Cassation No. 4392-2013, the Supreme Court established legal rules that serve as a normative parameter for future similar cases, in order to promote legal certainty and standardize jurisprudence on tax issues. Specifically, the binding rules established by the Supreme Court were the following:
1) Neither the extensive nor the restrictive interpretation is relevant to interpret provisions that restrict rights or establish obligations. The general rule is literal interpretation.
2) The collection of default interest for payments on account of income tax declared and paid in a timely manner is not applicable, in accordance with the provisions of literal a) of article 85 of the Income Tax Law and article 34 of the Single Ordered Text (TUO) of the Tax Code.
3) If after the payment on account calculated, declared and paid promptly by the taxpayer, there is a variation in the coefficient of the payment on account, this situation should not determine the collection of default interest.
At the time, the parties questioned whether Cassation No. 4392-2013 was binding. Moreover, many courts and chambers did not follow the criteria established in a binding manner by the Supreme Court. Proof of questioning its scope is that the National Superintendency of Customs and Tax Administration (Sunat) initiated an amparo process on the occasion of the issuance of the judgment of cassation No. 4392-2013. Sunat’s claim was declared inadmissible in first and second instance. The Constitutional Court (TC) established in an interlocutory ruling that Cassation No. 4392-2013 was valid.
Through Cassation No. 4646-2019, the Supreme Court specified the following:
a) The obligation to pay default interest will arise from the timely fulfillment of the payments on account. Therefore, it is necessary to establish what is meant by timely fulfillment of payments on account. To do this, it is necessary to resort to the provisions of article 85 of the Income Tax Law.
b) The cancellation of payments on account of the income tax that did not start from a correct calculation base, by virtue of what was later established by the taxpayer himself or the Sunat, cannot be understood as a payment in the strict sense, since this supposes the complete execution of the service as an essential requirement.
c) It is not just a matter of complying with the formal duty of submitting the sworn statement in a timely manner and that the taxpayer has calculated the coefficient of payments on account according to the information from the previous year that he considered correct.
It was necessary that what was declared for the previous exercise had been an exact manifestation of his taxable income, and only then would the coefficient of payments on account be understood as correct.
d) Article 34 of the TUO of the Tax Code could not only be applicable to cases in which the payments on account were paid outside the term established for their cancellation.
It is also applicable when the taxpayer made a timely payment, based on information from the previous year or preceding the previous year that had been originally declared. However, in this case, it is subsequently established that the calculation basis was incorrect and therefore the coefficient used to declare and pay the payments on account was incorrect.
e) The judgment corresponding to Cassation No. 4392-2013 does not contain as a binding rule that the application of default interest is not applicable as a result of the subsequent modification of the basis for calculating payments on account of income tax.
f) It is not appropriate to understand that the judicial bodies are subject to a binding criterion consisting of the non-application of default interest due to the subsequent modification of the basis for calculating payments on account of income tax.
g) Applies the fines associated with these determination resolutions due to the modification of the coefficient of payment on account of the income tax. For this purpose, it is indicated that since the taxpayer had to have declared correctly, the fine provided for in numeral 1 of article 178 of the TUO of the Tax Code is configured.
In our opinion, the judgment of the Supreme Court is in error and contravenes the law, due to the following:
I) The payments on account of the income tax are advances of what will be the definitive settlement of the annual income tax for the year. Therefore, the determination of payments on account is always an estimate of a future obligation. It is not possible to know in advance and exactly, at the beginning of each year, how much I am going to pay in income tax at the end of the year.
II) Since the determination of the payments on account is an estimate, it is a question of resorting to parameters for its establishment. In our legislation, these are provided for in article 85 of the Income Tax Law. Pursuant to this provision, these advances are measured and fixed based on the tax calculated (read, declared tax) by the taxpayer in previous years.
III) Therefore, in strict compliance with the principle of legality, the criterion to determine whether late payment interest must be paid for modifying the coefficient of payments on account is if they were declared and paid in accordance with article 85 of the Income Tax Law. Rent. If this happened, the application of default interest provided for in article 34 of the TUO of the Tax Code does not apply.
IV) That is, if the payments on account of the income tax were declared and paid according to the “calculated tax”, established in article 85 of the Income Tax Law, default interest is not applicable because the payment was timely.
V) Assume that for the determination of the payments on account of the income tax, the exact and definitive liquidation of the income tax of the previous years must be considered:
(I) ignores that it is the taxpayers who are bearing in advance the economic burden of the income tax that must be settled and paid at the end of the fiscal year
(II) is unaware that at the time the declaration and payments on account were made in accordance with article 85 of the Income Tax Law, the obligation was extinguished and, therefore, there can be no interest on arrears arising from an obligation already extinguished ; and, what is more serious
(III) would mean that Sunat would have to have audited and determined the income tax of previous years, always and in a timely manner at the beginning of each year, in order to correctly declare the payments on account.
In other words, we are faced with an interpretation that is not reasonable and does not respond to the functionality of taxation for the determination of payments on account.
Source: The Peruvian