Kazakhstan: Prime Minister Issues Two-Week Deadline for Tax Return Revisions

Kazakhstan's Prime Minister Olzhas Bektenov has instructed entrepreneurs to submit revised tax returns and pay fair amounts of taxes within two weeks, Orda.kz reports.

The government held a working meeting on tax and budget reform matters and strengthened control over tax revenues.

Finance Minister Madi Takiyev reported that many large companies and well-known brands use tax optimization schemes to pay minimal amounts to the budget.

Common methods include dividing a business into several legal entities, fictitious losses, and transferring employees to the status of individual entrepreneurs.

Of the 2.3 million taxpayers, only 8%, or 137 thousand, are VAT payers. In general, 81% of the total number of entities operate in a special tax regime using a simplified declaration, while 85% of them indicate income of up to 15 million tenge. We analyzed the mutual settlements of entities using special tax regimes with companies operating under the general regime. Mutual settlements between such regimes have doubled over the past year - from five to 10 trillion tenge. At the same time, out of a total turnover of 16 trillion tenge under special tax regimes, mutual settlements with the general regime amount to 10 trillion tenge. That is, while earning hundreds of billions, taxpayers pay meager taxes, Takiyev reported.

The state now wants to:

• Introduce a legislative criterion for business fragmentation
  
• Implement the principle of the predominance of form over substance in tax disputes
  
• Implement control methods
  
• Limit the types of activities for individual entrepreneurs

Prime Minister Olzhas Bektenov agreed with Takiyev that large business people are behaving in bad faith and mentioned the construction companies BI Group and BAZIS:

With billion-dollar turnover, they pay amounts to the budget that are absolutely not in line with their profits. We have a full list of such large companies. There are also large, well-known construction companies, such as BI Group, BAZIS and many others. Well-known and popular restaurants, fitness clubs and various companies operating in other sectors of the economy.

He warned entrepreneurs that "today or tomorrow they will receive notifications from tax authorities about the need to pay additional taxes."

I ask everyone to submit additional tax returns to the tax authorities within two weeks and pay fair amounts of taxes. The conversation will be tough, but we are ready for dialogue if business is ready to behave fairly towards the state,  Bektenov added.

If businesses fail to comply with the requirements, the authorities are ready to take strict measures, "including fiscal and law enforcement instruments."

Original Author: Zarina Fayzulina