For entrepreneurs, companies and other organizations of various organizational and legal forms, knowledge of the basics of tax control is not just a recommendation, but a clear fence against unexpected problems. If you don't know how the tax authorities work, it's easy to get caught in a "leak", get fined, or even get hit with more serious sanctions. How can I avoid mistakes and unnecessary expenses? It's simple: you need to understand how tax audits are conducted and what the tax service expects from you.
Ignoring the rules of tax control can lead to unpleasant consequences. From fines and penalties to lengthy legal proceedings with the tax authorities, the consequences can be very unpleasant.
Tax audits, surveys, and desk checks — these procedures can catch you off guard if you don't know the ins and outs of them. And errors in reporting or unaccounted for nuances of legislation can lead to considerable fines and restore order at completely unnecessary stages. Once you understand how the tax authorities operate, you can not only avoid risks, but also set up your work so that any checks are just a workflow, and not a problem.
In order to understand these issues, it is important to rely on current legal acts regulating tax control in our country. The following are the main sources that you should focus on:
- Business Code of the Republic of Kazakhstan;
- Code of the Republic of Kazakhstan "On Taxes and other mandatory payments to the Budget (Tax Code)";
- Joint Order of the Minister of Finance of the Republic of Kazakhstan No. 254 dated 18.04.2017 and the Minister of National Economy of the Republic of Kazakhstan No. 200 dated 15.05.2017 "On approval of tax audit checklists".
Tax control is the state control carried out by tax authorities over the implementation of the norms of the tax legislation of the Republic of Kazakhstan and other legislation of the Republic of Kazakhstan, control over the implementation of which is entrusted to the tax authorities.
Tax control is carried out in:
1) the tax audit form;
2) other forms of state control.
Tax survey
A tax survey is another form of state control carried out by tax authorities in order to confirm the actual location or absence of a taxpayer (tax agent).
The tax survey is conducted during business hours at the location indicated in the taxpayer's (tax agent's) registration data. Witnesses are invited to participate in the tax survey.
Based on the results of the tax survey, a tax survey report is drawn up.
If the actual absence of a taxpayer is established at the location indicated in the registration data, the tax authority sends such taxpayer a notification confirming the location (absence) of the taxpayer.
Within 20 working days from the date of sending the notification by the tax authority, the taxpayer must submit to the tax authority in person a written explanation of the reasons for the absence at the time of the tax survey, accompanied by copies of the documents and the original (for verification) or notarized copies of the documents:
- proof of ownership (use) of immovable property;
- written consent of the natural person who owns the immovable property declared as its location.
The period between the date of notarization of a copy of the document confirming the taxpayer's location and its submission to the tax authority should not exceed 10 business days.
In case of non-fulfillment by the taxpayer of the requirement specified in part one of this paragraph, the tax authority performs one of the following actions:
- suspends spending operations on the bank accounts of such taxpayer;
- removes VAT from the registration account.
Desk control
Desk control is the control carried out by tax authorities on the basis of studying and analyzing tax reports submitted by the taxpayer (tax agent), information from authorized state bodies, as well as other documents and information about the taxpayer's activities.
If violations are detected, a notification / notice of elimination of violations is issued with a description of the identified violations and their degree of risk attached.
Execution of the notice of elimination of violations is carried out by the taxpayer (tax agent) within 30 working days from the day following the day of its delivery (receipt).
In case of disagreement with the violations indicated in the notification, the taxpayer (tax agent) has the right to send a paper or electronic statement of the absence of violations to the tax authority.
Tax monitoring
Tax monitoring is carried out by analyzing the financial and economic activities of taxpayers in order to determine their real tax base, monitor compliance with the tax legislation of the Republic of Kazakhstan and applicable market prices in order to control transfer pricing.
Tax monitoring consists of:
1) monitoring of large taxpayers;
2) horizontal monitoring.
In the course of monitoring large taxpayers, the authorized body has the right to require taxpayers to submit documents and written explanations confirming the correctness of tax calculation and timely payment (withholding and transfer) of taxes and payments to the budget, as well as financial statements of the taxpayer (tax agent), including financial statements of its subsidiaries.
Horizontal monitoring is carried out through expanded information interaction between the tax authority and the taxpayer, including providing tax officials with access to information systems of accounting and tax accounting and accounting documentation of the taxpayer at its location.
Preliminary explanation
A preliminary explanation is an explanation of the authorized body on the occurrence of a tax liability in relation to planned transactions (operations).
A preliminary explanation is available upon request:
- a taxpayer who is on horizontal monitoring;
- an organization that implements an investment priority project.
Preliminary clarification is carried out within the limits of information and documents submitted by the taxpayer.
Tax audits
A tax audit is an audit carried out by a tax authority of compliance with the norms of the tax legislation of the Republic of Kazakhstan, as well as other legislation of the Republic of Kazakhstan, control over the implementation of which is entrusted to the tax authorities. Tax audits are carried out exclusively by the tax authorities.
Tax audits are carried out in the form of a comprehensive, thematic, counter-audit, and time-keeping survey.
A comprehensive audit is an audit carried out by a tax authority in relation to a taxpayer (tax agent), regarding the fulfillment of a tax obligation for all types of taxes, payments to the budget and social payments.
Tax audits in the event of liquidation (termination of activity) of a taxpayer (structural subdivision of a legal entity) are conducted exclusively in the form of a comprehensive audit.
A thematic audit is an audit conducted by a tax authority in relation to a taxpayer (tax agent) on the issues specified in paragraph 1 of Article 142 of the Tax Code of the Republic of Kazakhstan.
A counter-audit is an audit by a tax authority of persons who performed transactions with a taxpayer (tax agent), in respect of which the tax authority conducts a comprehensive or thematic audit, in order to obtain additional information about such operations, confirm the fact and content of operations, and on issues arising during the audit of the specified taxpayer (tax agent).
A counter check is auxiliary to a complex or thematic check.
A timed survey is an audit conducted by a tax authority to determine the actual income of the taxpayer and the actual costs associated with activities aimed at generating income for the period during which the survey is conducted.
Tax audits are divided into the following types:
1) periodic tax audits based on risk assessment;
2) unscheduled tax audits.
Periodic tax audits based on risk assessment are inspections appointed by tax authorities in relation to taxpayers (tax agents) based on the results of analysis of tax reports, information from authorized state bodies, as well as information obtained from official and open sources of information on the activities of taxpayers (tax agents).
The basis for assigning periodic tax audits based on risk assessment is a semi-annual schedule.
Unscheduled taxes are carried out on the basis of a tax application or complaint of the taxpayer (tax agent) and on other grounds provided for in paragraph 3 of Article 145 of the Tax Code of the Republic of Kazakhstan.
The deadline for conducting a tax audit specified in the order should not exceed 30 business days from the date of delivery of the order.
The term of conducting a tax audit may be suspended or extended on the grounds provided for by the tax legislation of the Republic of Kazakhstan.
The tax authorities, at least 30 calendar days prior to the beginning of a periodic tax audit based on risk assessment, send or hand over a notice of conducting a tax audit to the taxpayer (tax agent) in the form established by the authorized body.
A tax audit is carried out on the basis of an order. The date of commencement of the tax audit is considered to be the date of delivery of the order to the taxpayer (tax agent).
Prior to drawing up the tax audit report, an official of the tax authority hands the taxpayer a preliminary tax audit report.
At the same time, the taxpayer has the right to submit a written objection to the preliminary tax audit report.
Upon completion of the tax audit, an official of the tax authority draws up a tax audit report.
The end of the tax audit period is considered to be the day when the tax audit report is handed over to the taxpayer (tax agent).
Upon completion of the tax audit, if violations are detected, the tax authority issues a notification on the results of the audit, which is sent (handed) to the taxpayer (tax agent).
A taxpayer (tax agent) who has received a notification about the results of the audit must comply with it within the time limits set out in the notification, if he has not appealed the results of the audit.
Complaint about notification of audit results
A taxpayer's (tax agent's) complaint about the notification of the audit results is submitted to the authorized body within 30 working days from the day following the date of delivery of the notification to the taxpayer (tax agent).
At the same time, a copy of the complaint must be sent by the taxpayer (tax agent) to the tax authorities that conducted the tax audit and considered the taxpayer's (tax agent's) objections to the preliminary tax audit report.
A taxpayer's (tax agent's) complaint is submitted in writing.
The complaint must include:
1) the name of the authorized body to which the complaint is submitted;
2) the surname, first name and patronymic (if it is indicated in the identity document) or the full name of the person filing the complaint, his place of residence (location);
3) identification number;
4) name of the tax authority that conducted the tax audit;
5) the circumstances on which the person filing the complaint bases its claims and the evidence supporting these circumstances;
6) the date of signature of the complaint by the taxpayer (tax agent);
7) list of attached documents.
The complaint is signed by the taxpayer (tax agent) or a person who is its representative.
The following documents are attached to the complaint:
1) documents confirming the circumstances on which the taxpayer (tax agent) bases its claims;
2) other documents related to the case.
A reasoned decision is made on the complaint of a taxpayer (tax agent) within no more than 30 working days from the date of registration of the complaint, and on complaints of taxpayers subject to tax monitoring – no more than 45 working days from the date of registration of the complaint.
The decision of the authorized body is mandatory for execution by the tax authorities.
Submission of a complaint (application) by a taxpayer (tax agent) to the authorized body or court suspends the execution of the notification of the results of the audit in the part being appealed. For more information about document requirements, please refer to one of the sources listed at the beginning of this article.