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

Article 120. Restrictions on the disposal of property of a taxpayer (tax agent)

1. A tax authority imposes restrictions on the disposal of property of a taxpayer (tax agent) pursuant to the decision specified in paragraph 4 of this article, in case of:

1) failure to pay tax debts 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 fifteen working days from the date of delivery of notice on tax debt repayment;

2) an appeal by a taxpayer (tax agent), with the exception of a taxpayer subject to tax monitoring, notification of the audit results, which contains information on the amount of taxes assessed and payments to the budget, and penalties, as well as on excess VAT amount returned from the budget and not confirmed for refund.

In addition to the above, in the case specified in this Subparagraph, a tax authority imposes restrictions without sending a notice of the payment of tax debts upon expiration of three working days:

from the submission of a complaint by a taxpayer (tax agent) in accordance with the procedure set forth in Chapter 21 of this Code;

from the removal of a taxpayer (tax agent) from the list of taxpayers, of large taxpayers subject to monitoringor termination of horizontal monitoring agreement.

2. A tax authority imposes restrictions on the disposal of a taxpayer’s (tax agent’s) property that:

1) belongs to him/her/it on the basis of the right of ownership or the right of economic management and (or) is held in the inventory of this taxpayer (tax agent) - in the case specified in subparagraph 1) of part one of paragraph 1 of this article;

2) that in accordance with international financial reporting standards and (or) requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, is a fixed asset, investment in real estate and (or) a biological asset, in the case referred to in subparagraph 2) of part one of paragraph 1 of this article.

3. Not subject to restrictions on disposal are:

life support facilities;

electric, thermal and other types of energy;

food products or raw materials, the shelf life and (or) storage period of which is less than one year.

A tax authority is not allowed to seize a taxpayer’s (tax agent’s) restricted property that was transferred (received) into financial leasing or provided as collateral, before the termination of a lease and (or) a pledge agreement.

A taxpayer (tax agent) is not allowed to change the terms of the agreement (to extend the agreement, sublease and (or) repledge) from the day of imposition of restrictions on the disposal of property by a tax authority and until their removal.

For the purposes of this paragraph, life support facilities shall be understood as structures, technological installations and units of gas supply, power supply, heat supply, water supply and sanitation organizations, the termination or suspension of operation of which may lead to disruption of the engineering infrastructure of settlements and territories.

4. A decision to impose restrictions on the disposal of property of a taxpayer (tax agent) is drawn up in the form established by the authorized body and is made by a tax authority in the amount of:

1) tax debts according to the taxpayer’s (tax agent’s) personal account data as of the date of such a decision - in the case specified in subparagraph 1) of part one of paragraph 1 of this article;

2) taxes, payments to the budget and penalties appealed by the taxpayer (tax agent) in accordance with the procedure set forth in Chapter 21 of this Code - in the case specified in subparagraph 2) of part one of paragraph 1 of this article.

5. A decision to impose restrictions on the disposal of property shall be delivered to a taxpayer (tax agent) by hand against signature or in any other way confirming its dispatch and receipt. In this case, a decision is considered to be handed to the taxpayer (tax agent) if it is sent using one of the methods mentioned below:

1) by registered mail with return receipt - on the date a taxpayer (tax agent) signs in the notification of a postal or other communications organization;

2) electronically - from the date of delivery of the decision by the tax authority to the web application. This method shall apply to a taxpayer (tax agent) interacting with tax authorities electronically in accordance with the legislation of the Republic of Kazakhstan on electronic documents and electronic digital signatures;

3) if delivery is impossible due to the refusal to put a signature confirming the receipt of such a decision, or absence from the location - on the date of a tax inspection to be conducted in accordance with the procedure specified in Article 70 of this Code.

6. Within five business days from the receipt by a taxpayer (tax agent) of a decision to impose restrictions on the disposal of property, a tax authority forwards a copy of such a decision to authorized state bodies for registering the encumbrance of title to property, the title to which or transactions with respect to which are subject to state registration, or property subject to state registration.

7. After the expiration of ten business days from the delivery of a decision to impose restrictions on the disposal of the property of a taxpayer (tax agent) to the taxpayer (tax agent), a tax authority takes an inventory of the restricted property in the presence of the taxpayer (tax agent) by drawing up a property inventory act in the form established by the authorized body.

If a taxpayer (tax agent) owns the property, the title to

which or transactions with respect to which are subject to state registration, or property subject to state registration, such property shall be entered into the inventory list in the first place.

When taking an inventory of the restricted property, it is necessary to indicate the book value, which is determined on the basis of the taxpayer’s (tax agent’s) accounting data, or market value in the property inventory act. Market value is a value stated in an appraisal report conducted in accordance with the legislation of the Republic of Kazakhstan on appraisal activity.

8. In the course of drawing up an act of inventory of restricted property, a taxpayer (tax agent) must produce original balance sheet, documents confirming the right of ownership of such property and (or) the right of its economic management or their notarized copies for the review of tax authority officials. Copies of the documents specified in this paragraph are attached to a restricted property inventory act.

A restricted property inventory act is drawn up in two copies and signed by a person who compiled it, and also by a taxpayer (tax agent) and (or) his/her/its official.

A taxpayer (tax agent) is obliged to keep the restricted property safe and intact, except for changes due to natural wear and tear and (or) natural loss under normal storage conditions, until restrictions are removed in accordance with the legislation of the Republic of Kazakhstan. In addition to the above, a taxpayer (tax agent) is liable for unlawful actions with respect to the said property in accordance with the laws of the Republic of Kazakhstan.

In case of failure to pay tax debts and sell restricted property through two auctions, a tax authority has the right to take an inventory of other property of a taxpayer (tax agent) by voiding the first inventory act and drawing up a new property inventory act taking into consideration the taxpayer’s (tax agent’s) personal account data on the amount of tax debts as of the date of the new inventory act.

9. A tax authority revokes a decision to impose restrictions on the disposal of property and voids a property inventory act drawn up pursuant to such a decision in the form established by the authorized body, in case of:

1) payment of tax debts by a taxpayer (tax agent) – within one business day from the payment of such debts;

2) issuance of a decision of the authorized body or a final and binding court judgment vacating an audit findings report in the part complained of - within one business day from the issuance of such a decision or a final and binding court judgment;

3) withdrawal by a taxpayer (tax agent) of his/her/its complaint about an audit findings report - within one business day from the withdrawal of such a complaint.

10. A tax authority sends to authorized state bodies a notification of termination of encumbrance of rights to property:

1) not indicated in an inventory act - within five business days from the property inventory act, attaching a copy of such an act;

2) with respect to which a decision to impose restrictions on the disposal was canceled in the cases provided for in paragraph 9 of this article - within five business days from the decision to cancel the decision to impose restrictions on the disposal of property, attaching a copy of such a decision;

3) sold by an authorized legal entity, also in settlement of arrears in customs payments, taxes and penalties – within five business days from the date of signing a purchase and sale agreement, attaching a copy of such an agreement.

11. In the cases specified in paragraphs 6 and 10 of this article, a tax authority shall forward relevant notifications to authorized state bodies in hard copy or in electronic form via a telecommunications network.

Footnote. Article 120 as amended by the Law of the Republic of Kazakhstan dated 02.04.2019 No. 241-VI (shall be enforced from 01.01.2019); dated December 10, 2020 No. 382-VI (enforcement Article 2).