What is a Nylon Invoice? Legal Consequences of Issuing and Using It
A nylon invoice is a frequently encountered fraud method in commercial life and refers to fake invoices issued for a purchase or sale of goods or services that have not actually been made. This action, which causes tax loss, has serious legal consequences. So, what is a nylon invoice, why is it issued and what are the legal consequences of this situation? Here are detailed explanations:
What is a Nylon Invoice?
Definition:
A nylon invoice is a fake invoice issued by showing that a commercial transaction that does not actually exist has been made. These invoices are used to evade tax or obtain unfair VAT refunds.
Example: Company A issues an invoice to Company B even though it has not sold any goods or services, and this invoice is used to provide a tax advantage.
Purpose:
By using a nylon invoice, companies pay less tax by reducing the tax base or request unfair VAT refunds from the state.
Reasons for Issuing and Using Nylon Invoices
Tax Evasion:
Companies declare less income by showing false expenses with nylon invoices and thus pay less tax.
Example: Company X can reduce its tax payment by issuing an invoice for a purchase that does not exist in reality, showing its earnings in that period lower.
Unfair VAT Refund:
By issuing nylon invoices, they can unfairly request a refund of the VAT collected by the state.
Example: A company can request a VAT refund from the state that it does not actually deserve with high-priced fake invoices.
Unregistered Economy:
Nylon invoices can be issued to record illegal commercial transactions and give them a legal appearance.
Legal Consequences of Issuing Nylon Invoices
Crime According to the Tax Procedure Law:
Issuing and using nylon invoices is considered a serious tax crime according to the Turkish Tax Procedure Law (VUK). In the event that this crime is detected, the issuer and the user will face both administrative and criminal sanctions.
Example: If Company Y is found to have issued fake invoices and underestimated the tax base, it may be subject to serious fines and tax loss penalties.
Imprisonment:
Issuing and using nylon invoices is considered within the scope of tax evasion crime and the penalty for this crime is 18 months to 5 years of imprisonment.
Example: If Company Z is found to have caused damage to the tax office by issuing fake invoices, the responsible persons may be sentenced to prison.
Impairment of Tax:
According to the Tax Procedure Law, a tax loss penalty is imposed for taxes underdeclared due to the use of nylon invoices. This penalty may be one times the amount of the underpaid tax.
Example: A company that causes a tax loss of 100,000 TL with fake invoices may have to pay the same amount of tax loss penalty.
Penalties Specific to Smuggling Crimes:
Issuing or using nylon invoices is considered a smuggling crime and if this crime is detected, a criminal case is filed against the perpetrators.
Legal Consequences of Using Nylon Invoices
The User is Also Responsible:
The person or companies using the nylon invoice are considered as accomplices as well as the person who issues it and face the same legal sanctions.
Example: If a commercial enterprise is detected to be using a fake invoice, it may face imprisonment and a fine.
Suspension of Commercial Activities:
The commercial activities of companies that use or issue nylon invoices may be temporarily suspended or deleted from the trade registry.
Example: If Company Y is detected to be issuing a fake invoice, its license may be suspended or its commercial activities may be restricted.
Defense and Legal Process
Good Faith Claim:
A company that claims to be in good faith in using nylon invoices may be partially exempted from criminal liability if it can prove this situation.
Example: If a company has received an invoice without knowing it was fake, it may request a reduction in the penalty by proving this with documents.
Reconciliation and Penalty Reduction:
A penalty reduction may be applied if a reconciliation is reached with the tax offices.
Example: When Company A is sentenced to a penalty for tax evasion, it can reduce its penalty by requesting a settlement.
Preventing the Use of Nylon Invoices
Careful Accounting Management:
Companies must be meticulous in the purchase and sale of invoices and keep proper accounting records.
Recommendation: Checking the reliability of the companies with which transactions are made minimizes the risk of fake invoices.
Getting Tax Consultancy:
Getting support from an expert consultant on tax law helps protect companies from such risks.
Issuing and using nylon invoices has serious consequences both economically and legally. This action, which leads to tax loss, can result in heavy fines and imprisonment. Companies that continue their commercial activities within the framework of the law and avoid using fake invoices will prevent them from facing such sanctions.