The procedure for conducting tax audits

1. Basic principles of tax audits

Unlike the previous regime, scheduled (regular) tax audits have been canceled. The tax authorities no longer have the right to schedule inspections according to pre-approved schedules. An audit can be initiated only on the basis of specific conditions specified in the Tax Code of the Republic of Kazakhstan. 

In addition, attention is drawn to the principle of non-suspension of the taxpayer's activities during the audit: its conduct should not interfere with normal business activities, except in cases provided for by law. 

2. Grounds for the appointment of a tax audit

According to the new approach, verification can be assigned only in the following cases:: 

1. At the request (initiative) of the taxpayer himself or the tax agent. The taxpayer has the right to request an audit at his own request, for example, to confirm the correctness of calculations or to resolve controversial issues. 

2. If there are grounds provided for by the Criminal Procedure Code of the Republic of Kazakhstan. This may be a check in the framework of a criminal case on the facts of alleged tax crimes. 

3. Upon expiration of certain contracts, for example, subsurface use agreements and other agreements for which the legislation provides for verification upon expiration. 

4. According to the decision of the tax authority, which is made on the basis of an analysis of risks and identified violations of tax legislation. Such a decision is made in accordance with the approved rules and recorded in the prescribed form. 

3. Risk-based approach

The new Tax Code of the Republic of Kazakhstan introduces an assessment of the tax burden as one of the criteria for making a decision on an audit. If the taxpayer's tax burden ratio is 90% or more of the average industry level in the region.

4. Forms and types of tax audits

Despite the cancellation of scheduled inspections, the legislation retains several types of control procedures adapted to the new conditions.: 

• Comprehensive tax audit — covers the fulfillment of tax obligations for all types of taxes and mandatory payments. 

• A thematic audit is aimed at verifying certain aspects of taxation or certain types of taxes. 

• Counter check — is carried out in relation to the taxpayer's counterparties as part of an already scheduled check. 

• A time—based survey is a form of control measure aimed at analyzing the actual activities of the taxpayer on the spot. 

The period to be reviewed should not exceed the limitation period established by the Tax Code, and may also not be covered by previously conducted audits. 

5. The procedure for the appointment and conduct of a tax audit

The verification procedure includes several key steps:

Making a decision on verification

The tax authorities decide on an audit only after a preliminary analysis of the information (tax reports, data from other government agencies, information about possible violations). This confirms that verification is considered as an event to respond to specific risks, rather than as a formal procedure. 

Conducting verification

Within the prescribed period, tax authorities' specialists collect and analyze documents, information and explanations from the taxpayer. The terms of the audit are determined separately for different categories of taxpayers.