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

Article 123. Collection of tax debts of taxpayers (tax agents) from their debtors’ accounts

1. In the absence of bank accounts of a taxpayer (tax agent), classified in accordance with the risk management system as a major or average risk, as well as with non-payment of tax debts after collection from the money in bank accounts, carried out in the manner specified by Article 122 of this Code, a tax authority forecloses on money in bank accounts of third parties indebted to a taxpayer (tax agent) (hereinafter referred to as debtors) up to the amount of their current tax debts.

2. A taxpayer (tax agent) shall be obliged, no later than ten working days from the date of receipt of a notice of tax debts repayment, to file to the tax authority that sent such the notice the list of debtors indicating the amount of receivables.

If there are effective court decisions on the recovery of debts from debtors in favor of the taxpayer (tax agent), such a court decision shall also be provided.

At the same time, to identify debtors of a taxpayer (tax agent), the tax authority shall have the right to use data from information systems of tax authorities, and also to conduct an audit of the taxpayer (tax agent) to determine mutual settlements between the taxpayer (tax agent) and its debtors. In the course of an audit of a taxpayer (tax agent), the tax authority shall have the right to conduct a counter audit of debtors.

The tax authority is not entitled to confirm the amounts of receivables disputed in court.

The list of debtors or a statement of mutual settlements reconciliation is not submitted if a taxpayer (tax agent) repays tax debts.

3. Based on a list of debtors and (or) information on debtors received from information systems of tax authorities and (or) a report on a taxpayer’s (tax agent’s) tax audit confirming the amount of receivables, a tax authority sends to the debtors notices of foreclosure on money from their bank accounts up to the amount of receivables in order to pay tax debts of the taxpayer (tax agent).

Within twenty business days from the receipt of a notice, debtors are required to submit a reconciliation statement drawn up together with a taxpayer (tax agent) as of the date of the notice, in hard or soft copy, to a tax authority that sent the notice.

The settlement reconciliation statement of the taxpayer and his/her/its debtor must contain the following information:

1) the name of the taxpayer (tax agent) and his/her/its debtor, their identification numbers;

2) the amount of the debtor’s debt to the taxpayer (tax agent);

3) legal details, seal (if any) and the signatures of the taxpayer (tax agent) and his/her/its debtor or electronic digital signatures of the taxpayer and his/her/its debtor;

4) the date of the reconciliation statement, which shall not be earlier than the date of receipt of the notice of payment of the debt to the budget.

4. If the debtors fail to submit an account reconciliation statement within the term provided for by part two of paragraph 3 of this article, or if the tax authority fails to confirm the amount of receivables, the tax audit of these debtors shall be conducted. At the same time, the tax authority is not entitled to confirm the amounts of receivables disputed in court. In the absence of receivables, the debtor, together with the account reconciliation statement, shall file documents to the tax authority confirming the fact of debt repayment to the taxpayer (tax agent).

5. On the basis of the account reconciliation statement and (or) the inspection report on the debtor, including the report on counter inspection carried out in accordance with paragraph 3 of this article, confirming the amount of receivables, and (or) a submitted court decision, the tax authority shall issue a collection order on recovery of the amount of the tax debt of the taxpayer (tax agent) from the debtor’s bank accounts.

If receivables indicated in the reconciliation statement of settlements between the debtor and the taxpayer (tax agent) are paid, collection orders for collecting the amount of tax debts of the taxpayer (tax agent) from his/her/its debtor’s bank accounts are subject to revocation within one business day following the submission of the settlement reconciliation statement together with documents confirming the payment of such debt by the debtor or the taxpayer (tax agent) to the tax authority.

6. A second-tier bank or an organization carrying out certain types of banking operations of a debtor-taxpayer is required to execute a collection order for collecting tax debts of a taxpayer (tax agent) issued by a tax authority in accordance with the requirements established by Article 122 of this Code.

In addition to the above, in case of debiting money in excess of the amount indicated in the collection order from bank accounts of a debtor opened with several second-tier banks or organizations carrying out certain types of banking operations, the amount debited in excess is returned to the debtor by the tax authority on the basis of his/her/its application.

7. Collection of tax debt of a taxpayer (tax agent) from its debtors' accounts in the manner specified by this Article shall be carried out regardless of the f risk to which the debtor shall be assigned in accordance with the risk management system.

Footnote. Article 123 as amended by the Law of the Republic of Kazakhstan dated 21.12.2022 No. 165-VII (shall be enforced from 01.01.2023).