Facts
The Federal Tax Administration (FTA) conducted an audit of taxpayer [A.] , who operates an entertainment establishment with sexual services, and found that the revenues from sexual services were not recorded. The FTA made a discretionary assessment of the revenues and demanded value added taxes for the years 2007-2009 and 2010. The taxpayer appealed and argued that the FTA's assessment was not methodically justifiable. The Federal Administrative Court overturned the appeal decisions and remanded the case to the FTA. The FTA filed a complaint with the Federal Supreme Court, which upheld the complaints and confirmed the appeal decisions.
Considerations
The Federal Supreme Court examined the admissibility of the complaint and concluded that the FTA was authorized to make a discretionary assessment of the taxable revenues, as the taxpayer had not fulfilled its record-keeping and retention obligations. The court found that the FTA's discretionary assessment was based on plausible considerations and that the assessment was not obviously incorrect.
The court also pointed out that the taxpayer had not fulfilled its obligations under self-assessment and that the FTA was not required to conduct extensive or unpromising investigations. The FTA's discretionary assessment met the requirement that it must be…