Commentary on Article 222. Evasion of Tax Payments by Organizations under the Criminal Code of the Republic of Kazakhstan
1. Evasion of taxes or other mandatory payments to the state budget by organizations through failure to submit a declaration of aggregate annual income in cases where submission of such a declaration is mandatory, or through the inclusion in a declaration or other documents related to the calculation or payment of taxes or other mandatory payments to the state budget of knowingly distorted information concerning income or expenses, or through concealment of other taxable items or items subject to other mandatory payments, or the actual location of the organization, provided that such act results in non-payment of taxes or mandatory payments on a large scale, —
shall be punishable by deprivation of the right to hold certain positions or engage in certain activities for a period of up to five years, or by arrest for a period of four to six months, or by imprisonment for a period of up to three years, with a fine of up to three hundred monthly calculation indices or in the amount of the convicted person's salary or other income for a period of up to three months, or without such fine.
2. The same act, committed repeatedly, —
shall be punishable by imprisonment for a period of up to five years, with deprivation of the right to hold certain positions and engage in certain activities for a period of up to five years, and a fine in the amount of two hundred to five hundred monthly calculation indices or in the amount of the convicted person's salary or other income for a period of two to five months, or without such fine.
Note. Non-payment by an organization of taxes or other mandatory payments to the state budget shall be deemed to have been committed on a large scale if the amount of unpaid taxes or mandatory payments exceeds two thousand monthly calculation indices.
In accordance with the tax legislation of the Republic of Kazakhstan, taxable persons include not only individuals but also legal entities. Evasion by legal entities of taxes or other mandatory payments on a large scale constitutes a criminally punishable act provided for under Article 222 of the Criminal Code of the Republic of Kazakhstan.
The public danger of tax crimes is determined by the high importance of taxes in the economic activities of society, as a result of which significant damage is caused to the economy of our state.
The object of the crime is public relations concerning the implementation of the state's financial activities on a lawful basis.
From the objective side, this crime is characterized by omission in the form of:
1) failure to submit a declaration of aggregate annual income in cases where submission of declarations is mandatory;
2) concealment of other taxable items or items subject to other mandatory payments;
or by an act in the form of:
3) inclusion in a declaration or accounting documents of knowingly distorted information concerning income or expenses.
The aggregate annual income of a resident taxpayer consists of income received in the Republic of Kazakhstan and outside its borders. A resident is understood to mean a legal entity established in accordance with the legislation of the Republic of Kazakhstan.
Aggregate annual income subject to income taxation is understood to mean the difference between gross income received during a calendar year and documented expenses related to the generation of such income. Therefore, the inclusion of knowingly distorted information in an income declaration may be defined as the deliberate understatement of information concerning income actually received or the overstatement of expenses, thereby making it possible to reduce the taxable base.
The list of information concerning income and expenses that must be included in accounting documents for the calculation of the taxable base is established by the Tax Code of the Republic of Kazakhstan dated June 12, 2001 (as amended and supplemented). K080000099_
Knowingly distorted information means information that has been deliberately altered and rendered factually incorrect with regard to the amount of income, expenses or tax benefits taken into account when calculating taxes, as well as information that inaccurately reflects the actual situation as a result of ignoring materially important information. Distortion of information may be carried out by concealing or understating income received; concealing or incorrectly indicating sources of income; overstating expenses incurred; and providing other false information. An essential element is the deliberate nature of the actions, that is, the person's awareness that the information included in the declaration or accounting documents is distorted and does not correspond to reality.
Knowingly distorted information shall be deemed to have been included in accounting documents if the latter have been prepared for submission to the tax authorities and duly executed.
Other taxable items include the property of an enterprise, value added, resources used, and other items determined by regulatory legal acts.
Concealment of other taxable items means failure to reflect in accounting records any items subject to taxation; unlawful reduction of the taxable base; knowingly incorrect calculation thereof; and so forth.
This crime shall be considered completed from the moment of evasion of payment of taxes or other mandatory payments on a large scale in cases of failure to submit a declaration of aggregate annual income, in the circumstances expressly provided for in the disposition of this provision. According to the Note to this Article, evasion of tax payments by organizations shall be deemed to have been committed on a large scale if the amount of unpaid taxes exceeds two thousand monthly calculation indices established by the legislation of the Republic of Kazakhstan at the time the crime was committed.
Tax evasion, which is essentially a form of deception, begins from the moment revenue from an individual business transaction is concealed in the primary and accounting documents of an organization, continues throughout the entire taxable period, and ends at the moment when reporting documents containing inaccurate information concerning the existence and amounts of taxable items are submitted to the tax authorities. In other words, concealment of taxable items should be considered completed from the moment reporting documentation containing false information about taxable items is submitted to the relevant territorial tax authorities, or from the date established for submission of such reports if they have not been submitted in a timely manner.
If false information has been entered into accounting records, but the reporting documentation has not yet been submitted to the tax authorities or the deadline for its submission has not yet arrived, such cases constitute an attempt to commit this crime.
The subject of the crime is officials (the head of the organization and the chief accountant), as well as persons performing managerial functions in a commercial or other organization who are responsible for maintaining accounting records and submitting reports and are vested with the right to sign financial, banking and reporting documents. Therefore, it appears that other persons (freight forwarders, salespersons, cashiers, etc.), depending on the circumstances, may act only as accomplices to the crime.
From the subjective side, the crime is committed exclusively with direct intent. By submitting knowingly false information concerning taxable items, the person realizes that they are misleading the tax authorities and desires to do so. The crime is generally committed for mercenary motives. The purpose of such criminal actions is to evade the fulfillment of tax payment obligations, retain funds not paid into the budget for one's own needs, or convert such funds into the property of other persons.
The aggravated form of this crime, as specified by the legislator, is evasion of tax payments by organizations committed repeatedly. Repeated evasion of tax payments by organizations shall be recognized where the guilty person commits two or more acts provided for under the Article under consideration, provided that the conviction for the previous crime has not been expunged or cancelled in accordance with the procedure established by law.
Commentary dated 2007 on the Criminal Code of the Republic of Kazakhstan by I.Sh. Borchashvili, Honored Worker of Kazakhstan, Doctor of Law, Professor, Academician of the National Academy of Natural Sciences of Kazakhstan.
Date of amendment of the legal act: 02.08.2007
Date of adoption of the legal act: 02.08.2007
Place of adoption: NONE
Body that adopted the legal act: 180000000000
Territorial scope: 100000000000
Registration number assigned to the regulatory legal act by the rule-making body: 167
Status of the legal act: new
Scope of legal relations: 028000000000
Form of the act: COMMENTARY
Legal force: 1900
Language of the act: Russian.
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