During a tax audit, primary documents, not just tax reports, should be the subject of the auditors' research and assessment.
By the decision of the court of cassation of December 7, 2016, the judicial acts of the courts of the Aktobe region were canceled and a new decision was made to satisfy the application of JSC "K". It was established that the charges were made only on the basis of tax returns, where the chief accountant of the Company mistakenly failed to reflect losses, the existence of which was confirmed by primary documents and was not disputed by an employee of the tax authority. In rejecting the Company's application, the courts of first instance and the courts of appeal concluded that the auditors are not required to take into account the losses and expenses of the Company, unless the taxpayer himself indicates this in the relevant tax reports.
The cassation instance pointed out that these conclusions contradict the norms of substantive law. According to Article 627 of the Tax Code, a tax audit is an audit carried out by tax authorities of compliance with the norms of the tax legislation of the Republic of Kazakhstan. Tax accounting is based on accounting data. The procedure for maintaining accounting records is established by the legislation of the Republic of Kazakhstan on accounting and financial reporting. Article 7 of the Law of the Republic of Kazakhstan "On Accounting and Financial Reporting" stipulates that accounting documentation includes primary documents, accounting registers, financial statements and accounting policies. Accounting records are made on the basis of primary documents.
During the tax audit, the Company submitted the primary accounting and financial documents in full for the period under review. However, the submitted documents were not examined by the inspector in order to verify the correctness of the Company's calculation of taxes and other mandatory payments to the budget, and the reliability of tax reporting. The cassation instance took into account the conclusions of the judicial economic examination available in the case on the absence of grounds for additional taxes and penalties.
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