The court lawfully refused to satisfy the application for recognition of illegal actions of the tax authority and notification of the results of the tax audit.
Mir Krup LLP (hereinafter referred to as LLP) filed a court application to the State Duma of the Ministry of Internal Affairs of the Republic of Kazakhstan on recognition of illegal actions and notification of the results of the tax audit.
By the decision of the Council of Ministers of the City of Nur-Sultan dated April 10, 2020, the stated requirements were denied, and the judicial act was left unchanged on appeal (June 2, 2020).
The local courts established that, according to paragraphs 6, 7 of Article 69 of the Tax Code, the general procedure for conducting a tax audit is determined in accordance with the Business Code (hereinafter referred to as the PC).
In accordance with paragraph 7 of Article 140 of the Tax Code, the specifics of the procedure, timing, extension, suspension of inspections, registration of an act on the appointment, results and completion of inspections carried out by state revenue authorities are determined by the Tax Code.
The court found that the notification was served within the time limits set by Article 147 of the Tax Code.
The end of the tax audit period is considered to be the day when the tax audit report is handed over to the taxpayer.
If it is impossible to hand over the inspection report, a tax survey is conducted.
The deadline for completing the tax audit will be the date of the tax survey.
The Department has not violated the terms of the audit, the tax audit was completed within 37 working days, excluding the periods of its suspension.
The courts did not take into account the arguments of the representatives of the LLP with reference to paragraph 2 of Article 48 of the Tax Code that at the time of delivery of the notification there was a limitation period of three years. Since the tax audit was completed by conducting a tax survey on December 27, 2019, the above-mentioned provisions of the Tax Code do not apply to legal relations that arose before its entry into force.
Regulatory and legal framework
In accordance with Article 2 of the Code of the Republic of Kazakhstan dated December 25, 2017 "On Taxes and other mandatory payments to the Budget (Tax Code)", the tax legislation of the Republic of Kazakhstan is based on the Constitution of the Republic of Kazakhstan, consists of this Code, as well as regulatory legal acts, the adoption of which is provided for by this Code.
If an international treaty ratified by the Republic of Kazakhstan establishes rules other than those contained in the Tax Code, the rules of the said treaty shall apply.
The main regulatory legal acts that courts should follow when considering cases related to the application of tax legislation are:
1. The Constitution of the Republic of Kazakhstan dated August 30, 1995;
2. The Code of the Republic of Kazakhstan "On Taxes and other Mandatory Payments to the Budget (Tax Code)" (hereinafter – NC);
3. The Civil Code of the Republic of Kazakhstan (hereinafter referred to as the Civil Code) (General Part) dated December 27, 1994, (Special Part) dated July 1, 1999;
4. The Civil Procedure Code of the Republic of Kazakhstan (hereinafter – CPC) dated October 31, 2015;
5. The Business Code of the Republic of Kazakhstan (hereinafter referred to as the Business Code) dated October 29, 2015;
6. The Law of the Republic of Kazakhstan "On Permits and Notifications" dated May 16, 2014;
7. The Law of the Republic of Kazakhstan "On Accounting and Financial Reporting" dated February 28, 2007;
8. The Law of the Republic of Kazakhstan "On State Registration of Legal Entities and Registration of branches and representative Offices" dated April 17, 1995;
9. Regulatory rulings of the Supreme Court of the Republic of Kazakhstan (hereinafter – NP):
- "On judicial practice of tax legislation application" dated June 29, 2017 No. 4;
- "On the application by courts of certain norms of civil procedural legislation" dated March 20, 2003 No. 2;
- "On some issues of the invalidity of transactions and the application by courts of the consequences of their invalidity" dated July 7, 2016 No. 6;
- "On some issues of application by courts of the norms of Chapter 29 of the CPC" dated December 24, 2010 No. 20;
Resolutions of the Government of the Republic of Kazakhstan, regulatory legal orders of the authorized body in the system of state revenue bodies.
Summary from the Supreme Court of the Republic of Kazakhstan on the judicial practice of applying tax legislation for 2020 and 3 months of 2021 dated July 9, 2021
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