Collection of tax fees from a legal entity

              Article 30 of the Civil Procedure Code of the Republic of Kazakhstan (hereinafter-CPC) stipulates that specialized inter-district economic courts consider civil cases on property and non-property disputes, the parties to which are citizens engaged in business activities without forming a legal entity, legal entities, corporate disputes, as well as civil cases on the restructuring of financial organizations and organizations, members of the banking conglomerate as a parent organization and non-financial organizations, in cases stipulated by the laws of the Republic of Kazakhstan.

According to Part 3 of Article 32 of the CPC, a claim arising from the activities of a branch or representative office of a legal entity may also be filed at the location of the branch or representative office.

On the basis of these norms, cases of this category are subject to the jurisdiction of specialized inter-district economic courts.

Article 14 of the CPC stipulates that civil proceedings are conducted in the State language, and if necessary, Russian or other languages are used in court proceedings along with the State language.

The language of the proceedings is determined by the court's ruling, depending on the language in which the statement of claim (application) is filed with the court.

The proceedings in the same civil case are conducted in the language of the proceedings established initially.

If, during the preparation for the consideration of the case in the court of first instance, it became clear that the plaintiff does not speak the language in which his representative filed the statement of claim (application), then, at the written request of the plaintiff, the court issues a ruling on changing the language of the proceedings.

Article 30 of the Civil Procedure Code of the Republic of Kazakhstan (hereinafter-CPC) stipulates that specialized inter-district economic courts consider civil cases on property and non-property disputes, the parties to which are citizens engaged in business activities without forming a legal entity, legal entities, corporate disputes, as well as civil cases on the restructuring of financial organizations and organizations, which are part of a banking conglomerate as a parent organization and are not financial organizations, in the following cases:, provided for by the laws of the Republic of Kazakhstan.

According to Part 3 of Article 32 of the CPC, a claim arising from the activities of a branch or representative office of a legal entity may also be filed at the location of the branch or representative office. On the basis of these norms, cases of this category are subject to the jurisdiction of specialized inter-district economic courts.

Article 14 of the CPC stipulates that civil proceedings are conducted in the State language, and if necessary, Russian or other languages are used in court proceedings along with the State language.

The language of the proceedings is determined by the court's ruling, depending on the language in which the statement of claim (application) is filed with the court.

The proceedings in the same civil case are conducted in the language of the proceedings established initially.

If, during the preparation for the consideration of the case in the court of first instance, it became clear that the plaintiff does not speak the language in which his representative filed the statement of claim (application), then, at the written request of the plaintiff, the court issues a ruling on changing the language of the proceedings.

In accordance with article 35 of the Constitution of the Republic of Kazakhstan, the payment of legally established taxes, fees and other mandatory payments is the duty and obligation of everyone.

Article 12 of the Tax Code of the Republic of Kazakhstan (hereinafter referred to as the Tax Code) defines the following concepts: taxes are mandatory monetary payments to the budget unilaterally established by the state, with the exception of cases provided for in this Code, made in certain amounts, irrevocable and gratuitous, other mandatory payments are mandatory deductions of money to the budget in the form of fees, charges, and duties, with the exception of customs payments, made in the amounts and cases established by this Code. Under the current tax legislation of the Republic of Kazakhstan, tax authorities are endowed with broad powers in relation to business entities, including the right to adopt non-normative acts, which, if properly followed, have the property of enforceability in themselves.

The procedure for calculating and paying taxes and other mandatory payments to the budget, as well as relations between the state and the taxpayer related to the fulfillment of a tax obligation, are regulated by the Tax Code. It follows from the provision of paragraph 1 of Article 31 of the Tax Code on the fulfillment by a taxpayer of a tax obligation that a taxpayer is obliged to fulfill tax obligations independently, unless otherwise established by the Tax Code. Tax, like any other duty, is terminated by proper execution. The fulfillment of a tax obligation is considered to be the payment of arrears in full and on time.

According to paragraph 2 of this article, in fulfillment of a tax obligation, a taxpayer must:

- register with the tax authority,

- keep records of taxable objects and (or) objects related to taxation,

- calculate, based on the objects of taxation and (or) objects related to taxation, the tax base and tax rates, the amounts of taxes and other mandatory payments to be paid to the budget,

- to compile and submit, with the exception of tax registers, tax forms to the tax authorities in accordance with the established procedure,

- pay the calculated and accrued amounts of taxes and other mandatory payments to the budget, advance and current payments for taxes and other mandatory payments to the budget.

Proper fulfillment by a taxpayer of a tax obligation within the time limits established by tax legislation is a necessary and sufficient condition for the proper fulfillment of a tax obligation, terminates the tax obligation in connection with the realization by the parties of all their rights and obligations towards each other and the achievement of the purpose of the existence of the tax obligation.

The application of the methods established by the tax legislation of the Republic of Kazakhstan to ensure the fulfillment (Article 609 of the Tax Code) of a taxpayer's (tax agent's) tax obligation will be lawful only if the tax obligation is not fulfilled within the established time frame. It is precisely the violation of the deadline for fulfilling an obligation that is a prerequisite for the use of methods to ensure the fulfillment of a taxpayer's (tax agent's) tax obligation.

In accordance with paragraph 1 of Article 18 of the Tax Code, the tax authorities are tasked with ensuring the completeness of tax receipts and other mandatory payments to the budget. The ways to ensure the fulfillment of a tax obligation that has not been fulfilled on time, and the measures of compulsory collection of tax arrears are provided for in Chapters 85-86 of the Tax Code, the list of taxes and other mandatory payments to the budget is established by Article 55 of the Code. The current regulations of the legislator on the procedure for applying methods to ensure the fulfillment of a tax obligation that has not been fulfilled within the prescribed period, and on subjects to which methods of enforcement can be applied, have eliminated a number of contradictions and inaccuracies in tax legislation. The methods of securing obligations are in the nature of a public law establishment provided for directly by the tax Code and are put into effect by a unilateral act of the tax authority. If there is a sufficient reason, that is, if the taxpayer (tax agent) violates the deadline for fulfilling the tax obligation, the tax authorities are required to apply methods to ensure the fulfillment of the tax obligation.

The methods of ensuring the fulfillment of a tax obligation that has not been fulfilled on time, except for the accrual of penalties on the unpaid amount of taxes and other mandatory payments to the budget, are applied within the time limits established by Articles 611-613 of the Tax Code. The methods of ensuring the fulfillment of a tax obligation that has not been fulfilled on time must be applied in strict compliance with the provisions of Article 609 of the Tax Code and other provisions of tax legislation related to this provision, together with which the provisions of Articles 611-613 of the Tax Code form a mandatory completed regulatory order.

Prior to the beginning of the application of methods to ensure the fulfillment of a tax obligation that has not been fulfilled on time, except for the accrual of penalties on the unpaid amount of taxes and other payments to the budget, a notification is sent to the taxpayer (tax agent), which, in accordance with paragraph 1 of Article 607 of the Tax Code – a notification sent by a tax service body to a taxpayer (tax agent) on paper or with his written consent electronically about the need for the latter to fulfill a tax obligation, obligations to calculate, withhold and transfer mandatory pension contributions, calculation and payment of social contributions is recognized.

Prior to the beginning of the application of methods to ensure the fulfillment of a tax obligation that has not been fulfilled on time, except for the accrual of penalties on the unpaid amount of taxes and other payments to the budget, a notification is sent to the taxpayer (tax agent), which, in accordance with paragraph 1 of Article 607 of the Tax Code – a notification sent by a tax service body to a taxpayer (tax agent) on paper or with his written consent electronically about the need for the latter to fulfill a tax obligation, obligations to calculate, withhold and transfer mandatory pension contributions, calculation and payment of social contributions is recognized.

The notification forms are established by the authorized body. Other documents received from the tax authorities cannot be considered as notifications for the purposes of applying methods to ensure the fulfillment of a tax obligation, and, accordingly, their non-fulfillment does not entail the legal consequences provided for in the above article. The notification must be delivered to the taxpayer (tax agent) personally against signature or in any other way confirming the fact of sending and receiving. After receiving the notification, the taxpayer must independently execute it within the time period stipulated by the tax legislation. In case of agreement with the notification, the taxpayer is obliged to comply with it, i.e. transfer the specified amounts to the state revenue. If there is no voluntary execution of the notification, the tax authorities may apply to the court or apply compulsory collection of tax arrears.

According to subparagraph 25 of paragraph 1 of Article 20 of the Tax Code, the tax authorities are obliged to collect the taxpayer's tax debts in a compulsory manner, i.e. by using their authority to take measures to forcibly collect tax debts. These measures of compulsory collection of tax arrears are applied only to taxpayers (tax agents) defined in paragraph 1 of Article 614 of the Tax Code, which does not include individuals. The issuance of court orders against legal entities is contrary to the norms of the Tax Code, as indicated in the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated February 27, 2013 No. 1 "On Judicial practice in the application of tax legislation" (hereinafter -NP). Thus, according to paragraph 13 of the NP, the norms of the Tax Code fully ensure the possibility of collecting tax debts from taxpayers specified in paragraph 1 of Article 614 of the Tax Code in an out-of-court manner. Therefore, the claims of the tax authorities for the recovery of arrears in taxes and other mandatory payments to the budget of penalties from these persons are not subject to consideration and resolution in civil proceedings.

Taking into account paragraph 3 of Article 6 of the Law of the Republic of Kazakhstan "On Regulatory Legal Acts", the provision of part 1 of Article 139 and subparagraph 5) of Article 140 of the CPC regarding the issuance of a court order to recover arrears in taxes and other mandatory payments from legal entities cannot be applied. This provision contradicts the above-mentioned norms of the Tax Code, which provide for the powers of tax authorities to collect tax debts. In this regard, the norms of the Tax Code, which was put into effect later than the CPC, should be applied. However, if there is no or insufficient property in the territory of the Republic of Kazakhstan to repay the non-resident's tax debts incurred as a result of activities in the Republic of Kazakhstan through a permanent establishment, the tax authorities have the right to apply to the court with an application for a court order or with a claim to recover the specified debt from the non-resident.

In this case, it is necessary to proceed from paragraph 1 of Article 4 of the Agreement on the Procedure for Resolving Disputes Related to Business Activities (Kiev, March 20, 1992) and part 3 of Article 32 of the CPC. According to paragraph 1 of Article 4 of the "Agreement on the Procedure for Resolving Disputes related to the conduct of economic activities" (Kiev, March 20, 1992), ratified by the Resolution of the Supreme Council of the Republic of Kazakhstan dated July 02, 1992, the competent court of the State party of the Commonwealth of Independent States has the right to consider the disputes referred to in Article 1 of this Agreement, if in the territory of this State- Member of the Commonwealth of Independent States:

a) the defendant had a permanent place of residence or location on the day of the filing of the claim. If several defendants are involved in the case located on the territory of different member states of the Commonwealth, the dispute is considered at the location of any defendant at the plaintiff's choice.;

b) commercial, industrial or other economic activities of the respondent's enterprise (branch) are carried out;

c) the obligation from the contract that is the subject of the dispute has been fulfilled or must be fulfilled in whole or in part.;

d) there was an action or other circumstance that served as the basis for a claim for damages;

e) the plaintiff has a permanent place of residence or location in a claim for the protection of business reputation;

f) there is a counterparty-a supplier, contractor or service provider (performing work) and the dispute concerns the conclusion, modification and termination of contracts.

In accordance with paragraph 5 of article 2 of the NCR, international treaties take precedence over national legislation.

Since the Republic of Kazakhstan is a State party to this Agreement, the tax authorities have the right to file lawsuits against non-resident legal entities.

Legislative framework

The Constitution of the Republic of Kazakhstan.

The Tax Code of the Republic of Kazakhstan.

The Civil Procedure Code of the Republic of Kazakhstan.

Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan No. 1 dated February 27, 2013 "On judicial practice of tax legislation application".

The international agreement is the "Agreement on the procedure for Resolving Disputes related to business activities (Kiev, 03/20/1992)", ratified by the Decree of the Supreme Council of the Republic of Kazakhstan dated 07/02/1992.

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