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

Article 94. In-house audit

1. An in-house audit is tax authorities’ control based on the examination and analysis of tax returns submitted by a taxpayer (tax agent), information provided by authorized state bodies, as well as other documents and information on the taxpayer’s activity.

An in-house audit is an integral part of a risk management system.

2. An in-house audit aims to give a taxpayer the right to independently eliminate violations detected by tax authorities based on the results of an in-house audit, by registering with tax authorities and/or filing tax returns in accordance with Article 96 of this Code and/or paying taxes and payments to the budget.
Article 95. Procedure and time limits for an in-house audit

1. An in-house audit is conducted by comparing the following data available to tax authorities:

1) tax returns;

2) information from other state bodies on taxable and (or) tax-related items;

3) information obtained from various sources of information on a taxpayer’s activity;

4) other reporting established by this Code.

2.In-house audit shall be conducted after the issuance of electronic invoices and (or) for the relevant tax period after expiry of the deadline for filing tax reports for such a period established by this Code.

3. An in-house audit is conducted within the limitation period with due regard to the provisions set forth in Article 48 of this Code.

Footnote. Article 95 as amended by the Law of the Republic of Kazakhstan dated 21.12.2022 No. 165-VII (shall be enforced from 01.01.2023).



Article 96. Results of an in-house audit

1. In case of detected violations found in the in-house audit, the following documents shall be drawn up:

on violations with a high risk degree - a notice on elimination of violations identified by the tax authorities based on the in-house audit findings, with a description of the discovered violations and their risk degree attached.

In this case, violations with a high risk degree shall be violations found during the in-house audit conducted after issuance of electronic invoices purposed to establishing the actual turnover in the sale of goods, provision of works and services;

for violations with an average risk degree - a notification on elimination of violations identified by the tax authorities based on the in-house audit results, with a description of the discovered violations and their risk degree attached;

for violations with a low risk degree - a notice of violations identified during an in-house audit, with a description of the discovered violations and their risk degree attached.

A notice of violations revealed in the in-house audit shall be sent to the taxpayer (tax agent) no later than ten working days from the date of detection of violations in tax reporting for information.

The form of notification of violations found in the in-house audit shall be established by the authorized body.

2. A taxpayer (tax agent) shall execute a notice of elimination of violations revealed by tax authorities based on the results of an in-house audit within thirty business days from the day following the day of its delivery (receipt).

A notice of elimination of violations revealed by tax authorities based on the results of an in-house audit is recognized as executed by a taxpayer (tax agent):

1) if the taxpayer (tax agent) accepts the violations specified in the notification, the identified violations must be eliminated by:

registration with the tax authorities;

filing of tax reporting upon notification for the taxable period to which the identified violations relate;

payment to the budget of VAT amount previously returned from the budget at the request of the taxpayer for VAT refund, also by payment of penalties in the amount specified in paragraph 4 of Article 104 of this Code, for each day from the date of transfer of such amounts to the taxpayer;

revocation, correction or addition of invoices issued in electronic form, as prescribed by the tax legislation of the Republic of Kazakhstan;

2) in case of disagreement with the medium-risk violations indicated in the notification - submission to the tax authority that sent the notification of the elimination of violations identified by the tax authorities in the in-house audit, by the taxpayer (tax agent) on paper or in electronic form, of an explanation on absence of violations with attached extracts from the registers of tax and (or) accounting and (or) documents related to the indicated violations, confirming accuracy of the data entered in the tax reporting, except for the cases provided for in paragraph 3 of this article;

3) in case of disagreement with the violations of a high risk degree indicated in the notification - submission to the tax authority that sent the notification on the elimination of violations found by the tax authorities in the in-house audit, by the taxpayer (tax agent) on paper or electronic media, of an explanation with copies of documents attached, confirming the fact of carrying out operations (transactions) indicated in the violations.

2-1. The explanations provided for in subparagraphs 2) and 3) of part two of paragraph 2 of this article must indicate:

date of signing the explanation by the taxpayer (tax agent);

surname, name and patronymic (if it is indicated in the identity document) or full name of the person who provided the explanation, his place of residence (location);

identification number of the taxpayer (tax agent);

the name of the tax authority that sent the notification on elimination of violations identified by the tax authorities in the in-house audit;

the number and date of the notification for which the explanation is provided;

circumstances of disagreement of the person, who submitted the explanation, with the violations indicated in the notification with mandatory attachment of the documents specified in subparagraphs 2) and 3) of the second part of paragraph 2 of this article.

In execution of the notification on the elimination of violations identified by the tax authorities in the in-house audit, by providing an explanation, the requirement for documents unrelated to the violations described in the notification shall not be allowed.

3. A taxpayer is not entitled to provide the explanation, specified in subparagraph 2) of paragraph 2 of this article, of the following violations revealed by tax authorities based on the results of an in-house audit:

1) when calculating corporate income tax, expenses are included into deductibles and VAT on purchased goods, works, services is offset:

on the basis of an invoice and (or) other document, the action (actions) on the issuance of which are recognized by enforced court ruling or a resolution of the criminal prosecution body to terminate the pre-trial investigation on non-rehabilitating grounds, as committed by a private business entity without actually performing work, rendering of services, shipment of goods;

for transactions invalidated by a final and binding court judgment;

2) when calculating corporate income tax, expenses are included into deductibles for transactions committed without actual performance of works, rendering of services, shipment of goods with a taxpayer, the head and (or) a founder (participant) of which are (is) not involved in registration (reregistration) and (or) conduct of financial and economic activity of such a legal entity, as established by a final and binding court judgment;

3) when VAT on purchased goods, works, services is applied against:

transactions (operations) with legal entities and (or) individual entrepreneurs, whose registration was invalidated by a final and binding court judgment;

transactions (operations) with legal entities whose reregistration was invalidated by a final and binding court judgment.

4. The tax authority shall deem the notification of the elimination of violations identified by the tax authorities in the in-house audit as not executed if the violation was not eliminated or the violation was not eliminated in full.

If a notification on elimination of violations identified by the tax authority in the in-house audit is recognized as unexecuted by the tax authority, a decision is made to recognize the notice on elimination of violations identified by the tax authorities as a result of an in-house audit not executed in the form and within the time frames established by the authorized body and it shall be sent to the taxpayer in one of the following ways:

1) by registered mail with notification;

2) electronically to the web application or the user's personal account on the "electronic government" web portal;

3) handed over to the taxpayer against signature.

In this case, the decision sent by one of the listed below methods shall be considered handed to the taxpayer (tax agent) in the following instances:

1) by registered mail with a notification - from the date of the taxpayer's (tax agent's) note in the notification of a postal or other communications organization. At the same time, such a decision must be delivered by a postal or other communication organization not later than ten working days from the date of acceptance by the postal or other communication organization;

2) electronically:

from the date of delivery of the decision by the tax authority to the web application.

This method applies to a taxpayer interacting with tax authorities electronically in accordance with the legislation of the Republic of Kazakhstan on electronic documents and electronic digital signature;

from the date of delivery of the decision to the user's personal account on the e-government web portal.

This method applies to a taxpayer registered on the e-government web portal;

3) through the State Corporation "Government for Citizens" - from the date of its receipt in person.

4-1. An appeal by a taxpayer (tax agent) of the decision referred to in paragraph 4 of this article shall be lodged within ten working days from the date of its delivery (receipt) to a higher tax authority and (or) an authorized body or court.

In this case, a copy of the complaint must be sent by the taxpayer (tax agent) to the tax authority that sent the decision specified in paragraph 4 of this article.

4-2. If, for a good reason, the deadline established by paragraph 4-1 of this article is missed, this deadline, upon the request of the taxpayer (tax agent) filing the complaint, shall be restored by the tax authority and (or) the authorized body considering the complaint.

In order to restore the missed deadline for filing a complaint, the tax authority considering the complaint shall recognize as a good reason the temporary incapacity for work of the individual to whom the decision referred to in paragraph 4 of this article is sent , as well as the head and (or) chief accountant (if any) of the taxpayer ( tax agent).

The provisions of this paragraph shall apply to individuals to whom the decision referred to in paragraph 4 of this article is sent, as well as to taxpayers (tax agents) whose organizational structure does not provide for the presence of persons replacing the above-mentioned persons during their absence.

In this case, the taxpayer (tax agent) must attach a document confirming the period of temporary incapacity for work of the persons specified in part two of this paragraph, and a document establishing the organizational structure of such a taxpayer (tax agent) to the petition to restore the missed deadline for filing a complaint.

The petition of the taxpayer (tax agent) to restore the missed deadline for filing a complaint shall be satisfied by the tax authority and (or) the authorized body considering the complaint, provided that the taxpayer (tax agent) filed the complaint and the petition no later than ten working days from the date of the end of the period of temporary disability of persons specified in part two of this paragraph.

4-3. Suspension of debit transactions on bank accounts of a taxpayer (tax agent) shall not be carried out when he/she submits a complaint against the decision specified in paragraph 4 of this article:

1) from the date of acceptance of the complaint by the higher tax authority and (or) the authorized body - until the issuance of a written decision by the higher tax authority and (or) the authorized body;

2) from the date of acceptance by the court of the complaint (application) for proceedings - until the entry into force of the judicial act.

5. When submitting a complaint about a notice of elimination of violations revealed by tax authorities based on the results of an in-house audit to a higher-level tax authority and (or) the authorized body or court, the running of a time period for the execution of the notice of elimination of violations revealed by tax authorities based on the results of an in-house audit is suspended:

1) from the day the complaint is accepted by a higher-level tax authority and (or) the authorized body - until the higher-level tax authority and (or) the authorized body renders a written decision;

2) from the day the court initiates proceedings in the complaint (application) – until a court judgment becomes final and binding.

At the same time, in cases of filing a complaint with a court against actions (inaction) of tax officials on sending a notice of elimination of violations, specified in subparagraphs 2) and 3) of paragraph 3 of this article, revealed by tax authorities based on the results of an in-house audit, a taxpayer has the right to prove the actual receipt of goods, works, services from a legal person and (or) an individual entrepreneur, whose registration (reregistration) was invalidated by a final and binding court judgment.

6. Unless otherwise established by this article, failure to execute in due time established by paragraph 2 of this article, a note of the elimination of violations identified by tax authorities based on the in-house audit results, in the manner and within the time frames established by paragraphs 2 and 2-1 of this article, shall entail suspension of debit transactions on the taxpayer’s bank accounts pursuant to Article 118 of this Code.

6-1. On violations with a high risk degree, failure to comply with the deadline and (or) recognition as unfulfilled the notice of elimination of violations identified by the tax authorities based on the in-house audit results shall entail limitation of issuing electronic invoices in the information system of electronic invoices in accordance with Article 120-1 of this Code.

7. Based on the results of an in-house audit conducted in accordance with paragraph 6 of Article 59 and paragraph 7 of Article 66 of this Code, a tax authority shall draw up an opinion in the form established by the authorized body.

In this case, the date of completion of an in-house audit is that of the opinion specified in this paragraph.

Footnote. Article 96 as amended by Law of the Republic of Kazakhstan No. 241-VI dated 02.04.2019 (shall be enforced since 01.01.2020); dated 10.12.2020 No. 382-VI (effective from 01.01.2021); dated 21.12.2022 No. 165-VII (shall be enforced from 01.01.2023).

Chapter 11. RECORDKEEPING OF THE FULFILLMENT OF TAX OBLIGATIONS, A DUTY TO TRANSFER SOCIAL WELFARE PAYMENTS, FINES AND PENALTIES