Commentary on Article 244. Evasion by a Citizen of Payment of Taxes and (or) Other Mandatory Payments to the Budget of the Criminal Code of the Republic of Kazakhstan
1. Evasion by a citizen of payment of taxes and (or) other mandatory payments to the budget, committed by failing to submit an income declaration in cases where the submission of such a declaration is mandatory, or by including knowingly distorted information about income or expenses, or property subject to taxation, in a declaration or other documents related to the calculation or payment of taxes and (or) other mandatory payments to the budget, using an invoice without the actual performance of work, provision of services, or shipment of goods, if this act results in non-payment of taxes and (or) other mandatory payments to the budget on a large scale, —
shall be punishable by a fine of up to three thousand monthly calculation indices, or corrective labour 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.
Note. A person who has committed an act provided for by this Article shall be released from criminal liability in the event of voluntary payment of tax arrears and (or) other mandatory payments to the budget, as well as penalties established by the legislation of the Republic of Kazakhstan.
Taxes and other mandatory payments are one of the important sources of formation of the revenue side of the state budget of the Republic of Kazakhstan.
The public danger of this crime lies in the intentional failure to fulfil the constitutional obligation of everyone to pay legally established taxes, fees and other mandatory payments (Article 35 of the Constitution of the Republic of Kazakhstan), which results in the failure of funds to be received by the budget of Kazakhstan.
The object of the crime is the financial interests of the state.
The subject matter of the crime, pursuant to Article 244 of the Criminal Code, comprises two types of payments to the state budget: taxes and other mandatory payments payable, in accordance with the law, exclusively by individuals.
In addition, the subject matter may also include an income declaration, that is, an official document of an established form in which the taxpayer records the information required for completion and which is submitted to the tax inspectorate. This document serves as the basis for determining the amount of tax payable in accordance with the tax rate, which is understood as the amount of tax accruals per unit of measurement of the tax base.
According to subparagraph 55) of paragraph 1 of Article 1 of the Code of the Republic of Kazakhstan dated 25 December 2017, “On Taxes and Other Mandatory Payments to the Budget (Tax Code),” taxes are mandatory monetary payments to the budget established by the state unilaterally by law, with the exception of cases provided for by the Code, made in specified amounts and having an irrevocable and gratuitous nature.
Other mandatory payments to the budget are mandatory monetary contributions to the budget in the form of fees, charges and duties, with the exception of customs payments, made in the amounts and cases established by the Code (subparagraph 10) of paragraph 1 of Article 1 of the Tax Code).
Article 189 of the Tax Code defines the types of taxes and other mandatory payments to the budget. Thus, the following types of taxes are in force in the Republic of Kazakhstan:
corporate income tax;
individual income tax;
value added tax;
excise duties;
rent tax on exports;
special payments and taxes of subsoil users;
social tax;
vehicle tax;
land tax;
property tax;
gambling business tax (subparagraph 1) of paragraph 1).
The Tax Code establishes the following payments to the budget:
state duty;
fees;
charges for:
the use of licences for engaging in certain types of activities;
the use of land plots;
the use of water resources from surface sources;
emissions into the environment;
the use of wildlife;
forest use;
the use of specially protected natural areas;
the use of the radio frequency spectrum;
the provision of long-distance and (or) international telephone communications, as well as cellular communications;
the placement of outdoor (visual) advertising (subparagraph 2) of paragraph 1 of Article 189 of the Tax Code).
For the purposes of applying international treaties, indirect taxes are recognised as value added tax and excise duties (paragraph 2 of Article 189 of the Tax Code).
Amounts of taxes and payments to the budget are credited to the revenues of the respective budgets in accordance with the procedure determined by the Budget Code of the Republic of Kazakhstan and the Law on the Republican Budget (paragraph 3 of Article 189 of the Tax Code).
The disposition of Article 244 of the Criminal Code is blanket in nature, since the procedure for paying taxes is established by the Tax Code of the Republic of Kazakhstan.
The objective element of the crime is expressed in the commission of the following acts or omissions:
- Evasion by a citizen of payment of taxes and (or) other mandatory payments to the budget by failing to submit an income declaration in cases where the submission of such a declaration is mandatory.
In accordance with paragraph 1 of Article 363 of the Tax Code, the following resident taxpayers are required to submit an individual income tax declaration:
individual entrepreneurs;
persons engaged in private practice; pursuant to subparagraph 19) of paragraph 1 of Article 1 of the Tax Code, a person engaged in private practice means a private notary, private bailiff, advocate, or professional mediator;
individuals who have received property income;
individuals who have received income from sources outside the Republic of Kazakhstan;
domestic workers who, in accordance with the labour legislation of the Republic of Kazakhstan, receive income from persons who are not tax agents;
citizens of the Republic of Kazakhstan receiving employee income under employment agreements (contracts) and (or) civil law contracts concluded with diplomatic missions and equivalent missions of a foreign state, consular institutions of a foreign state accredited in the Republic of Kazakhstan, which are not tax agents;
citizens of the Republic of Kazakhstan receiving employee income under employment agreements (contracts) and (or) civil law contracts concluded with international and state organisations, foreign and Kazakhstani non-governmental public organisations and foundations exempted from the obligation to calculate, withhold and transfer individual income tax at the source of payment in accordance with international treaties ratified by the Republic of Kazakhstan;
resident labour immigrants of the Republic of Kazakhstan receiving (or entitled to receive) income under employment agreements concluded in accordance with the labour legislation of the Republic of Kazakhstan on the basis of a permit for a labour immigrant;
mediators, with the exception of professional mediators, in accordance with the Law of the Republic of Kazakhstan “On Mediation,” receiving income from persons who are not tax agents;
individuals receiving taxable income from personal subsidiary farms recorded in the household accounting book in accordance with the legislation of the Republic of Kazakhstan, in respect of which individual income tax was not withheld at the source of payment due to the provision of inaccurate information to the tax agent by the person engaged in the personal subsidiary farm;
citizens of the Republic of Kazakhstan, kandas and persons holding a residence permit in the Republic of Kazakhstan who, as of 31 December of the reporting tax period, have money in bank accounts in foreign banks located outside the Republic of Kazakhstan in an amount exceeding 141 times the monthly calculation index established by the Law on the Republican Budget and effective as of 31 December of the reporting tax period;
citizens of the Republic of Kazakhstan, kandas and persons holding a residence permit in the Republic of Kazakhstan who, as of 31 December of the reporting tax period, own the following property:
immovable property that (rights to and (or) transactions involving which) is subject to state or other registration (recording) with the competent authority of a foreign state in accordance with the legislation of that foreign state;
securities whose issuers are registered outside the Republic of Kazakhstan;
an ownership interest in the authorised capital of a legal entity registered outside the Republic of Kazakhstan.
Deputies of the Parliament of the Republic of Kazakhstan, judges, as well as individuals who are subject to the obligation to submit a declaration in accordance with the Constitutional Law of the Republic of Kazakhstan “On Elections in the Republic of Kazakhstan,” the Criminal Executive Code of the Republic of Kazakhstan and the Law of the Republic of Kazakhstan “On Combating Corruption,” shall submit a declaration of income and property that constitutes an object of taxation and is located both within the territory of the Republic of Kazakhstan and abroad (paragraph 2 of Article 363 of the Tax Code).
At the same time, the persons specified in this paragraph, including those staying outside the Republic of Kazakhstan for the purpose of studying, undergoing an internship or practical training, shall not submit an individual income tax declaration if there are no grounds provided for in this paragraph.
An individual income tax declaration shall be submitted to the tax authority at the place of location (residence) no later than 31 March of the year following the reporting tax period, with the exception of cases provided for by the Constitutional Law of the Republic of Kazakhstan “On Elections in the Republic of Kazakhstan,” the Criminal Executive Code of the Republic of Kazakhstan and the Law of the Republic of Kazakhstan “On Combating Corruption” (paragraph 1 of Article 364 of the Tax Code);
Evasion by a citizen of payment of taxes or other mandatory payments to the budget by including knowingly distorted information about income or expenses, or property subject to taxation, in a declaration;
Evasion by a citizen of payment of taxes or other mandatory payments to the budget by including knowingly distorted information about income or expenses, or property subject to taxation, in other documents related to the calculation or payment of taxes and (or) other mandatory payments to the budget;
Evasion by a citizen of payment of taxes or other mandatory payments to the budget through the use of an invoice without the actual performance of work, provision of services, or shipment of goods;
Where this act results in non-payment of taxes and (or) other mandatory payments to the budget on a large scale.
Failure to submit an income declaration occurs when, after the expiry of the deadlines for submitting a declaration established by tax legislation, a citizen fails to submit it to the relevant tax authorities at the place of residence.
The inclusion in a declaration or other documents of knowingly distorted information about income or expenses, or property, shall be understood as the intentional indication in a declaration or other documents of any information concerning the amounts of income, expenses or property that does not correspond to reality.
According to paragraph 1 of Article 412 of the Tax Code, when conducting transactions involving the sale of goods, works or services, the following persons are obliged to issue invoices:
value added tax payers specified in subparagraph 1) of paragraph 1 of Article 367 of the Code;
taxpayers in cases provided for by regulatory legal acts of the Republic of Kazakhstan adopted for the purpose of implementing international treaties ratified by the Republic of Kazakhstan;
a commission agent who is not a value added tax payer, in cases established by Article 416 of the Code;
a freight forwarder who is not a value added tax payer, in cases established by Article 415 of the Code;
taxpayers in the case of the sale of imported goods.
In an invoice, the amount of taxable turnover shall be indicated separately for each item of goods, works or services.
In addition to other information, taxpayers shall indicate in the invoice or other document provided for in paragraph 1 of Article 400 of the Tax Code:
for turnovers subject to value added tax — the amount of value added tax;
for taxable turnovers, including those exempt from value added tax — the mark “Without VAT.”
When the crime under consideration is committed, an invoice is issued without the actual performance of work, provision of services, or shipment of goods.
According to paragraph 26 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 Offences in the Sphere of Economic Activity,” when considering criminal cases involving evasion of payment of taxes and (or) other mandatory payments to the budget, courts should bear in mind that the provisions of the Tax Code determine the types of taxes and mandatory payments to the budget, the deadlines for their payment, and the objects of taxation and payments.
The amount of unpaid taxes and (or) other mandatory payments to the budget shall be determined on the basis of the totality of evidence, including a tax audit report, an opinion of a specialist (expert) and other evidence, regardless of the type of tax or mandatory payment and the deadlines for their payment, with the total amount for the entire period of non-payment being charged.
In cases of evasion of payment of taxes and (or) other mandatory payments to the budget through the use of invoices issued without the actual performance of work, provision of services, or shipment of goods, — as stated in paragraph 29 of the aforementioned Regulatory Resolution, — it is necessary to establish whether or not there was complicity in the commission of criminal offences provided for by Articles 216 and 244 or 245 of the Criminal Code between the person evading payment of taxes and the person who provided the fictitious invoices.
In the event of the detention of a person who issued fictitious invoices and (or) cashed out monetary funds under such invoices, as well as in other cases requiring urgent investigative actions, the failure to carry out which may result in the concealment or destruction of documents, the criminal prosecution authority, in accordance with part 2 of Article 122 of the Criminal Procedure Code, shall have the right to initiate a tax audit of the person to whom the fictitious invoices were issued, involve a specialist or order a forensic economic examination.
An indictment in criminal cases under Articles 244 and 245 of the Criminal Code must necessarily set out the provisions of tax legislation, in the version effective at the time the criminal offence was committed, that were violated by the accused, as well as the deadlines for submitting declarations on taxes and (or) other mandatory payments to the budget and the deadlines for their payment. In the absence of such information in the indictment, the court, during the preliminary hearing, must recognise these circumstances as substantial violations of criminal procedure legislation that prevent the appointment of the main court hearing and resolve the issue of returning the case to the prosecutor in accordance with Article 323 of the Criminal Procedure Code.
The Tax Code provides for different deadlines for submitting declarations and different deadlines for paying taxes, depending on the type of taxes and other mandatory payments to the budget. Courts should bear in mind that the deadline for submitting a declaration and the deadline for paying taxes and other mandatory payments to the budget may not coincide. The date of completion of the criminal offence provided for by Articles 244 and 245 of the Criminal Code is the day following the last day of the deadline for payment of the tax (budget payment) established by tax legislation.
Evasion of payment of taxes and (or) other mandatory payments to the budget is committed only with direct intent, — the Supreme Court emphasises in paragraph 28 of the aforementioned Resolution, — whereby, for the purpose of evading taxes and payments, a citizen intentionally fails to submit an income declaration despite being obliged to do so, or enters knowingly distorted information about income or expenses, or property subject to taxation, into a declaration or other documents related to the calculation or payment of taxes and (or) other mandatory payments to the budget.
The large amount of evasion by a citizen of payment of taxes (and) other mandatory payments to the budget is determined in paragraph 38) of Article 3 of the Criminal Code and constitutes an amount of payments not received by the budget exceeding twenty thousand monthly calculation indices. The amount of the monthly calculation index is established for each individual year by the Law of the Republic of Kazakhstan “On the Republican Budget.”
In cases where a person, for the purpose of evading payment of taxes and other mandatory payments, forges official documents of organisations that grant rights or release from obligations, as well as stamps, seals and forms, the acts committed by that person, where there are grounds for doing so, shall be classified cumulatively under Article 244 or Article 245 of the Criminal Code and Article 385 of the Criminal Code.
By its legal structure, the corpus delicti is material. The crime shall be considered completed if the act results in non-payment of taxes and (or) other mandatory payments to the budget on a large scale.
From the subjective side, the crime is characterised by an intentional form of guilt. The person is aware that they are evading payment of taxes and (or) other mandatory payments to the budget by failing to submit an income declaration in cases where submission is mandatory, or by including knowingly distorted information about income or expenses, or property subject to taxation, in a declaration or other documents related to the calculation or payment of taxes and (or) other mandatory payments to the budget, or by using an invoice without the actual performance of work, provision of services, or shipment of goods; they foresee the possibility or inevitability of the consequences occurring and desire them or treat them with indifference.
The subject of the crime under consideration is a sane individual who has reached the age of 16 and is obliged to pay legally established taxes.
In accordance with subparagraph 57) of paragraph 1 of Article 1 of the Tax Code, a taxpayer is a person and (or) a structural subdivision of a legal entity that is a payer of taxes and payments to the budget.
The Note states that a person who has committed an act provided for by the commented Article shall be released from criminal liability in the event of voluntary payment of tax arrears and (or) other mandatory payments to the budget, as well as penalties established by the legislation of the Republic of Kazakhstan. Compensation for damage must be complete. Partial compensation for damage, or an obligation of the guilty person to compensate for the damage in the future, shall not constitute grounds for release from criminal liability.
The act provided for by Article 244 of the Criminal Code is classified as a crime of medium gravity.
Commentary to the Criminal Code of the Republic of Kazakhstan, 2021, by Isidor Shamilovich Borchashvili, Honoured 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 reform of the law enforcement system under the Security Council of the Republic of Kazakhstan, Honoured Employee of the Ministry of Internal Affairs of the Republic of Kazakhstan.
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