Can a taxpayer in Kazakhstan challenge the decision of the tax authorities?
- Taxpayer's right to a hearing
- New requirements for the evidence base
- Write to our lawyer to find out the details
After the introduction of the APPC of the Republic of Kazakhstan, already in the first half of 2022, about 55% of tax disputes were resolved in favor of taxpayers. This is an impressive result, especially if you remember that before the introduction of the APPC, this figure was only 15%.
We are witnessing an increase in the number of court decisions in which the courts of administrative justice consider tax disputes in favor of taxpayers, based on the violation of the fundamental principles of the APPC by the state revenue authorities.
The most common grounds for such decisions when appealing against notifications based on the results of in-house audits, tax audits and instructions are non-compliance by the tax authorities with the principles of justice, protection of the right to trust, priority of rights and legality.
The courts of administrative justice attach particular importance to the observance of these principles and actively apply the "Principle of the Active Role of the Court", which implies a thorough examination of the arguments of the parties, the request for additional information, assistance to taxpayers in drawing up claims and pointing out shortcomings, as well as a preliminary opinion on the case. Thanks to the introduction of this principle, the situation in tax disputes is balanced. Initially, the confrontation between the taxpayer and the state body may seem unequal, but the principles of the APPC are aimed at creating equal conditions for both parties.
As we already know from the material, the APPC distinguishes 4 types of claims: a claim for challenging, a claim for enforcement, a claim for actions and a claim for recognition.
- The main type of claim that is used in tax disputes is a claim to challenging, for example, if you are not satisfied with the result of a tax audit, you, expressing your legal disagreement, file a lawsuit to challenge its results. Other types of claims are also applicable to tax disputes, but only in other categories.
- For example, a claim for enforcement is applicable if the tax authorities are "in no hurry" to refund VAT to the taxpayer.
- A claim for actions retains its classic application and is also applicable in cases where the tax authority does not issue a certain act that it should have issued.
- Taxpayers often resort to a claim for recognition in cases where it is necessary to recognize the existence of a tax benefit.
It is easy to get confused in these claims, since the construction is really new and taxpayers do not always determine the claim correctly.
Thus, taxpayers often confuse claims for recognition with claims for challenge. For example, a taxpayer does not agree with the results of a tax audit, and instead of a claim to challenge the results of a tax audit, he files a claim to recognize the results of a tax audit as illegal.
The situation is similar with claims for coercion and actions for actions.
However, as we know, within the framework of the APPC, there is a principle of "active role of the court", which is widely used in tax disputes. In the above-described cases, the Judges support the plaintiffs-taxpayers and point out to them the mistakes in choosing a claim.
Taxpayer's right to a hearing
Meanwhile, many disputes with the tax authorities are resolved in a pre-trial manner thanks to the taxpayer's right to a hearing.
- The right to a hearing is a key procedural right that provides the parties to the case with the opportunity to express their opinions, present evidence and arguments regarding the preliminary decision in an administrative case.
The taxpayer's right to a pre-trial hearing greatly simplifies the process of resolving disputes and contributes to a more constructive interaction between taxpayers and tax authorities. This procedure allows the parties to share their opinions and evidence, leading to fairer and more informed decisions.
The right to a hearing is exercised by videoconferencing or any other means of communication.
After receiving a preliminary decision on an administrative case, the taxpayer has 2 working days to provide or express his opinion on it. However, this procedure does not apply in all cases.
The hearing procedure shall not be carried out in the following cases:
- In case of intermediate acts-actions within the framework of a tax audit;
- When appointing tax audits at the initiative of the taxpayer himself;
- Upon delivery of a preliminary tax audit report if the amount of additional charge exceeds 20,000 MCI (Monthly calculation index);
- At the request of the taxpayer to refuse to conduct the hearing procedure.
The hearing procedure is often carried out in the following cases:
- In case of non-confirmation of the amounts of CIT (Corporate Income Tax), VAT;
- When considering complaints about the actions/inaction of tax authorities;
- Upon delivery of a preliminary tax audit report if the amount of additional charge does not exceed 20,000 MCI.
This list of examples is not exhaustive.
New requirements for the evidence base
It is also important to note the innovation of the APPCin the requirements for the evidence base on the part of the administrative body. Now the defendant in administrative proceedings can rely only on the grounds specified in the administrative act. For example, if the tax authority did not provide justification for the unlawfulness of the taxpayer's actions in the audit report, it will not be able to use new evidence in court.
Taking into account the existing judicial practice and the active application of the principles of the APPC, taxpayers should pay special attention to compliance with these principles when applying to the court, since they are mandatory for the tax authorities.
For both parties, both taxpayers and tax authorities, it is important that tax disputes are resolved fairly and objectively. The principles of the APPCplay a key role in achieving this goal.
Author: Alibek Slan
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