Commentary on Article 216. Commission of Actions for Issuing an Invoice Without the Actual Performance of Work, Provision of Services, or Shipment of Goods under the Criminal Code of the Republic of Kazakhstan
1. Actions by a private entrepreneurship entity involving the issuance of an invoice without the actual performance of work, provision of services, or shipment of goods, committed for the purpose of obtaining property benefits and causing substantial damage to a citizen, an organization, or the state, —
shall be punishable by a fine in an amount of up to three thousand monthly calculation indices, or corrective labor in the same amount, or community service for a period of up to eight hundred hours, or restriction of liberty for a period of up to three years, or imprisonment for the same period.
2. The act provided for in Part One of this Article, if committed:
1) repeatedly;
2) by a group of persons acting in prior collusion;
3) excluded pursuant to Law of the Republic of Kazakhstan No. 180-VI dated 12 July 2018;
4) by a person authorized to perform state functions, or a person equated thereto, or an official, or a person holding a responsible public office, where the act is associated with the use of their official position;
5) excluded pursuant to Law of the Republic of Kazakhstan No. 84-VI dated 3 July 2017.
shall be punishable by a fine in an amount of up to five thousand monthly calculation indices, or corrective labor in the same amount, or community service for a period of up to one thousand two hundred hours, or restriction of liberty for a period of up to five years, or imprisonment for the same period, with confiscation of property, and in cases provided for by subparagraph 4), with lifelong deprivation of the right to hold certain positions or engage in certain activities.
3. The acts provided for in Parts One or Two of this Article, if committed by a criminal group or resulting in particularly substantial damage,
shall be punishable by imprisonment for a period of up to seven years, with confiscation of property, with or without lifelong deprivation of the right to hold certain positions or engage in certain activities.
The public danger of the crime under consideration lies in the violation of the foundations of economic activity, associated with the commission of theft (for example, in the form of fraud), thereby causing substantial damage to a citizen, an organization, or the state.
The object of the crime is social relations concerning the conduct of entrepreneurial activity based on the law.
An invoice is understood as a mandatory document for all value-added tax payers, unless otherwise established by this Article. The form of the invoice, except for an invoice issued electronically, shall be determined independently by the taxpayer, taking into account the provisions of this Article. An invoice shall be issued on paper or electronically.
An invoice contains information about the amount of funds and the invoice section (accounting information). This document is extremely important because it serves as the basis for accepting the amounts of VAT presented for offset. All organizations and enterprises that are VAT payers are required to issue invoices.
In the commission of the crime under consideration, an invoice is issued without the actual performance of work, provision of services, or shipment of goods.
Pursuant to Article 147 of the Civil Code of the Republic of Kazakhstan, transactions are understood as actions of citizens and legal entities aimed at establishing, changing, or terminating civil rights and obligations.
In accordance with Article 683 of the Civil Code of the Republic of Kazakhstan, under a contract for the provision of services for consideration, the contractor undertakes, at the customer's request, to provide services (perform certain actions or carry out certain activities), while the customer undertakes to pay for those services.
Article 462 of the Civil Code of the Republic of Kazakhstan provides that the supply of goods shall be carried out by the supplier through the shipment (transfer) of goods to the buyer under the contract or to the person specified in the contract as the recipient.
From the objective side, the crime is characterized by actions taken by a private entrepreneurship entity involving the issuance of an invoice without the actual performance of work, provision of services, or shipment of goods, for the purpose of obtaining property benefits, which caused substantial damage to a citizen, an organization, or the state.
According to paragraph 13 of the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated 24 January 2020, “On Certain Issues of the Application by Courts of Legislation in Cases of Criminal Offenses in the Sphere of Economic Activity,” when considering criminal cases, it must be proven that invoices were issued by private entrepreneurship entities without the actual performance of work, provision of services, or shipment of goods. The court is obliged to examine evidence demonstrating that the private entrepreneurship entity possessed the relevant assets, buildings, and vehicles under ownership, lease rights, or other legal grounds, as well as material and labor resources without which it would be impossible to perform the work and provide the services. If the private entrepreneurship entity provided services by engaging a subcontractor, evidence confirming the provision of such services by the direct contractor shall be examined and evaluated.
If the subject matter of the transaction is goods, documents confirming their production or acquisition from third parties, including payment for the purchase and sale of the goods, shall be examined.
Documents confirming transportation expenses related to the shipment of goods may also be the subject of examination and evaluation.
The issuance of several invoices without the actual performance of work, provision of services, or shipment of goods, where such actions are covered by a single intent, constitutes one continuing crime.
When several fictitious invoices are issued to different counterparties and the criminal prosecution authority classifies these actions as one continuing criminal offense, the courts should verify whether the perpetrator had a single intent. If, however, the commission of the specified actions is not connected by a single intent and constitutes repeated commission, then, where the amount of damage in respect of each counterparty does not reach the amount specified in subparagraph 38) of Article 3 of the Criminal Code of the Republic of Kazakhstan, the defendant's actions shall be classified as an administrative offense.
According to paragraph 16 of the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan “On Certain Issues of the Application by Courts of Legislation in Cases of Criminal Offenses in the Sphere of Economic Activity,” courts should bear in mind that, when delivering a conviction or issuing a ruling terminating proceedings on a non-exonerating ground under Article 216 of the Criminal Code of the Republic of Kazakhstan, a transaction confirmed by a fictitious invoice shall be deemed void pursuant to paragraph 2 of Article 158 of the Civil Code of the Republic of Kazakhstan. Tax authorities are not required to file claims challenging transactions confirmed by fictitious invoices. Additional assessments of the relevant tax amounts shall be made by the tax authority on the basis of a conviction that has entered into legal force or a ruling terminating proceedings on a non-exonerating ground, which provides a legal assessment of the unlawful actions of a person involving the issuance of invoices without the actual performance of work, provision of services, or shipment of goods.
If actions involving the issuance of fictitious invoices are associated with the commission of other criminal offenses in the sphere of economic activity, then, in accordance with the requirements of Articles 24 and 113 of the Criminal Procedure Code of the Republic of Kazakhstan, the case must establish and assess the circumstances surrounding the use of fictitious invoices by counterparties, their complicity in issuing such invoices, as well as the complicity of the private entrepreneurship entity that issued the fictitious invoice in the commission of both economic and other criminal offenses.
Damage caused as a result of issuing invoices without the actual performance of work, provision of services, or shipment of goods shall be the amount of taxes and other mandatory payments that the counterparty evaded paying, or the amount of a loan, income, stolen funds, or property benefits.
The amount of unpaid taxes and other mandatory payments shall be determined on the basis of the totality of evidence, including a tax audit report, an expert or specialist opinion, and other evidence.
If the consequences in the form of substantial or particularly substantial damage to a citizen, an organization, or the state do not occur due to circumstances beyond the control of the perpetrator, then, provided that it is established that the private entrepreneurship entity, when issuing a fictitious invoice, pursued the purpose of obtaining property benefits by causing substantial or particularly substantial damage to a citizen, an organization, or the state, its actions shall be classified as an attempt to commit the crime provided for in Article 216 of the Criminal Code of the Republic of Kazakhstan.
Paragraph 6 of the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated 29 June 2017, “On Judicial Practice in the Application of Tax Legislation,” also states that actions by a private entrepreneurship entity involving the issuance of an invoice without the actual performance of work, provision of services, or shipment of goods for the purpose of obtaining property benefits, which caused substantial damage to a citizen, an organization, or the state, entail criminal liability under Article 216 of the Criminal Code of the Republic of Kazakhstan.
The issuance by a taxpayer of a fictitious invoice, namely, an invoice issued by a payer who is not registered for VAT purposes, as well as by a person who does not actually perform work, provide services, or ship goods, and which includes an amount of value-added tax, in the absence of signs of a criminal offense, entails administrative liability under Article [the article number in the original text is illegible].
By its legal structure, the corpus delicti is material in nature. The crime shall be deemed completed upon the infliction of substantial damage to a citizen, an organization, or the state. Pursuant to subparagraph 38) of Article 3 of the Criminal Code of the Republic of Kazakhstan, substantial damage shall mean damage caused to a citizen in an amount exceeding two thousand times the monthly calculation index, or damage caused to an organization or the state in an amount exceeding twenty thousand times the monthly calculation index.
For criminal liability to arise under this provision of the Criminal Code of the Republic of Kazakhstan, it is mandatory to establish a causal relationship between the perpetrator's act and the resulting consequence in the form of substantial damage.
The subjects of the crime are private entrepreneurship entities, which include citizens, kandas, non-residents, stateless persons engaged in entrepreneurial activity, as well as persons performing managerial functions in non-governmental commercial legal entities. A person who is not a private entrepreneurship entity but participated in the commission of the act provided for in Article 216 of the Criminal Code of the Republic of Kazakhstan shall bear criminal liability accordingly as an organizer, instigator, or accomplice.
From the subjective side, the crime under consideration is committed intentionally. The perpetrator is aware that they are issuing invoices without the actual performance of work, provision of services, or shipment of goods, and wishes to act in this manner.
An essential element of the subjective side of this crime is the existence of the purpose of obtaining property benefits.
Obtaining property benefits shall be understood as actions of a property-related nature performed by a person involving objects of civil rights and aimed at obtaining property benefits through saving their own property assets, generating profit, or avoiding material expenses. When obtaining property benefits, a person most often does not acquire property but rather avoids material expenses and generates profit. In other words, the perpetrator performs actions that, under normal circumstances, would result in the expenditure of the perpetrator's own property or the expenditure of a certain amount of personal labor (or labor by persons close to them) to increase or improve the quality of property benefits. However, since certain actions are performed without material expenses for the perpetrator, they save their property assets at someone else's expense.
Under Part 2 of Article 216 of the Criminal Code of the Republic of Kazakhstan, liability arises for the same acts committed repeatedly; by a group of persons acting in prior collusion; or by a person authorized to perform state functions, a person equated thereto, an official, or a person holding a responsible public office, where the act is associated with the use of their official position.
Repeated issuance of invoices without the actual performance of work, provision of services, or shipment of goods shall mean the commission of two or more acts provided for in Article 216 or a part of Article 216 of the Criminal Code of the Republic of Kazakhstan. The commission of two or more acts not connected by a single intent constitutes repeated commission of crimes and is subject to classification under subparagraph 1) of Part 2 of Article 216 of the Criminal Code of the Republic of Kazakhstan. The crime under consideration shall not be recognized as repeated if the person has been convicted of a previously committed crime or released from criminal liability on grounds established by law.
Issuance of invoices without the actual performance of work, provision of services, or shipment of goods by a group of persons acting in prior collusion shall mean the commission of actions involving persons who had previously agreed to commit the crime jointly.
Pursuant to subparagraph 27) of Article 3 of the Criminal Code of the Republic of Kazakhstan, a person authorized to perform state functions is recognized as a civil servant in accordance with the legislation of the Republic of Kazakhstan on public service, or a member of a maslikhat.
Pursuant to subparagraph 28) of Article 3 of the Criminal Code of the Republic of Kazakhstan, persons equated to persons authorized to perform state functions include: a person elected to local self-government bodies; a citizen registered in accordance with the procedure established by the laws of the Republic of Kazakhstan as a candidate for President of the Republic of Kazakhstan, a deputy of the Parliament of the Republic of Kazakhstan or maslikhats, akims of towns of district significance, settlements, villages, and rural districts, as well as a member of an elected local self-government body; an employee permanently or temporarily working in a local self-government body whose remuneration is paid from the state budget of the Republic of Kazakhstan; a person performing managerial functions in a state organization or a quasi-public sector entity, as well as a person authorized to make decisions on the organization and conduct of procurement, including public procurement, or responsible for the selection and implementation of projects financed from the state budget and the National Fund of the Republic of Kazakhstan, holding a position no lower than the head of an independent structural division in the specified organizations; employees of the National Bank of the Republic of Kazakhstan and its departments; employees of an authorized organization in the field of civil aviation operating in accordance with the legislation of the Republic of Kazakhstan on the use of the airspace of the Republic of Kazakhstan and aviation activities; employees of the authorized body for the regulation, control, and supervision of the financial market and financial organizations.
Pursuant to subparagraph 26) of Article 3 of the Criminal Code of the Republic of Kazakhstan, an official is a person who permanently, temporarily, or under special authority performs the functions of a representative of authority or carries out organizational and administrative or administrative and economic functions in state bodies, local self-government bodies, as well as in the Armed Forces of the Republic of Kazakhstan, other troops, and military formations of the Republic of Kazakhstan.
Pursuant to subparagraph 16) of Article 3 of the Criminal Code of the Republic of Kazakhstan, a person holding a responsible public office is a person holding a position established by the Constitution of the Republic of Kazakhstan, constitutional laws, and other laws of the Republic of Kazakhstan for the direct performance of state functions and powers of state bodies, including a Member of Parliament, a judge, as well as a person holding a political public office or an administrative public office of Category “A” in accordance with the legislation of the Republic of Kazakhstan on public service.
Part 3 of Article 216 of the Criminal Code of the Republic of Kazakhstan establishes liability for the acts provided for in Parts 1 or 2 of the specified Article of the Criminal Code of the Republic of Kazakhstan, if committed by a criminal group or resulting in particularly substantial damage.
Pursuant to Part 3 of Article 31 of the Criminal Code of the Republic of Kazakhstan, a crime shall be recognized as having been committed by a criminal group if it is committed by an organized group, criminal organization, criminal community, transnational organized group, transnational criminal organization, transnational criminal community, terrorist group, extremist group, gang, or illegal paramilitary formation.
Particularly substantial damage provided for in Article 216 shall mean damage caused to a citizen in an amount exceeding five thousand times the monthly calculation index, or damage caused to an organization or the state in an amount exceeding fifty thousand times the monthly calculation index (subparagraph 3) of Article 3 of the Criminal Code of the Republic of Kazakhstan).
The act provided for in Part 1 of Article 216 of the Criminal Code of the Republic of Kazakhstan is classified as a crime of medium gravity.
The acts provided for in Parts 2 and 3 of Article 216 of the Criminal Code of the Republic of Kazakhstan are classified as serious crimes.
Commentary to the Criminal Code of the Republic of Kazakhstan, 2021, by Isidor Shamilovich Borchashvili, Honored Figure of Kazakhstan, Doctor of Law, Professor, Academician of the Kazakhstan National Academy of Natural Sciences, member of the Scientific Advisory Councils under the Constitutional Council of the Republic of Kazakhstan and the Supreme Court of the Republic of Kazakhstan, member of the working group on the reform of the law enforcement system under the Security Council of the Republic of Kazakhstan, Honored Employee of the Ministry of Internal Affairs of the Republic of Kazakhstan.
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