On taxes and other obligatory payments to the budget (Tax Code)

Article 72. Determining the income of an individual subject to taxation in certain cases, including by indirect method

1. Determination of the income of an individual subject to taxation, in some cases, including by indirect method, shall be applied in the course of tax control in relation to an individual in order to determine completeness and reliability of the information indicated by him in the tax returns of an individual, also of the data of the authorized bodies and third parties, entailing the occurrence of a tax liability on individual income tax.

2. The information reflected in the tax statements provided for by this Code, as well as the data of the authorized bodies and third parties, may be taken into account to confirm the income directed to meet the individual’s expenses regardless of the statute of limitations on tax liability and claim established by Article 48 of this Code.

3. The following data reflected in the tax returns provided for by this Code, may be taken into account to confirm the income used to meet the expenses of an individual, only in the availability of supporting documents issued by the competent authority of a foreign state in accordance with the legislation of the foreign state:

1) on property located in a foreign state, including with preferential taxation, determined in accordance with paragraph 3 of Article 294 of this Code;

2) on the debt of other persons to an individual (accounts receivable) and (or) the debt of an individual to other persons (accounts payable) in the event that an individual or legal entity, being a debtor and (or) creditor, is located and (or) registered in a foreign state, including with preferential taxation determined in accordance with Article 294 of this Code.

4. To determine the income of an individual subject to taxation, in some cases, including by an indirect method, the tax authorities shall avail of information received from authorized bodies, second-tier banks and organizations engaged in certain types of banking operations, third parties, competent authorities of foreign states and from other information sources.

5. The actions within this article shall not apply to an individual who was registered as an individual entrepreneur, a person engaged in private practice, in terms of determining income from such activities.

6. If the income of an individual, reflected in tax returns, does not correspond to his expenses incurred, including for property acquisition, the tax authorities, in the course of tax control of individuals, shall be entitled to apply the following types of indirect method to determine the income of an individual:

1) the asset value increment method is used if, during the period covered by tax control, an individual has expenses for the acquisition of property subject to state or other registration, as well as property for which rights and (or) transactions are subject to state or other registration.

This method is applied by comparing the property gains specified in this subparagraph for a certain period with the income reflected in tax returns;

2) the cost accounting method is used if an individual has expenses during the period covered by tax control that are not indicated in subparagraph 1) of this paragraph.

This method is applied by comparing the expenses of an individual not specified in subparagraph 1) of this paragraph with the income reflected in tax returns;

3) the method of accounting for the flow of funds in bank accounts is used in the event of a change in an individual's monetary savings in accounts with second-tier banks and organizations carrying out certain types of banking operations during the period covered by tax control.

This method is applied by comparing the change in the monetary savings of an individual on accounts in second-tier banks and organizations engaged in certain types of banking operations with the income reflected in tax returns.

7. When exercising tax control, if necessary, tax authorities may use a combination of the methods defined by this article.

8. When applying the methods defined by this article, the obligations of an individual shall be taken into account in the course of tax control.

9. The procedure for determining the income of an individual by the methods specified in this article shall be determined by the authorized body.

Footnote. Article 72 as amended by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (effective from 01.01.2021).