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

Article 116. Methods for securing the fulfillment of overdue tax obligations

1. The fulfillment of an overdue tax obligation of a taxpayer (tax agent) can be secured by:

1) charging penalty for unpaid amount of taxes and payments to the budget, including advance payments and (or) current payments of them;

2) suspending debit transactions in bank accounts (except for correspondent accounts) of a taxpayer (tax agent) that is a legal entity, a structural unit of a legal entity, a non-resident operating in the Republic of Kazakhstan through a permanent establishment, an individual entrepreneur, a private practice owner;

3) suspending debit transactions with the cash of a taxpayer (tax agent) that is a legal entity, a structural unit of a legal entity, a non-resident operating in the Republic of Kazakhstan through a permanent establishment, an individual entrepreneur, a private practice owner;

4) restricting the disposal of property of a taxpayer (tax agent) that is a legal entity, a structural unit of a legal entity, a non-resident operating in the Republic of Kazakhstan through a permanent establishment, an individual entrepreneur, a private practice owner.

If the fulfillment of tax obligations in accordance with subparagraph 2) of paragraph 3 of Article 722 of this Code is imposed on an operator, methods for securing the fulfillment of an overdue tax obligation:

specified in subparagraph 1) of part one of this paragraph are applied to the operator;

specified in subparagraphs 2), 3) and 4) of part one of this paragraph are applied both to the operator and each participant of a simple partnership (consortium).

2. Methods for securing the fulfillment of an overdue tax obligation, specified in subparagraphs 2), 3) and 4) of part one of paragraph 1 of this article, shall be applied within the time limits specified in Articles 118, 119 and 120 of this Code.

Before applying methods for securing the fulfillment of the overdue tax obligation specified in subparagraphs 2), 3) and 4) of part one of paragraph 1 of this article, a notice of the payment of tax debts, specified in subparagraph 7) of paragraph 2 of Article 114 of this Code, shall be sent to a taxpayer (tax agent), except for cases specified in paragraph 3 of this article.

Methods for securing the fulfillment of an overdue tax obligation, except for penalty accrual, shall be applied to taxpayers (tax agents) with the medium and high level of risk within the time periods provided by this Chapter, depending on the risk to which the taxpayer (tax agent) is assigned to the date of tax debts or the date of transfer of taxpayer (tax agent) from the low risk category to the average or major risk category.

3. In case a structural unit of a legal entity fails to pay its tax debts within thirty business days from the receipt of a notice of the payment of tax debts, a tax authority applies methods for securing the fulfillment of an overdue tax obligation, specified in subparagraphs 2), 3) and 4) of paragraph 1 of this Article, to a taxpayer (tax agent) that is a legal entity that set up this structural unit.

In case of failure to pay tax debts by a structural unit of a legal entity after application of methods for securing the fulfillment of an overdue tax obligation to it in accordance with the procedure set forth in part one of this paragraph, and provided that the legal entity has more than one structural unit, a tax authority shall apply methods for securing the fulfillment of an overdue tax obligation specified in subparagraphs 2) and 3) of paragraph 1 of this article, simultaneously to all structural units of this legal entity.

In case a legal entity fails to pay its tax debts within thirty business days from the receipt of a notice of the payment of tax debts, a tax authority applies methods for securing the fulfillment of an overdue tax obligation, specified in subparagraphs 2), 3) and 4) of paragraph 1 of this article, to taxpayers that are structural units of this legal entity.

4. Methods for securing the fulfillment of an overdue tax obligation specified in subparagraphs 2), 3) and 4) of paragraph 1 of this article are subject to cancellation in case of:

1) declaring bankrupt - from the date of a final and binding court judgment on declaring a taxpayer bankrupt;

2) the application of the rehabilitation procedure - from the date of entry into force of the court decision on the application of the rehabilitation procedure;

3) approval by court of an insolvency resolution agreement - from the date of a final and binding court judgment on approval of such an agreement;

4) involuntary liquidation of second-tier banks, insurance (reinsurance) organizations - from the date of a final and binding court judgment on involuntary liquidation;

5) compulsory termination of operation of branches of non-resident banks of the Republic of Kazakhstan, branches of non-resident insurance (reinsurance) organizations of the Republic of Kazakhstan - from the date of adoption by the authorized body for regulation, control and supervision of the financial market and financial organizations of the decision to revoke the license.

In addition to the above, in the cases specified in subparagraphs 1), 2) and 3) of part one of this paragraph, methods for securing the fulfillment of an overdue tax obligation are applied to a taxpayer in accordance with the provisions of this chapter with respect to the amount of a tax obligation that is not included in the register of creditors’ claims as prescribed by the legislation of the Republic of Kazakhstan on rehabilitation and bankruptcy, and (or) tax obligation of a taxpayer not included in the insolvency resolution agreement approved by court.

5. Unless otherwise provided by paragraph 5-1 of this article, in the event of a complaint against a notification of the audit results or a notification of the horizontal monitoring results, the methods of ensuring fulfillment of an overdue tax obligation, with the exception of restrictions on disposal of the taxpayer's (tax agent's) property, shall be suspended pending a decision on the complaint examination outcome.

5-1. If the authorized body leaves the complaint of the taxpayer (tax agent) to the notification of the audit results without satisfaction, the application of methods to ensure fulfillment of the overdue tax obligation, with the exception of restrictions on the disposal of the property of the taxpayer (tax agent), shall be suspended for fifteen working days from the date of the decision based on the outcome of the complaint examination.

6. If a taxpayer (tax agent) appeals against notices of the payment of tax debts, the application of methods for securing the fulfillment of an overdue tax obligation pending a decision on the results of the complaint’s consideration is not suspended.

7. For the purposes of this chapter, the accounts of state institutions opened with the central authorized body for budget execution are equated to bank accounts, and the central authorized body for budget execution is equated to an organization carrying out certain types of banking operations.

8. Remained in force until 01.01.2019 in accordance with the Law of the Republic of Kazakhstan dated 25.12.2017 No. 121-VI.

Footnote. Article 116 as amended by Law of the Republic of Kazakhstan No. 290-VІ dated December 27, 2019 (shall be enforced upon expiry of ten calendar days after the day of its first official publication); 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).