On challenging the results of the desk inspection
The vast majority of cases on challenging the results of tax administration by tax authorities are disputes on appealing notices on the elimination of violations identified by state revenue authorities based on the results of desk control.
According to Article 94 of the Tax Code, desk control is control carried out by tax authorities based on the study and analysis of tax reports submitted by a taxpayer (tax agent), information from authorized state bodies, as well as other documents and information about the taxpayer's activities. Desk control is an integral part of the risk management system.
In accordance with paragraph 1 of Article 96 of the Tax Code, if violations are detected based on the results of desk control, the following documents are issued::
for violations with a high degree of risk, a notification on the elimination of violations identified by the tax authorities based on the results of desk control, with a description of the violations identified.;
for violations with a moderate degree of risk, a notification of violations identified by the results of desk control, with a description of the violations detected.
The analysis showed that the courts, when considering cases of challenging a notification based on the results of desk control, only find out whether there are grounds for its issuance without examining the validity of the notification on its merits.
A study of judicial acts of this category indicates that there is no uniform practice of reviewing cases, despite the fact that taxpayers' statements contain almost the same arguments (they provided explanations in a timely manner, and attached the documents specified in the explanation).
The grounds for issuing a notification based on the results of the tax audit were mainly judicial acts on the recognition of contracts for the supply of goods (performance of works, provision of services) as invalid; on the invalidation and cancellation of registration, re-registration of a legal entity; information from the analytical report of the INIS "Pyramid of Suppliers".
During the generalization, the courts of the region had questions about the degree to which the subject was classified as medium or low risk. According to the judges, the tax authority must prove that the violation has a high degree of risk (carrying out transactions with inactive taxpayers and with taxpayers whose registration has been declared invalid by the court; making fictitious transactions without actually performing work, rendering services, shipping goods; court verdict, court order), since the form of response depends on it. in accordance with Article 96 of the Tax Code.
Regulatory and legal framework
In accordance with Article 2 of the Code of the Republic of Kazakhstan dated December 25, 2017 "On Taxes and other mandatory payments to the Budget (Tax Code)", the tax legislation of the Republic of Kazakhstan is based on the Constitution of the Republic of Kazakhstan, consists of this Code, as well as regulatory legal acts, the adoption of which is provided for by this Code.
If an international treaty ratified by the Republic of Kazakhstan establishes rules other than those contained in the Tax Code, the rules of the said treaty shall apply.
The main regulatory legal acts that courts should follow when considering cases related to the application of tax legislation are:
1. The Constitution of the Republic of Kazakhstan dated August 30, 1995;
2. The Code of the Republic of Kazakhstan "On Taxes and other Mandatory Payments to the Budget (Tax Code)" (hereinafter – NC);
3. The Civil Code of the Republic of Kazakhstan (hereinafter referred to as the Civil Code) (General Part) dated December 27, 1994, (Special Part) dated July 1, 1999;
4. The Civil Procedure Code of the Republic of Kazakhstan (hereinafter – CPC) dated October 31, 2015;
5. The Business Code of the Republic of Kazakhstan (hereinafter referred to as the Business Code) dated October 29, 2015;
6. The Law of the Republic of Kazakhstan "On Permits and Notifications" dated May 16, 2014;
7. The Law of the Republic of Kazakhstan "On Accounting and Financial Reporting" dated February 28, 2007;
8. The Law of the Republic of Kazakhstan "On State Registration of Legal Entities and Registration of branches and representative Offices" dated April 17, 1995;
9. Regulatory rulings of the Supreme Court of the Republic of Kazakhstan (hereinafter – NP):
- "On judicial practice of tax legislation application" dated June 29, 2017 No. 4;
- "On the application by courts of certain norms of civil procedural legislation" dated March 20, 2003 No. 2;
- "On some issues of the invalidity of transactions and the application by courts of the consequences of their invalidity" dated July 7, 2016 No. 6;
- "On some issues of application by courts of the norms of Chapter 29 of the CPC" dated December 24, 2010 No. 20;
Resolutions of the Government of the Republic of Kazakhstan, regulatory legal orders of the authorized body in the system of state revenue bodies.
Summary from the Supreme Court of the Republic of Kazakhstan on the judicial practice of applying tax legislation for 2020 and 3 months of 2021 dated July 9, 2021
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