Tax Amnesty Program Launched on 1 January 2019

With effect from 1 January 2019, Kazakhstan Law Concerning the Implementation of the Kazakhstan Code on Taxes and Other Obligatory Payments to the Budget (Tax Code)
No. 121-VI of 25 December 2017 was amended by adding Article 57-1 reading as follows [please see Article 55.1(4) of Kazakhstan Law On the Amendment of Certain Legislative Acts of the Republic of Kazakhstan Concerning the Administrative and Territorial Structure of the Republic of Kazakhstan and Anti-Shadow Economy Measures No. 210-VI of 28 December 2018]:

“Article 57-1. To establish that, subject to the payment by a taxpayer of tax arrears accrued on the taxpayer’s account as at 1 October 2018 within the period from 1 October 2018 through 31 December 2019, the following amounts shall not be deemed as tax liabilities and shall not be remitted to the budget, but shall be written off in the manner prescribed by the competent authority:

1) the fine accrued on the taxpayer’s account as at 1 October 2018 in relation to the specified tax arrears for the period from 1 October 2018 through the date of payment, including the date of actual payment; where the written off fine shall relate to that particular tax or obligatory payment for which the arrears have been paid;

2) the penalty imposed for a tax offence under the Kazakhstan Code of Administrative Offences accrued on the taxpayer’s account as at 1 October 2018 in relation to the tax or obligatory payment for which the arrears have been paid; the fines and penalties write-off provided by this Article shall apply to advanced discharge of liabilities in relation to those taxes and other obligatory payments to the budget the due date for which, as at 1 October 2018, was changed in accordance with Kazakhstan tax legislation and Kazakhstan rehabilitation and bankruptcy legislation.

The provisions of this Article shall not apply to those taxpayers who:

1) are subject to monitoring as major taxpayers;

2) as at 1 October 2018, were engaged in one or more of the following activities:

·         subsoil use operations, except the subsoil users who are recognised as such due to their right to produce underground waters and therapeutic muds;

·         manufacturing of excisable goods;

3) are natural persons, save for the tax arrears resulting from business, private notary, private court bailiff, attorney or professional mediator activities.”.

Therefore, any taxpayer (save for the exceptions) who discharges their tax arrears (principal outstanding taxes and other obligatory payments to the budget) accrued on their account as at 1 October 2018 before 31 December 2019 shall be exempt from the payment of:

(1) the fine accrued on the aforementioned arrears for the entire period through the date of the actual payment of the arrears; and

(2) the administrative penalty imposed for the tax offence recorded as at 1 October 2018 in relation to the aforementioned arrears on the taxpayer’s account.

Noteworthy is that the tax amnesty program covers not only small-size and mid-size businesses but also large-size businesses, provided that they are not subject to monitoring as major taxpayers, are not subsoil users and do not manufacture excisable goods.