ORDER OF THE TAX COMMITTEE OF THE MINISTRY OF FINANCE OF THE REPUBLIC OF KAZAKHSTAN

of December 25, 2006 No. 654

About approval of Methodical recommendations about conducting tax audits of taxpayers

List of amending documents

For the purpose of improvement of tax administration when conducting tax audits, and also improvement of quality of conducting tax audits I ORDER:

1. Approve the enclosed Methodical recommendations about conducting tax audits of taxpayers (further - Methodical recommendations).

2. To chairmen of the Tax Committees on areas, the cities of Almaty, Astana, in the territories of special economic zones, MRNK No. 1 to take measures for carrying out technical study for studying of Methodical recommendations among workers, entrusted divisions.

3. To management of organizational and financial providing the Tax Committee of the Ministry of Finance of the Republic of Kazakhstan (Smagulova G. A.) bring this order to the attention of chiefs of managements and specialized department of the Tax Committee of the Ministry of Finance of the Republic of Kazakhstan (further - MF RK Oil Company), the Tax Committees specified in Item 2 of this order.

4. To confer responsibility for execution of this order on chiefs of managements and specialized department of MF RK Oil Company, heads of tax authorities.

5. To impose control of execution of this order on the vice-chairman of MF RK Oil Company Kanatov S. S.

6. This order becomes effective since January 1, 2007.

 

Approved by the order of the Tax Committee of the Ministry of Finance of the Republic of Kazakhstan of December 25, 2006, No. 654

Methodical recommendations about conducting tax audits of taxpayers

These Methodical recommendations establish general procedure for conducting tax audits of taxpayers by bodies of Tax Service concerning execution of the tax legislation by them.

Chapter 1. General provisions

1. When conducting tax audits officials of bodies of Tax Service are guided by the Code of the Republic of Kazakhstan "About taxes and other obligatory payments in the budget" (Tax code), legislative and other regulatory legal acts of the Republic of Kazakhstan, and also these Methodical recommendations.

2. Concepts and terms of the tax legislation used in these Methodical recommendations are used in the values determined in the Tax code and in these Methodical recommendations.

3. The basic concepts, abbreviations, reducings applied in these Methodical recommendations:

GFSS - State Social Insurance Fund;

INIS - the integrated taxation information system;

IS EKNA - the information system "Electronic Control of Tax Audit";

КПСиСУ - Committee on legal statistics and special accounting of the Prosecutor General's Office of the Republic of Kazakhstan;

Administrative Code - The code of the Republic of Kazakhstan about administrative offenses;

KKM with FP - cash register with fiscal memory;

MRP - monthly settlement indicator;

MF RK Oil Company - Tax Committee of the Ministry of Finance of the Republic of Kazakhstan.

tax audit - complex research of source accounting and other accounting documents of the taxpayer, bookkeeping registers, accounting records and tax statements, economic and other agreements, acts of accomplishment of contractual commitments, internal orders, orders, protocols, any other documents concerning questions of execution of the tax liabilities; survey (inspection) of production, storage, trade and other facilities and the territories, on carrying out inventory count of the property belonging to the taxpayer, and also other actions of bodies of Tax Service (their officials) performed in the location of the taxpayer (the place of its activities, the location of the taxation object) and in other places out of the location of bodies of Tax Service for the purpose of check of execution by the taxpayer of its tax liability;

The VAT - the value added tax;

NPF - the accumulation pension fund;

OPV - compulsory pension contributions;

Procedure for the choice on check - the Procedure for the choice of the taxpayers who are subject to tax audit, No. 462 "Procedure for the choice of the taxpayers who are subject to tax audit" approved by the order of the Chairman of the Tax Committee of the Ministry of Finance of the Republic of Kazakhstan of September 25, 2006;

Rules of time inspections - the Rules of carrying out time inspections approved by the order of the Minister of state revenues of the Republic of Kazakhstan of April 18, 2002 No. 445 "Rules of carrying out time inspections";

law enforcement agencies - bodies of financial police, internal affairs, homeland security, customs authorities and bodies of prosecutor's office;

RNN - registration taxpayer number;

Joint order - The joint order of the Chairman of the Tax Committee of the Ministry of Finance of the Republic of Kazakhstan of July 11, 2005 No. 311 and the First Deputy Chairman of the Agency of the Republic of Kazakhstan on fight against economic and corruption crime (financial police) of July 8, 2005 No. 152 "About approval of the Order of interaction of bodies of Tax Service and financial police of the Republic of Kazakhstan for identification, the prevention, suppression of offenses and crimes in the field of economic activity";

UK - Criminal Code of Kazakhstan;

UKM - accounting and control brand;

Code of Criminal Procedure - Code of penal procedure of the Republic of Kazakhstan;

4. The purpose of tax audit is control of observance by the taxpayer of the legislation of the Republic of Kazakhstan, including in the field of the taxation, provision of pensions and social insurance.

5. The task of tax audit consists in establishment of compliance to requirements of the tax legislation of execution by the checked taxpayer of the tax liability and documentary confirmation by bodies of Tax Service of the facts elicited tax offenses and their reflection in the act of tax audit.

6. Tax audits are performed only by bodies of Tax Service. Nobody except bodies of Tax Service has the right to carry out tax audits.

7. Implementation of tax audits of taxpayers by the employees of bodies of Tax Service who are close relatives (parents, spouses, brothers, sisters, children) or cousins-in-laws (brothers, sisters, parents and children of spouses) of officials of the checked taxpayer is forbidden. Also employees of bodies of Tax Service, personally, directly or indirectly interested in results of tax audit are not allowed to tax audit of taxpayers. In case of such cases the employee of bodies of Tax Service shall inform the direct head before check of their availability. Responsibility for non-execution of this provision is conferred on the employee of body of Tax Service according to the legislation of the Republic of Kazakhstan.

8. Employees of bodies of Tax Service shall respect the rules of the Code of honor approved by the Presidential decree of May 3, 2005 No. 1567, and regulations of the Code of professional ethics of the employee of bodies of Tax Service of the Republic of Kazakhstan approved by the order of the Chairman of the Tax Committee of the Ministry of Finance of the Republic of Kazakhstan of September 30, 2006 No. 474, and also correctly and shows consideration for taxpayers and their representatives, to impose on the taxpayer requirements based on the tax legislation and other regulatory legal acts.

9. Employees of bodies of Tax Service shall keep the secrecy of information about the taxpayers received during tax audit and have the right to provide this information according to the procedure, established by the legislation of the Republic of Kazakhstan, only to the following persons:

1) to other employees of Tax Service in the course and for the purpose of execution of the service duties by them;

2) to law enforcement agencies for the purpose of prosecution under the law of persons committing tax offenses and crimes;

3) to courts during consideration of the case about determination of the tax liabilities of the taxpayer or responsibility for tax offenses and crimes;

4) to authorized state body on forming of forecast indicators of the government budget;

5) to tax or law enforcement agencies of other countries according to international treaties.

10. Conducting tax audits shall not stop activities of the taxpayer, except as specified, established by legal acts of the Republic of Kazakhstan.

11. Bodies of Tax Service have the right to check structural divisions of the legal entity irrespective of conducting tax audit of the most legal entity if such structural division is independent payer of one or several taxes and other obligatory payments in the budget.

Chapter 2. Types of tax audits

12. Tax audits are subdivided into the following types:

1) documentary check;

2) raid check;

3) time inspection.

13. Documentary checks are subdivided into the following types:

1) complex check - check of execution of the tax liability on all types of tax and other obligatory payments in the budget;

In articles 60-64 of the Tax Code types of tax and other obligatory payments in the budget are specifically specified. In this type of check the question of completeness and timeliness of deduction and (or) transfer of OPV does not enter into NPF and social contributions to GFSS;

2) thematic check - check:

execution of the tax liability on separate type of tax and other obligatory payment in the budget;

completeness and timeliness of deduction and (or) transfer of OPV in NPF and social contributions to GFSS;

execution by the banks and organizations performing separate types of banking activities, the obligations established by the Tax code;

concerning the state control in case of use of the transfer prices;

concerning state regulation of production and turnover of separate types of excise goods;

concerning determination of settlement between the taxpayer and his debtors;

3) counter check - the inspection which is carried out concerning the third parties if when conducting tax audits the tax authority has need for receipt of the additional information about the correct reflection in tax accounting of the performed operations by the taxpayer connected with specified persons;

4) additional check - the inspection which is carried out based on the decision of the body of Tax Service considering the claim of the taxpayer by results of tax audit, on the questions stated in the claim of the taxpayer, or considering the application of the nonresident for de novo review of question concerning legitimacy of application of provisions of the international treaty on avoidance of double taxation.

14. Raid inspection is carried out by tax authorities concerning certain taxpayers concerning observance of the following requirements of the legislation of the Republic of Kazakhstan by them:

1) statements of taxpayers on registration accounting in tax authorities;

2) correctness of application of cash registers with fiscal memory;

3) availability of the one-time coupon and other allowing documents;

4) observance of rules of licensing and conditions of production, storage and realization of separate types of the excise goods and types of activity which are in competence of bodies of Tax Service.

15. Time examinations are conducted by tax authorities for the purpose of the establishment of the actual income of the taxpayer and actual costs connected with income acquisition. Time examinations are conducted according to Rules of time inspections

Chapter 3. Frequency of conducting tax audits

16. Tax audits are carried out with the following frequency:

1) complex - is not more often than once a year;

2) thematic - is not more often than once a half-year on the same type of tax and other obligatory payment in the budget, concerning state regulation of production and turnover of separate types of excise goods, and also concerning execution by the banks and organizations performing separate types of banking activities, the obligations established by the Tax code and the state control in case of use of the transfer prices.

At the same time thematic tax audits of small business entities are carried out not more often than once a year. According to the Law of the Republic of Kazakhstan of March 31, 2006 "About private entrepreneurship" small business entities are individual entrepreneurs without formation of legal entity with annual average number of workers no more than fifty people and the legal entities performing private entrepreneurship with annual average number of workers no more than fifty people and annual average asset cost in year not over the sixty-thousandfold MRP established by the law on the republican budget for the corresponding financial year.

17. The restrictions stated above do not extend to the following cases:

1) when conducting the documentary checks performed in connection with reorganization or liquidation of the legal entity and the termination of activities of the individual entrepreneur and also in case of removal from VAT accounting based on the statement of the taxpayer. At the same time the check specified in this subitem shall be begun no later than thirty calendar days after receipt of the statement of the taxpayer;

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