Tax law thrown out; Court considers it an encroachment on private property

PMR's tax administration lost in court: Parliament's tax law thrown out

TIRASPOL (Tiraspol Times) - Taxpayers in Pridnestrovie got a break, courtesy of its Constitutional Court: In a watershed ruling, the country's highest court called certain forms of taxation incompatible with the right to private property guaranteed in the constitution.

In its ruling, the Constitutional Law Court of Pridnestrovie threw the book at tax legislation, considering a complaint filed by Tiraspol-based lawyer Dmitriy Kozlenkov. As a small business owner, he'd paid an advance tax in 2004 under a system known as "owner's patent / United income tax". However, when it was clear in 2005 that the advance payment for the "owner's patent" exceeded the actual amount due under the united income tax, he applied for a refund of the difference. This was refused on the basis of the tax law's Article 18 which claimed that no refunds could be due in cases of businesses owned by physical persons.

Dmitriy Kozlenkov then went to court. In his complaint he first indicated that the established standards contradict the constitutional principle of equality before the law. Physical persons and legal persons, such as companies, both have unconditional rights to refunds of overpaid taxes sums, but Article 18 placed physical persons in an unequal position before the law. Secondly, Dmitriy Kozlenkov also expressed the opinion that the non-refunding of excess tax is theft, and counter to the right to private property, guaranteed by Article 37 of Pridnestrovie's Constitution. His third complaint was that the law took effect on 14 February 2005 but was being applied as of 1 January 2005, thus retroactively and in violation of the legal principle, valid in Pridnestrovie, that no laws can be retroactive.

In its findings, the Constitutional Law Court agreed with all 3 complaints. The lawyers representing Pridnestrovie's tax authorities and the country's Parliament lost their arguments and the court ruled in favor of the applicant.

The law entitled "About the introduction of addition into the law about the income tax from the physical persons", in which Article 18 was included, was deemed unconstitutional and instantly lost all validity with the high court's ruling.