Fundamental right to proof and the interest presumption in tax law: Epistemic and constitutional issues of article 26 of the Peruvian Income Tax Act

Abstract

This paper aims to criticize the literal interpretation of section 26 of the Peruvian Income Tax Act that is accepted by the Peruvian IRS. This interpretation consists of the presumption that the existence of interests in loans can only be trumped by the taxpayer if they present their debtor’s account books. For this purpose, from a legal dogmatic methodological approach, some theoretical issues regarding the theory of legal presumption will be raised, as well as some considerations on presumptions in tax law. The main result is that this literal interpretation: i) alters the legal presumption’s nature of being a non-epistemic institutional guarantee; ii) violates the epistemic commitment of the material truth principle that is disciplined by Peruvian administrative procedural law; iii) represents a severe evidence restriction against the fundamental right of proof, specifically the right of presenting evidence and the admissibility of evidence; and iv) this restriction violates the ability-to-pay principle because imposes a tax burden based on a presumed economic situation involving a non-existent interest.