Tax Inspections: Tax Authorities’«Sword of Damocles»?Aiman Zhekeyeva, Senior Associate, International Law Firm Integrites, Kazakhstan
Any state cannot exist without taxes and control over the timely treasury reimbursement and taxes are conducted by state revenue bodies. One of the instruments of tax policy is tax inspections. Our last dispute practice between tax authorities and entrepreneurs on the additional charges based on the results of the tax inspections shows that entrepreneurs in general are always "at gunpoint" of the tax authorities and they are not protected from repeated for the same period inspections.
The Kazakhstan Tax Code in the 46 Article provides that limitation period of tax liabilities and claims is 5 years. This means in particular that inspection can extend to the previously inspected periods within the five years, with possible consequences in the form of additional relevant payments notifications.
According to the 627 article of the Tax Code of the Republic of Kazakhstan, tax inspections are divided into the following types:
1. Selected – tax inspections of the taxpayer (tax agent) based on the results of tax returns analysis and information of the competent government agency, and other documents and information about taxpayer (tax agent) activity.
2. Unplanned – tax inspectionsthat are not listed in subclause 1) of this clause, including carried out:
- upon request of the taxpayer (tax agent);
- upon request of the taxpayer to confirm the authenticity of value added tax excess because of the use of clause 3-1 of the 272 Article of the Tax Code represented not less than one time during 4 years after the start of construction;
- upon the reason provided by Criminal Procedural Code of the Republic of Kazakhstan.
- in the case of additional tax report of taxpayer (tax agent) for the previous tax period to verify the authenticity of information reflected in this additional tax reporting;
- in the case of receiving response on the previous tax inspections, which was not received during the previous requests of the tax authorities.
- in the case of non-notification of tax authorities by taxpayer (tax agent) about remedy of defaults detected in in-house inspections in the manner prescribed in the 608 Article of the Tax Code of the Republic of Kazakhstan;
- because of reorganization by means of partition or liquidation of the legal entity-resident, structural unit of the legal entity-non-resident;
- because of termination of the legal entity-non-resident activity in Kazakhstan carried out through a permanent establishment;
- because of termination of the individual entrepreneur activity, private notary and lawyer;
- because of deregistration for value added tax based on the taxpayer's tax statement;
- because of expiry of a subsoil use contract;
- on the issues state regulation of production and turnover of certain types of excise goods, as well as aviation fuel, biofuel, fuel oil;
- on the issues of settlement payment specification between taxpayer (tax agent) and his debtors according to tax legislation of the Republic of Kazakhstan;
- for the request of the taxpayer's tax return value added assurance of amounts of VAT claimed for refund;
- for the reasons of tax claim of non-resident for income tax refund from budget or conditional deposit according to international agreement statement to avoid double imposition;
- on the issues of discharge of duties of banks and organizations engaged in certain types of banking operations, duties established by the tax legislation of the Republic of Kazakhstan, as well as other laws of the Republic of Kazakhstan, control over the execution of which is entrusted to the tax authorities;
- on the issues concerning the definition of the tax liability in a transaction with the taxpayer recognized as a sham company on the basis of an enforceable judgment or decision of the court;
- for determining the tax liability on the action (s) on the invoice, which (are) recognized by a court as implemented without the actual work performance, provision of services, shipment of goods;
- because of taxpayer’s (tax agent) complain on notification of tax inspection results and (or) decision of the higher tax authority issued on a result of the complaint - for the issues in the complaint;
- because of non-resident's appeal on reconsideration of tax request with the treatment of non-resident tax on the re-examination request for a refund of income tax paid from the budget or conditional deposit under the provisions of an international agreement on avoidance of double taxation;
- on the elimination of violations for which the licensor suspended the license;
- on the fulfillment of the tax obligations of value added tax and (or) the excise duty on goods imported into the territory of the Republic of Kazakhstan from the territory of the Member States of the Customs Union;
- on tax registration in the tax authorities;
- on the availability of cash machines;
- on the availability of equipment (devices) for making payments with payment cards;
- on the availability and authenticity of excise and registration-control marks, availability of license and authenticity of the supporting invoices for alcoholic products, oil products, biofuels;
- on compliance with the order of use of cash machines;
- on compliance with licensing regulations and conditions of production, storage and sale of certain types of excisable goods;
- on the execution of the order of the tax authority, on the suspension of cash operations;
- based on the decision of the authorized body;
- based on the decision of the tax authority in the cases specified in this article.
Unplanned inspections specified in subclause 2 of this clause, may be carried out over the previously inspected period.