The social tax must be paid by the sole proprietor regardless of income.

No. 6001-22-00-6ap/1980 (2) dated 05/16/2023

Plaintiff: Individual entrepreneur N.M.

Respondent: Russian State Institution "State Revenue Department of the State Revenue Department"

The subject of the dispute: the recognition of the illegal and cancellation of the notification of the audit results dated 17.09.2012, the compulsion to terminate the activities of an individual entrepreneur.

Review of the plaintiff's cassation appeal

PLOT:

The Department conducted a comprehensive tax audit of the plaintiff, IP N.M.

According to the results of the audit, the defendant charged the plaintiff a social tax in the amount of 180302 tenge, penalties in the amount of 76377 tenge. The plaintiff does not agree with the tax audit report, since he was not engaged in entrepreneurial activity during the period under review, had no income from such activities, and therefore did not have to make social contributions. The notification of tax arrears has been served. In June 2012, the defendant issued a decision to bring the plaintiff to administrative responsibility under part 3 of Article 88 of the Administrative Code, which he challenged in court. By a court ruling, the defendant's decision was overturned for lack of an administrative offense, and the plaintiff's complaint was satisfied.

On 07/30/2012, the plaintiff wrote to the defendant an application for termination of the IP, but the tax authority staff misled him, the IP was not terminated, they said that the debts would be written off, as a result, on the contrary, the debts increase. In this regard, the plaintiff is forced to file a lawsuit with the court, as he does not want to be in the status of an individual entrepreneur.

Judicial acts:

1st instance: the claim is satisfied. The disputed notification was declared illegal and cancelled. The Management is charged with the obligation to terminate the activities of the sole proprietor on the basis of an application dated 07/30/2012.

Appeal: the decision was overturned, and a new decision was made to dismiss the claim.

Cassation: the decision is upheld.

Conclusions: In resolving the dispute and satisfying the claim, the court of first instance proceeded from the fact that the tax authority had not provided evidence of the plaintiff's entrepreneurial activity during the period under review. In 2009, the plaintiff was recognized as an inactive taxpayer. The plaintiff's IP status without carrying out taxable activities cannot be regarded as the basis for tax obligations. Due to the absence of tax arrears for the plaintiff, the court also satisfied the requirement to compel him to terminate his activities as an individual entrepreneur.

By overturning the decision of the court of first instance and rejecting the claim, the appellate instance, guided by the provisions of paragraph 2 of Article 358 of the Tax Code of 2008), which was in force during the period under review 2019-2012, concluded that the social tax should be paid by the sole proprietor regardless of income, since it is a fixed-rate tax: 2-fold the amount of the MCI for the sole proprietor and 1-fold the amount of the MCI for each employee. The object of taxation is the number of employees, including individual entrepreneurs themselves.

The plaintiff's social tax arrears are confirmed by a personal account statement.

These conclusions of the court of appeal fully comply with the requirements of paragraph 1 of Article 357, paragraph 2 of Article 358 and paragraph 2 of Article 359 of the Tax Code of 2008.

During the audit period 2017-2018, similar provisions of Articles 315 - 317 of the Code of the Republic of Kazakhstan "On Taxes and Other Mandatory Payments to the Budget" dated June 12, 2001 (hereinafter referred to as the 2001 Tax Code) were in effect.

The arguments of the plaintiff's cassation appeal on the application of the three-year limitation period established by Article 48 of the Tax Code to the resulting debt are untenable.

According to subparagraph 1) of paragraph 1 of Article 48 of the Tax Code, the limitation period for a tax obligation and claim is the period of time during which the tax authority has the right to calculate, calculate or revise the calculated, accrued amount of taxes and payments to the budget.

Unless otherwise provided by this Article, the limitation period is three years (paragraph 2 of Article 48 of the Tax Code).

The disputed notice was issued in 2012, during the period of the 2008 Tax Code, the limitation period for which was 5 years (paragraph 2 of Article 46).

In this regard, the verification period, starting in 2007, does not contradict the norms of applicable law.

The limitation period does not apply to the calculated and accrued amount of taxes on an unfulfilled notice. The provisions of article 54 of the 2008 Tax Code and article 56

The Tax Code contains an exclusive list of grounds for termination of a tax obligation, which include the termination of an individual entrepreneur's activity if there is no or repayment of tax arrears.

Due to the existence of social tax arrears, there were no legal grounds for imposing on the Management the obligation to terminate the plaintiff's activities as sole proprietor.

The arguments of the complaint about the need to retroactively apply paragraph 2 of Article 485 of the 2017 Tax Code to disputed legal relations, which improves the taxpayer's position, according to which social tax is paid only if there is income from entrepreneurial activity, were not taken into account.

The obligation to pay social tax arose from the plaintiff in the period from 2007 to 2012, the notification was issued in 2012, in this regard, the provisions of the 2001 and 2008 Tax Codes in force at that time are applicable to the disputed legal relations.

According to paragraph 5 of Article 3 of the 2017 Tax Code, the provisions of the laws of the Republic of Kazakhstan that establish new types of taxes and (or) payments to the budget, increase rates, establish new responsibilities, and worsen the situation of the taxpayer (tax agent) are not retroactive.

The author of the complaint's reference to the above-mentioned norm is erroneous, since when issuing a notification of tax assessment by the defendant, the provisions of the tax legislation in force at that time were correctly applied. Whereas paragraph 2 of Article 485 of the 2017 Tax Code is applicable to tax obligations that arose after its entry into force.

An exception to the above rule is paragraph 3 of Article 3 of the 2017 Tax Code, according to which laws introducing amendments and additions to this Code on tax administration, specifics of establishing tax reporting, and improving the status of a taxpayer (tax agent) may be adopted no later than December 1 of the current year.

The arguments about the prejudicial significance for this case of the decisions of the specialized administrative court of 05.07.2012 on the termination of the case of an administrative offense under part one of Article 88 and part one of Article 206 of the Administrative Code were lawfully rejected by the court of appeal, since the contested notification was not the subject of verification when considering cases of an administrative offense.

 

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