Pilot project on tax due diligence will be launched in Kazakhstan in 2024

From January 01, 2024 in Kazakhstan will operate a project that will help determine the level of tax due diligence taxpayers-buyers in checking the reliability and integrity of their suppliers.

The project will last a year - until January 01, 2025 and is being implemented to test in the tax administration of Kazakhstan application of data from the information system Register of Business Partners (IS RBP).

The participants of the pilot project are directly taxpayers-buyers, state revenue authorities and the National Chamber of Entrepreneurs of the RK "Atameken" (NCE).

The essence of the project: on the basis of data from the IS RBP taxpayers-suppliers will be divided into "green" and "red" zones.

Before making a transaction for the purchase of goods, works and services, the taxpayer-purchaser participating in the project is obliged to check the taxpayer-supplier for reliability.

Conclusion by a taxpayer-buyer of a transaction with a taxpayer-supplier, for which a report on due tax diligence has been received and which is in the "green" zone is considered to have been made with due tax diligence.

The conclusion by a taxpayer-supplier of a transaction with a taxpayer-supplier in respect of which a due diligence report has been received and which is in the "red" zone indicates increased tax risks.

Rights and obligations of project participants

The taxpayer-purchaser has the right to:

  • Exercise due tax diligence through a request to the IS RBP in accordance with the right provided by subparagraph (8) of Article 13 of the Tax Code to obtain information on the reliability and good faith of the counterparty;
  • provide a report on the tax due diligence performed;
  • receive explanations on the issues of these Rules;
  • provide information on the presence or absence of facts of involvement of third parties by the taxpayer-supplier for delivery (production) of goods, performance of works, rendering of services.

State revenue authorities shall have the right to obtain from the taxpayer-purchaser information on the manifestation of due tax diligence.

The state revenue authority is obliged to

  • take into account the fact of due tax diligence during desk control and tax audits;
  • to assign at least 4 positive points in the risk management system for due tax diligence;
  • to receive information on tax due diligence in the course of tax audits;
  • provide explanations to taxpayers on the application of the Rules;
  • take into account additional information or documentation provided by the taxpayer-purchaser to confirm the fact of delivery of goods, performance of work and rendering of services.

TPP provides

  • functioning of the IS RBP service with up-to-date information for registration of taxpayers-purchasers;
  • weekly placement and storage of information about requests and responses on the server of IS RBP.

What actions will be performed by the participants of the project for its realization

A taxpayer-buyer should:

  • register in the service of IS RBP to check the reliability and integrity of the taxpayer-supplier;
  • receive a report on tax due diligence by means of a request in the IS RBP not earlier than 10 working days before the date of the transaction, and for long-term transactions once a quarter until the signing of the act of completed work (including interim).

If the conclusion of a contract is preceded by tender or competition procedures, due diligence shall be performed not earlier than 10 business days before the results of the tender or competition are summarized.

  • Ensure that the report on tax due diligence is kept for the period of limitation provided for by the Tax Code.

State revenue authorities, upon receiving a tax due diligence report from a recipient taxpayer, must:

  • assign at least 4 positive points in the risk management system;
  • reflect the fact of due tax diligence in the act of tax audit;
  • take into account as one of the circumstances of disagreement of the person who provided an explanation to the notification of cameral control;
  • not to send to the judicial authorities claims for invalidation of transactions in respect of suppliers from the "green" zone.

It is expected that the pilot project will receive official approval, after preliminary study of the material, and will increase the level of reliability and integrity of the taxpayer.

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