Comment to article 190. Illegal entrepreneurship of the Criminal Code of the Republic of Kazakhstan of the Criminal Code of the Republic of Kazakhstan

     1. Carrying out business activities without registration or without a special permit (license) in cases where such a permit (license) is mandatory, or in violation of licensing conditions, as well as engaging in prohibited types of business activities if these acts have caused major damage to a citizen, organization or state, or involve the extraction of large-scale income or production, storage or the sale of excisable goods on a significant scale, —      

is punishable by a fine in the amount of three hundred to five hundred monthly calculation indices or in the amount of the convicted person's salary or other income for a period of three to five months, or by community service for a term of one hundred and eighty to two hundred and forty hours, or by arrest for a term of up to six months, or by imprisonment for a term of up to two years from a fine in the amount of up to fifty monthly calculation indices or in the amount of the convicted person's salary or other income for a period of up to one month or without it.      

2. The same deeds:      

a) committed by an organized group;      

b) associated with the extraction of income on a particularly large scale;      

c) committed by a person previously convicted of illegal entrepreneurship or illegal banking activities, —      

are punishable by a fine in the amount of seven hundred to one thousand monthly calculation indices or in the amount of the convicted person's salary or other income for a period of seven months to one year, or by imprisonment for a term of up to five years with or without confiscation of property.

     Note.      1. In Articles 190 and 191 of this Code, large—scale income is recognized as income, the amount of which exceeds five hundred monthly calculation indices, income on an especially large scale is income, the amount of which exceeds two thousand monthly calculation indices.      

2. In Article 190 of this Code, such a quantity of goods, the value of which exceeds one hundred monthly calculation indices, is recognized as significant.

     The public danger of illegal entrepreneurship is expressed in the fact that as a result of its commission significant damage is caused to the economy of the state.      

The object of the crime in question is public relations regarding the implementation of normal business activities based on the law.      

In accordance with Article 10 of the Civil Code of the Republic of Kazakhstan, entrepreneurship is understood as the initiative activity of citizens and legal entities, regardless of the form of ownership, aimed at making a profit or net income by satisfying demand for goods (works, services), based on private ownership (individual entrepreneurship) or on the right of economic management of a state enterprise (state entrepreneurship). Entrepreneurial activity is carried out on behalf of, at the risk and under the property responsibility of the entrepreneur. A similar concept is given in paragraph 5 of Article 1 of the Law of the Republic of Kazakhstan "On Private Entrepreneurship" dated January 31, 2006.      

Entrepreneurial activity of citizens and legal entities is subject to mandatory state registration. Citizens have the right to engage in entrepreneurial activity from the moment of state registration as an individual entrepreneur.

Registration of legal entities is carried out on the basis of The Law of the Republic of Kazakhstan "On State Registration of Legal Entities and Registration of Branches and Representative Offices" dated April 17, 1995 (as amended and supplemented). Registration of individuals engaged in entrepreneurial activity is carried out on the basis of the Law of the Republic of Kazakhstan "On Private Entrepreneurship" dated January 31, 2006.      

A license is a permit issued by a competent government agency to a citizen or a legal entity to engage in a certain type of activity or perform certain actions. The regulations on licenses are regulated by the Law of the Republic of Kazakhstan "On Licensing" dated April 17, 1995 (as amended and supplemented).      

The right of an entrepreneur to carry out activities for which a license is required arises from the moment of obtaining such a license or within the period specified therein and is terminated upon the expiration of this period, unless otherwise established by law or other legal acts.      

Licensing of certain types of business activities is carried out in order to protect the interests of consumers, improve the quality of public services, and comply with urban planning, environmental, and sanitary standards.      

On the objective side, entrepreneurship is considered illegal if it is carried out:      

- without registration;      

- without special permission (license) in cases where such permission (license) is required, or in violation of the terms of licensing;      

- by engaging in prohibited types of business activities.      

State registration of legal entities means checking the compliance of the constituent documents of a created legal entity with the laws of the Republic of Kazakhstan, issuing them a certificate of state registration with the assignment of a registration number and entering information about legal entities in the unified State register.      

Individual entrepreneurs who meet one of the following conditions are subject to mandatory state registration.:      

1 - they use the labor of hired workers on a permanent basis;      

2 - have a cumulative annual income from entrepreneurial activity, calculated in accordance with tax legislation in an amount exceeding the tax-free amount of the cumulative annual income established for individuals by legislative acts of the Republic of Kazakhstan.      

The state registration of legal entities and individuals is carried out by the authorized body of the Ministry of Justice of the Republic of Kazakhstan.      

Carrying out entrepreneurial activity without registration is understood to mean engaging in it in the absence of a document certifying the state registration of a legal entity or individual entrepreneur.      

Carrying out business activities without a special permit (license) takes place when obtaining such a permit is mandatory, that is, such activities without obtaining a license are prohibited by licensing legislation.

The following types of business activities are subject to mandatory licensing::      

1 - related to high-risk facilities or those of particularly important state significance (production and sale of weapons, military equipment, use of mineral resources, use of radio frequencies, etc.);      

2 - related to public services (educational, medical, commercial activities, as well as in the field of gambling — lotteries, casinos);      

3 - related to the concentration of financial resources (banking, auditing, insurance, operations with currency valuables, securities, stock exchanges, etc.).      

Entrepreneurial activity is illegal not only in the absence of a license, but also in violation of licensing conditions. This may include carrying out business activities beyond the time limit set by the license; engaging in a different type of activity than is provided for by the license; transferring the license to another person, etc.      

The Supreme Court of the Republic of Kazakhstan in the above-mentioned The Regulatory decree of June 18, 2004 clarifies that when establishing the fact of engaging in a prohibited type of entrepreneurial activity, the guilty person is criminally liable under the relevant article of the Criminal Code, which prohibits the implementation of a certain type of activity, and in the absence of a special provision — under art. 190 of the Criminal Code.      

The acquisition, storage of goods, provision of premises, transportation services and other assistance to illegal business activities entail criminal liability only in cases where these actions were committed with direct intent by a person aware of the illegality of business activities. The actions of such a person should be qualified as aiding and abetting illegal entrepreneurship, regardless of whether they received remuneration for the services rendered. If these actions were committed with the aim of making a profit from illegal business activities together with the entrepreneur, then they should be regarded as complicity in the crime provided for in art. 190 of the Criminal Code (paragraphs 7-8 of the Regulatory Decree of June 18, 2004).      

When committing actions in the course of illegal business activities that form part of another crime, the act is qualified by a set of articles providing for responsibility for illegal business and an article of the Criminal Code that establishes responsibility for another committed crime.      

190 of the Criminal Code, it is necessary to establish that the actions indicated in the disposition caused major damage to citizens, organizations or the state, or were associated with the extraction of income on a large scale or the production, storage and sale of excisable goods on a significant scale.      

Major damage is considered to be damage caused to a citizen in an amount one hundred times higher than the monthly calculation index. If damage from illegal business activity is caused to an organization or the state, then its amount must exceed five hundred monthly calculation indices, according to the notes to art. 189 of the Criminal Code.      Large-scale income is recognized as income, the amount of which exceeds five hundred monthly calculation indices (note to art. 190 of the Criminal Code).      

The criminal legislation of the Republic of Kazakhstan uses the concept of income given within the framework of tax legislation. Thus, Article 81 of the Tax Code of the Republic of Kazakhstan dated June 12, 2001 (as amended and supplemented) establishes income as the amount received from the sale of goods, works, and services, excluding expenses incurred in the course of this activity. K080000099_ Article 79 of the Tax Code of the Republic of Kazakhstan establishes the provision that this type of income is included in the concept of total annual income and defines taxable income, that is, the difference between total annual income and the provided deductions. When determining the total annual income, it includes all income to be received in the Republic of Kazakhstan and abroad during the tax period, with the exception of deductions, for example, from the transfer of assets free of charge or their sale at a reduced cost. K080000099_     

The Supreme Court of the Republic of Kazakhstan, in paragraph 9 of the said Regulatory Resolution, clarifies that when determining a large or especially large amount of income, which is a mandatory feature of a crime under Article 190 of the Criminal Code, only funds and property obtained by the perpetrator as a result of entrepreneurial activity without registration or without special permission (license) are taken into account in cases where such a permit (license) is required, or in violation of licensing conditions, as well as as a result of engaging in prohibited types of business activities. The income received during the implementation of the part of the activity that is recognized as legitimate should not be taken into account.      

Income received as a result of committing a crime in the sphere of economic activity provided for in Chapter 7 of the Criminal Code is subject to recovery from the perpetrator and conversion to state income as a result of unjustified enrichment acquired by criminal means.      

Money and other property received by the guilty person as a reward must be returned to their owner in cases where he mistakenly believed that he had paid for work or services that were not within the scope of the convicted person's duties.      

In accordance with paragraph 4, Part 3, Article 121 of the Criminal Procedure Code of the Republic of Kazakhstan, property and items directly used to extract income from illegal business activities, recognized as material evidence, are subject to state revenue, and if they are not discovered, their value is recovered from the perpetrator.      

Production refers to deliberate actions to create excisable goods in an artisanal or factory manner, or the alteration of any items, as a result of which they acquire the properties of genuine excisable goods.      

Storage should be understood as any intentional actions related to the presence of excisable goods in the possession of a person (with himself, indoors, in a hiding place, etc.). The duration of storage does not affect the qualification.      

Marketing involves their alienation, namely, the release of excisable goods into circulation by selling them, donating them, exchanging them, lending them, etc.      

During the production, storage or sale of excisable goods, criminal liability under Part 1 of Article 190 of the Criminal Code occurs if the value of these goods exceeds one hundred monthly calculation indices (paragraph 2 note to Article 190 of the Criminal Code).      An obligatory element of the objective side of the considered corpus delicti is the presence of a causal relationship between the fact of illegal entrepreneurship and the consequences that have occurred.      

The subject of the crime is a sane individual who has reached the age of 16.      

On the subjective side, the crime is committed intentionally. The perpetrator is aware that he carries out business activities without registration or without a special permit (license) in cases where such a permit (license) is mandatory, or in violation of licensing conditions, as well as prohibited types of business activities, anticipates that as a result of his actions it is possible or inevitable that major damage will be caused to citizens, organizations or the state, or they (actions) will be associated with the extraction of income on a large scale, or will be accompanied by production, storage and sale of excisable goods on a significant scale, and desires the occurrence of these criminal consequences.      

Illegal entrepreneurship is recognized as a qualified type of crime if it is committed:      

a) an organized group;      

b) involves the extraction of income on a particularly large scale;      

c) a person previously convicted of illegal entrepreneurship or illegal banking activities.      

The commission of a crime by an organized group, according to Part 3 of Article 31 of the Criminal Code, assumes that a stable criminal group has previously united to engage in illegal business activities.      

The extraction of income on a particularly large scale should be understood as income, the amount of which exceeds two thousand monthly calculation indices established by the legislation of the Republic of Kazakhstan at the time of the commission of the crime (note to art. 190 of the Criminal Code).      

A person who has previously been convicted of illegal entrepreneurship or illegal banking activities should be considered a person who has previously been convicted under art. 190 or art. 191 of the Criminal Code of the Republic of Kazakhstan, if the conviction for a previous crime has not been expunged or removed in accordance with the procedure established by law.

Commentary from 2007 to the Criminal Code of the Republic of Kazakhstan from the Honored Worker of Kazakhstan, Doctor of Law, Professor, Academician of the Kazakhstan National Academy of Natural Sciences BORCHASHVILI I.Sh.                  

Date of amendment of the act:  08/02/2007 Date of adoption of the act:  08/02/2007 Place of acceptance:  NO Authority that adopted the act: 180000000000 Region of operation:  100000000000 NPA registration number assigned by the regulatory body:  167 Status of the act:  new Sphere of legal relations:  028000000000 Report form:  COMM Legal force:  1900 Language of the Act:  rus

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