Tax inspection and support during tax inspection

Court practice in tax disputes
Unfortunately, the Kazakhstan practice shows that the court decisions on tax related disputes are mostly made in favor of the State, and rarely in favor of the taxpayers.
Proactive approach
Most companies prefer to apply the proactive (ahead of the time) approach and not litigate with the state.
This approach allows companies to reduce the risks of additional taxes at the initial stage, and also allows saving the company's resources for appealing the tax inspection results.
The inspectors may ignore the content and meaning of the documents, may be lazy to understand what the transactions were, for example, how to calculate the increase or income, whether there was the assignment of rights or not, and other legal aspects that affect the tax obligations. The inspectors may forget that there is an accounting tax policy in the Company, which specifies how certain operations are reflected.
Recommendations
Below are our small recommendations for reducing risks.
1. Checking whether the company is listed in a tax inspection plan
Every six months, the tax authorities publish a list of companies that will be subject to a tax inspection.
If the company is on such list, then company should prepare for the inspection in advance. The taxpayer is allowed to make changes to the tax reporting until the receipt of the tax inspection order.
Usually during the tax inspection, the inspectors can request documents, explanations, and ask questions. As our practice shows, it is better to have explanations, ready answers, documents, etc. in advance. This reduces the risks even at the initial stage than the court appeal.
2. Conducting planned work for reducing the risk level
According to the Tax Code, the tax authorities assign each company a certain level of risk. For example, a high level of risk or low level of risk. If the risk level is high, it is recommended to take a number of measures to reduce the level of risk in the tax authorities’ system. This is not a difficult job because it requires an approach and consistency. Reducing the risk in system allows avoiding the tax inspections altogether.
3. Receiving an opinion on likely problem areas (sensitive issues) in advance
As our practice shows, there are many issues that are not fully regulated and detailed by laws. This allows tax authorities to interpret different transactions according to their beliefs, while ignoring business practices or legal aspects of the agreements. It is better to get answers in advance for such disputed issues and build a defense for the future.
4. Selective Tax Check
Lawyers specializing in tax and fiscal practice, can check any tax aspects at the Company's choice, for example VAT and corporate income tax for non-residents for transactions over $10,000 for 2018. Then the lawyers analyze these areas and give their opinion, designate risks and provide action plan to reduce risks.