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

Article 118. Suspension of debit transactions in bank accounts of a taxpayer (tax agent)

1. 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 registered as an individual entrepreneur, a private practice owner shall be suspended in accordance with the procedure established by the laws of the Republic of Kazakhstan in case of:

1) failure of a taxpayer (tax agent) to file tax returns within the time limits established by this Code - upon expiration of thirty business days from the day following the delivery of the notice provided for in subparagraph 5) of paragraph 2 of Article 114 of this Code;

2) a taxpayer’s failure to submit a tax application for VAT registration - upon expiration of thirty business days from the day of delivery of the notice provided for in subparagraph 12) of paragraph 2 of Article 114 of this Code;

3) failure to pay tax debts to the budget by a taxpayer (tax agent), classified in accordance with the risk management system to the category of:

major risk - after one working day from the date of delivery of notice on tax debt repayment;

average risk - after ten working days from the date of delivery of notice on tax debt repayment;

4) denial of access to tax officials for conducting a tax audit and inspection of taxable and (or) tax-related items, except for cases of their violation of a tax audit procedure established by this Code - within five business days from the day of denial;

5) return by a postal or other communications organization of a notice due to the absence of a taxpayer (tax agent) from the location, except for the notice provided for in subparagraphs 7) and 13) of paragraph 2 of Article 114 of this Code - within five business days from the date of return;

6) a taxpayer’s failure to meet the requirement set forth in part one of paragraph 5 of Article 70 of this Code - within three business days from the deadline specified in part one of paragraph 5 of Article 70 of this Code;

7) non-fulfillment of the notification on the elimination of violations revealed by the tax authorities as a result of in-house audit - after five working days from the date of expiry of the period specified in part one of paragraph 2 of Article 96 of this Code, except for the case provided for by paragraph 4-3 of Article 96 of this Code.

2. Suspension of debit transactions in bank accounts applies to all debit transactions of a taxpayer (tax agent), except for:

1) transactions for the payment of taxes and payments to the budget provided for in Article 189 of this Code, customs payments provided for by the legislation of the Republic of Kazakhstan, social welfare payments, penalties accrued for their late payment, and fines to be paid to the budget;

2) withdrawal of money:

under writs of execution providing for the satisfaction of claims for damages caused to life and health, as well as claims for recovery of alimony;

under writs of execution providing for the withdrawal of money for settlements with persons working under an employment agreement for the payment of severance pay and wages, remuneration under an author contract, obligations of a client for the transfer of social welfare payments, as well as under writs of execution for collection to state revenue;

to pay tax debts, arrears in social welfare payments.

Debit transactions in bank accounts of a taxpayer (tax agent) in the case provided for in subparagraph 3) of paragraph 1 of this article shall be suspended up the amount of the tax debts indicated in a tax authority’s order to suspend debit transactions in bank accounts of the taxpayer (tax agent).

3. A tax authority shall issue an order to suspend debit transactions in bank accounts of a taxpayer (tax agent) in accordance with the form established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan, which shall come into force on the day of its receipt by a second-tier bank or an organization carrying out certain types of banking operations.

A tax authority sends such an order to second-tier banks or organizations carrying out certain types of banking operations in hard copy or electronically by transmitting via a telecommunications network. When a tax authority sends an order to suspend debit transactions in bank accounts of a taxpayer (tax agent) in electronic form, such an order is created in accordance with the formats established by the authorized body jointly with the National Bank of the Republic of Kazakhstan.

4. A tax authority’s order to suspend debit transactions in bank accounts of a taxpayer (tax agent) is subject to unconditional execution by second-tier banks or organizations carrying out certain types of banking operations and is executed in the order of priority established by the Civil Code of the Republic of Kazakhstan.

4-1. Repayment by a taxpayer (tax agent) of the amount of tax debt indicated in the order of the tax authority on suspension of debit transactions on bank accounts of the taxpayer (tax agent) shall be the ground for resumption by a second-tier bank or an organization carrying out certain types of banking operations, of debit transactions on bank accounts of such taxpayer (tax agent).

A second-tier bank or an organization carrying out certain types of banking operations, on the day of paying off the tax debt, shall resume debit transactions on bank accounts until cancellation of the tax authority's order on suspending debit transactions on the taxpayer's bank accounts.

5. An order to suspend debit transactions in bank accounts is canceled by the tax authority that issued the order to suspend debit transactions within one business day following the elimination of causes for the suspension of debit transactions in bank accounts.

In this case, the order to suspend debit transactions on bank accounts, issued in the case provided for by subparagraph 7) of paragraph 1 of this article, shall be canceled no later than one business day following the day of:

delivery of an order on appointing an unscheduled tax audit, conducted if the taxpayer (tax agent) fails to execute the notice of elimination of violations revealed by the tax authorities through an in-house audit, in the manner prescribed by Article 96 of this Code, or a tax audit in respect to the issues and taxable periods specified in a notice on the elimination of violations revealed by the tax authorities through an in-house audit;

receipt of the taxpayer's (tax agent's) complaint provided for by paragraph 4-1 of Article 96 of this Code, and resumed if the said complaint is unsatisfied no later than one working day following the date of issuance of a written decision of a higher tax authority and (or) authorized body, and (or ) court ruling enforcement.

6. If a bank account of a taxpayer (tax agent) is closed in accordance with the legislation of the Republic of Kazakhstan, a second-tier bank or an organization carrying out certain types of banking operations shall return an order to suspend debit transactions in the account to a relevant tax authority together with a notification of the closure of the bank account of a taxpayer (tax agent).

If an order to suspend debit transactions indicates more than one bank account, a second-tier bank or an organization carrying out certain types of banking operations shall return such an order to a relevant tax authority within one business day following the day of closing the last bank account specified in the order for suspension of debit transactions in bank accounts.

Footnote. Article 118 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); from 24.06. 2021 No. 53-VII (effective from.01.07.2021).