Yerlan Galiyev, attorney at law, partner of MinTax Group, ӘдiлетЖарғысы lawyer’s office. The complexity, variability of tax laws and the existence of legal gaps is the causes of numerous tax disputes between the state and taxpayers.
Grounds for tax disputes, as a rule, are the following legal acts:
• tax results notifications;
• tax audit statement;
• Notification on correction actions made based on results of in-house audit.
Appealing each of the abovementioned acts provides legal distinction (competent authority, terms, and procedure of appeal). Failure to comply with requirements of the legislation may entail a refusal from consideration of a complaint lodged by a taxpayer from the part of a court or a competent authority. Therefore, legal assistance is of particular importance.
The problem of tax disputes lies in the fact that simultaneously along with demand to meet tax liabilities, for example additional charge of taxes and fines on such liabilities, taxpayers are often brought to administrative responsibility, or a risk of initiation of a criminal case arises.
It is very important that an attorney at law may act at the professional level as a defendant in case of administrative offence and criminal procedures.
Very often poor knowledge of a taxpayer concerning a difference between tax disputes and bringing to administrative or criminal responsibility leads to negative consequences and, as a result, to valuable loss of property.
For example, it is recommended that upon completion of a tax audit the tax audit statement should be prepared. Based on this statement the tax authority has the right to issue two document, one is a notification on tax audit results, the second is an administrative offence report. The Notification on tax audit results can be appealed in the Superior Tax Authority, or in a court. For example, a department of a related region or a city of the republican level is a superior agency for tax agencies, and the Tax Committee of the Ministry of Finance of the Republic of Kazakhstan is the same for tax departments.
Besides, a taxpayer has the right to put in issue such notification in the Specialized Interdistrict Economical Court of the related region or a city of the republican level within three month from the date of its filing or receiving a decision of the superior agency, if the notification has been disputed.
In accordance with the applicable legislation, an administrative offence report on matters concerning understatement of amounts in tax return prepared based on the tax audit statement shall be submitted to an administrative court.
If the court issues the order to impose administrative penalties, it should be appealed within 10-days period from the date of receipt. Often, taxpayers miss this moment, supposing that they have the same period of 30 working days as in case of appeal of the notification resulting from the tax audit.
In practice, one often needs control by an attorney-at law over legal procedures of application by tax authorities of a method that ensures performance of overdue tax liability.
These methods may be as follows:
• Suspension of debit operations on bank accounts;
• Limits in disposal of property of a taxpayer (tax agent).
At that, notwithstanding the argumentativeness of some points in tax legislation and other factors, entailing tax disputes, the administrative offence laws have been made more rigorous in this respect. For example, the last amendments introduced into the Code on administrative offences No.155-II of the Republic of Kazakhstan dated 30 January 2001 state that understatement of tax amounts in the return and other administrative offences in taxation entails administrative arrests for the period of up to fourty five days with forfeiture of instruments using in breach of law and property resulting from the act. At the same time, we can observe humanization of the RoK criminal laws in respect of taxation. For tax offences performed by an individual, one provides criminal responsibility, if outstanding tax amount or obligatory payments exceeds two thousand of monthly reference indices (MRI), that currently comprises KZT 3, 236, 000 in return of five hundred MRI, that have been provided before.
Failure to pay by a legal entity taxes in a substantial sum of money, the criminal laws recognize amount, exceeding twenty thousand of MRI (KZT 32, 360, 000) (before, it was provided for two thousand of MRI), and in extra substantial sum of money – fifty thousand of MRI (KZT 80, 900 000) (before, it was provided for five thousand of MRI).
Therefore, when protecting interests of taxpayers with respect to tax offences, attorney at law should consider requirements of several branches of law:
1) Tax laws;
2) Administrative procedure law;
3) Administrative offence laws;
4) Civil procedural law;
5) Criminal law;
6) Procedural criminal law.
Maximum consideration of all the aspects and peculiarities of the said branches enables the attorney –at law to ensure efficient protection of rights of a taxpayer applied for assistance.