We keep thinking how to improve the justice management in taxation: More orality, digitalization and interdisciplinary justice

During the last 26th and 27th of June, the “International Seminar on Tax Justice” was held in Quito, Ecuador; on occasion of the celebrations for the 60 years of tax justice in that country, organized by the Judicial Council, the School of the Judiciary, the Simon Bolivar Andean University and the International Fiscal Association (IFA), Chapter Ecuador[1] .

In this seminar, I was privileged to make a presentation on the best practices of tax justice in Argentina and Latin American, but I must admit that I learned more than what I brought. In Ecuador, Justice in the field of tax litigation is exemplary and that is why wish to develop some ideas from this enriching experience.

The presentations were given by judges, academics and professionals from Ecuador and some international experts. In this occasion, theoretical and conceptual issues as well practical issues of justice in this area were addressed, and the experience of District Courts was discussed with the Tax District Courts of Ecuador, the Tax and Customs Courts of Chile and the Tax Court of the Nation of Argentina.

The relevance of the value of justice in the rule of law, the necessary independence and impartiality that should prevail were highlighted. Judges are the proper instruments to improve the justice of societies, having to ensure that upright and honest candidates are elected. The political power should not interfere in the appointment of judges, nor in the remarkable work that they perform. Under the rule of law, the judicial function is essential. Laws speak through the mouths of judges.

One of the papers, presented by the President of the IFA Ecuador Chapter, Paola Gachet, focused on the challenges to the tax policy makers, involving the new digital economic environment, considering that this highly topical issue is being debated in the international agendas (action 1 of the BEPS project). The Tax justice must be able to resolve the proposals that may arise, considering that some countries have already introduced digital tax services, as with the VAT reform in late 2017 in the case of Argentina.

A central issue I want to highlight, clearly stated by Colonel Carlos of IFA Ecuador, was the importance of orality in the tax justice of our country in recent years. Since it has become more relevant in the Tax District Courts (within the judicial function) the cases are substantiated in terms ranging from four to seven months. I have had the opportunity to participate in a final hearing at a tax trial (which are public) where the parties and experts sponsors exposed the grievances, the position of tax authorities, the evidence presented, and the final arguments. The judges gave their verdict, although they may uphold their decision during 10 days if the complexity of the issue warrants it. Remarkably, the courtrooms (with three judges) are formed for each case presented, i.e., they are not fixed.

Another important aspect of the Ecuadorian tax justice is the fact that the judgments of the District Courts may be appealed only before the National Appeal Court, which avoids discussions in various forums that ultimately harm both the taxpayer and the Treasury, and ultimately undermines the legal certainty that should govern the tax system.

Some voices may say that taxation is so complex (at least some topics such as transfer pricing, cases of possible treaty shopping , international planning structures that could be crossed out as abusive or harmful, etc.) that this orality can lead the analysis of the data to appear as somewhat superficial. In my opinion, it is not the case. I observed at this hearing the depth of the issues raised by both the applicant -the plaintiff- taxpayer, as well as the Treasury, and the respectful verdict given by the judges and its legal foundations.

While tax issues have a relevant documentary and written base (commercial documentation, accounting, contracts, powers, etc.), this does not mean that they cannot consider introducing greater orality in the substantiation of the causes. The parties present their positions and the experts, where necessary, will have to justify and defend their work. The live action (even filmed) reveals attitudes and postures that show in some cases more evidence than the written documents submitted.

This led me to think whether it was possible to propose the digitalization of the judicial process as an option to this important oral dimension of trials in tax matters. I understand that they are complementary tools, since orality enables greater dynamism in the management, but also the digitalization saves time, reduces distances and ultimately saves resources.

Regarding the Tax Court of Argentina, it will soon celebrate 60 years of age, but unlike tax justice in Ecuador and Chile, it has less changed over time, remaining as a real court of law, but under the Executive Branch. It is to note that the reform published in late 2017 included more orality to the proceedings before this Court. It established a mandatory basis of a prior evidentiary hearing where the facts at issue are presented. From the evidence offered, it establishes what facts will be admitted or if the matter will be purely legal. It is worth noting that the legislation already admitted the public hearing of the case before the sentencing, in cases where it was considered as necessary. These hearings have not been used in recent years, being replaced by final written allegations.

Something that was very striking and attractive to the audience was that the Tax Court of Argentina has public accountants as judges in the tax courtrooms and the importance of this was highlighted, considering that the cases treated most often involve accounting, financial, administrative and economic issues, where the contribution of these professionals is vital. It was noted then that this interdisciplinary representation of judges, lawyers and accountants is relevant.

In short and somehow reviewing and supplementing my previous contribution to this blog[2], I would emphasize the following aspects as relevant for an improvement in the management of justice in taxation:

  • The judicial independence is a key element, the laws speak through the mouths of judges and they must be highly qualified, impartial and act in accordance with the law, with all the controls necessary to ensure this and an exemplary punishment for those who are failing it. The judiciary must be alien to political power. In a state of law, the judiciary is essential. Tax justice, either at the administrative level or within the judiciary, does not escape these conditions.

  • I have not taken a position regarding which system is superior, if the courts should be under the Central Administration (case of Argentina) or under the Judicial branch (cases of Chile and Ecuador). I understand that those operating within the central government must ensure their independence and make clear that they are true courts of justice. The fact of belonging to the central government, or independent of both powers, limits the possibility of declaring laws as unconstitutional. Regarding the staff’s hierarchy, some differences arise. Human resources are essential tools in the work of these courts and must be paid according to the importance of their tasks.

  • Public accountants should participate as judges in resolving tax disputes. Tax disputes involve knowledge that go beyond the purely legal and procedural grounds.

  • The decisions of these courts must be final or at least allow some exceptional appeals, limited and specific with respect to certain cases.

  • The substantiation should be accelerated by incorporating more orality, both in the preliminary stage and the final stage, when facing the issuance of the judgment.

  • We should use ICT, enabling the digitalization of the demand submission and the positions of the tax administration, notifications, trial contribution and when pronouncing the sentence.


[1] http://funcionjudicial.gob.ec/index.php/es/saladeprensa/noticias/item/7251-escuela-de-la-función-judicial-realizó-seminario-internacional-sobre-la-justicia-tributaria-en-el-ecuador.html

[2] https://www.ciat.org/improvement-of-the-administration-of-tax-justice/?lang=en

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