Businessmen are forced to provide additional tax reports due to initiation of pre-trial investigations against their counterparts, who are suspected in pseudo-entrepreneurship

This issue was discussed at a meeting of the Council on protection of the rights of entrepreneurs NCE RK "Atameken", which took place at the General Prosecutor's Office of the Republic of Kazakhstan.

"State Revenue Committee sends notifications to some entrepreneurs with recommendations to provide additional tax reports, due to the reason that pre-trial investigations were initiated against their suppliers, who are suspected in pseudo-entrepreneurship. We can say that the State Revenue Committee puts pressure on businesses, forcing them to make changes to previously submitted tax statements, in fact threatening with new audits. At the same time the tax legislation does not stipulate that all transactions of pseudo-entrepreneurs are invalid, but only those which have entered into force in compliance with the court ruling", - said the chairman Gani Kasymov.

The Director of the Department of taxation NCE RK Zhenys Zhanbulatova made a report on this issue. She also noted that the majority of entrepreneurs who have received such notifications and contacted NCE RK, believe that these notification  look like threats rather than explanatory notes.

"These notifications contain a deadline for filing tax reports, which contradicts to the Tax Code, according to which the taxpayer is entitled to submit additional tax reports within the period of prescription (5 years). Despite the fact that the State Revenue Committee "recommend" to entrepreneurs to provide additional reports and to pay taxes in accordance with it, the notifications also indicate that due to the excess of the amount of damage in respect of business leaders can be initiated pre-trial investigation due to evasion from tax payment. It should be noted that, in accordance with the tax laws, the exclusion from deductions and offset to the corresponding amounts in the calculation of VAT and corporate income tax shall be the sums of only those transactions that were committed by contractors with criminal intent, and it is set by the court", - she reported.

A representative of NCE cited the example of a case that occurred in Ualikhanovsk district of ​​North Kazakhstan region. The akim of the district created a working group in order to increase wages in the real sector of the economy and replenishment of the state budget. Entrepreneurs were invited to the meetings of the working group during which were put requirements on provision of additional tax statements personal income tax. These requirements were accompanied by threats of closure, land seizures, inspections, fines, dismissals of relatives. "Given the evidence, the Department of the Agency for Civil Service Affairs and Anti-Corruption of NKR has initiated an inspection. It was found that the district akim gave instructions that go beyond the duties of civil servants - namely, conducting audits to identify inconsistencies in tax reporting. Given the evidence, an act of response on bringing the perpetrators to discipline was sent to the regional Akimat. The National Chamber considers such activities of local executive bodies unacceptable", - she said.

In her report, Zhanbulatova also voiced another problematic issue. Currently, the state revenue bodies send to entrepreneurs other notifications by the results of in-house audit, with the request to abolish the previously registered deductions from the corporate income tax as a result of transactions with persons whose registration has been recognized as invalid. The Tax Code established that the deductions are made in the presence of the documents, confirming the costs associated with its activities aimed at generating income. Entrepreneurs, who got notifications, have the relevant accounting documentation. However, the State Revenue authorities believe that all transactions, issued invoices, signatures on documents are illegal and have no legal force.

"However, the decree of the Supreme Court of the Republic of Kazakhstan dated by February 27, 2013 # 1" On judicial practice of application of the tax law" states that the Tax Code does not stipulate any prohibition to deduct the cost of such transactions on the basis of a court decision to invalidate registration of an individual entrepreneur or a legal entity. The National Chamber considers illegal the requirements of the State Revenue for the exclusion of the deductions. Given the above, NCE considers it necessary to analyze the actions of the authorities and to work out measures in order to protect the rights and legitimate interests of entrepreneurs", - she said.

Deputy Chairman of the State Revenue Committee of the Ministry of Finance Argyn Kypshakov, who was present at the meeting, commented on the situation. He said that, first of all, the letter for provision of additional tax reports is of informative nature. "It was a preliminary information. We held a conference call with the territorial bodies of the State Revenue Committee, we stated that execution is not compulsory in accordance with the Tax Code, within 30 working days entrepreneurs need to answer or provide an additional tax report, payment, or to justify the refusal. If somewhere our territorial divisions didn’t act this way, we are ready to explain to them", - he said.

"As for notifications on corporate income tax if there are such facts, we will withdraw them", - the official commented the second issue in that manner.

Deputy Chairman of NCE Rustam Zhursunov, in turn, offered his solution of the problem. "Maybe the form of notifications should be reconsidered, because those notifications that come to us, do not have informative nature, they contain demands. They contain deadlines, references to the Criminal Code regarding prosecution ... Maybe it is better to work put a template at the republican level, saying to be careful for your own good. Then it will be understandable", - he said.

The Chairman of the Board Mr. Kasymov summed up the results of the meeting. "Simple entrepreneurs honestly say: it is a blackmail. About one hundred complaints from them. You puts a gun to the businessman's throat. Do you say it is just a notification?"- he asked the representative of the State Revenue Committee.

"I recommend to the National Chamber to appeal to the Prosecutor General’s Office due to unlawful actions of state revenue bodies", - summed up Kasymov.