Are mass account checks by the tax authorities legal? An expert's analysis.
The Kazakhstan State Revenue Committee (SRC) has sent notifications to 594 bloggers regarding underreported income, but the legality of these audits remains questionable. Surprisingly for many, the SRC is investigating not the year 2024, but the earnings of influencers from 2022-2023. According to tax expert Aydar Masatbaev, it is essential to consider the deadlines established by legislation in such audits, as reported by inbusiness.kz.
According to Article 114 of the Tax Code, notifications must be issued within 10 working days after violations are identified.
"If the tax authority cannot confirm when it precisely learned of the violation, then such a notification is subject to cancellation. According to Article 114 of the Tax Code, if the state fails to meet the allotted time, such notifications are considered overdue," the tax expert explained.
The question of the legality of the received notifications remains open. The expert noted that if the data on tax violations by bloggers was stored by the tax authorities and is now being used to create a precedent, that is already a contentious point.
"If tax authorities obtained this information relatively recently, based on new data, then they are acting legally. But if this information was kept somewhere and was decided to be used as some sort of trump card, then the answer is no. Because there are clear deadlines when you must issue a notification," he emphasized.
How did tax authorities obtain information about bloggers' accounts?
By law, banks provide tax authorities with data on private accounts only concerning specific categories of citizens. These include individuals holding public office, their spouses, and those required to declare income according to election, anti-corruption, banking, and securities laws.
"Bloggers are not included in this list. Even individual entrepreneurs do not fall under it," Masatbaev emphasizes.
Order No. 323 of the Ministry of Finance sets another criterion — banks transmit information to tax authorities if an account receives payments from 100 or more different senders within three months. However, even in this case, the SRC must send requests to banks at the beginning of the following year and receive responses by mid-February. This means that information for 2022-2023 should have already been processed.
"Why are notifications being issued only now? Notifications, according to Article 114, must be issued within 10 working days. What are you waiting for? Or I assume they collected this request untimely. The timelines and groups do not match — that is what confuses me," the expert points out.
What types of income are taxed?
The main argument from tax authorities is that bloggers receive entrepreneurial income and are obliged to pay taxes. However, according to Masatbaev, not all monetary inflows are considered income.
"Gifts and inheritances are not taxed in Kazakhstan. If someone transferred money to a blogger as a gift (donation) — that is not income. But if they received payment for advertising or a performance — that is entrepreneurial income, from which taxes must be paid," he explained.
There are two ways for bloggers to declare their income:
- Through individual entrepreneurship (at a minimum) — if the income is received from Kazakhstani companies (for example, for advertising or corporate events).
- As foreign income — if the blogger earns through a YouTube channel or other foreign platforms. In this case, it is not necessary to register as an individual entrepreneur; one can simply declare income from monetization to a foreign audience and pay a 10% tax.
Masatbaev reminds that notifications are not accusatory or final decisions. If bloggers disagree with the tax authority, they have two options for defense:
- Challenge the notification itself if the SRC obtained the information illegally or missed the deadlines for its use. If it can be proven that Order No. 323 does not apply to bloggers, that will also be grounds for canceling the notification.
- Submit an explanation and, in case of disagreement with it from the tax authorities, wait for a tax audit and then contest the claims within that framework. This is a more complex process, as the SRC will have to prove that the transfers were indeed payment for services and not, for example, gifts or personal transfers.
"Given the successes of the ongoing reform of administrative justice, taxpayers now have better chances than ever for a fair and just court. A separate Administrative Procedural Code has been adopted for disputes with the state. I am pleased not only with its text but also with the administration of justice. Judges are already making successful strides toward fundamental reforms in justice administration. The statistics on satisfied claims from taxpayers now hover around 60-70%. This is a breakthrough, nothing like what it was seven years ago," Masatbaev notes.
According to the expert, pressure on the self-employed and influencers in Kazakhstan will only increase. The state is seeking additional sources of revenue, and tax control over online businesses will inevitably tighten.
"In the context of a budget deficit, tax authorities will try new control schemes. The state will seek any means to replenish the budget. And of course, since universal declaration is being introduced for us, this indicates that we must account for something. I believe that this administrative control will only intensify. This is far from the last move from the tax authorities in this chess game. I think there will be other moments that will test the tax security of our taxpayers," Masatbaev concludes.
Thus, bloggers who have come under the SRC's scrutiny should carefully examine the legal grounds for the claims and, if necessary, defend their position in court.
By the way, at the beginning of February, in response to our inquiry, the SRC stated that in 2024, tax revenues from Kazakhstani bloggers increased to 3.2 billion tenge, while the previous year they amounted to 2 billion tenge. It was also reported that following last year's desk audit, 37 influencers were found to have underreported their income by 630.1 million tenge. The SRC did not disclose the names of the violators, but it is known that they all received notifications and settled their debts.