Zhumageldy Sakenovich Yelyubayev, Doctor of Law,
President of the Kazakhstan Petroleum Lawyers Association (KPLA),
Deputy Chairman of the Management Board of the Kazakhstan Bar Association,
Former Judge of the RoK Supreme Court, Member of the International Council
of the RoK Supreme Court
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Scientific Practical Commentary
to Article 245 of the Criminal Code of the Republic of Kazakhstan
Article 245. Evasion by the Entities of Taxes and/or other Obligatory Payments to the Budget
1. Evasion by the entity of taxes and/or other obligatory payments to the budget by non-presentation of the return, when its filing is obligatory or introduction of knowingly false data on income and/or expenses, by concealment of other items of taxation and/or other obligatory payments, if this action is entailed non-payment of taxes and/or other obligatory payments on a large scale, -
Shall be punished by fine in the amount of up to two thousand monthly calculation indices or correctional works in the same amount, or restriction of liberty for the term of up to three years, or imprisonment for the same term, with deprivation of the right to occupy determined posts or to engage in a determined activity for the term of up to three years.
2. The same act committed:
1) with use of invoice without actual performance of works, rendering of services, shipment of goods;
2) by group of persons on previous concert, - shall be punished by fine in the amount of up to five thousand monthly calculation indices or correctional works in the same amount, or restriction of liberty for the term of up to five years, or imprisonment for the same term, with deprivation of the right to occupy determined posts or to engage in a determined activity for the term of up to three years
3. The actions provided by first or second parts of this Article, committed by criminal group or in special large amount, -
Shall be punished by fine in the amount three-time amount of outstanding payments to the budget or imprisonment for the term from five to eight years with deprivation of the right to occupy determined posts or to engage in a determined activity for the term of up to three years
Note. A person committing an act provided by this Article (except an act committed by criminal group), shall be released from criminal liability in case of voluntary payment of tax arears and/or other obligatory payments to the budget, and interest established by the legislation of the Republic of Kazakhstan.
COMMENTARY
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Pursuant to Article 35 of the Constitution of the Republic of Kazakhstan «payment of legally established taxes, fees and other obligatory payments shall be a duty and responsibility of everyone.»
I. The commented provision of the Criminal Code of the Republic of Kazakhstan (hereinafter RoK CC) stipulates criminal liability for «evasion by entities of taxes and/or other obligatory payments to the budget». Structurally this provision consists of three parts and a note. Each part of this provision contains a special type of a criminal offence, the commitment of which is subject to different types of punishment. The note to the commented article contains the grounds for relief from criminal liability.
The object of this crime is public relations in the sphere of financial interests of the state.
The objective aspect of crime is characterized by «omission» in the form of evasion by an individual of taxes and/or other obligatory payments to the budget by non-presentation of returns, when submission is obligatory or by «acts» in case of including into returns of knowingly distorted data on income and expenses, as well as concealment of objects of taxation.
Crime is considered to be committed from the moment of non-payment of taxes and/or other obligatory payments to the budget upon the expiration of the term of submission of a return or including in the return of knowingly false data or by concealment of the objects of taxation and other obligatory payments.
II. The structure of the disposition of part 1 of Article 245 of RoK CC is complicated and therefore to ensure better understanding of the essence of this provision and its correct interpretation, let us consider by parts the stipulated offences subject criminal liability. Thus, the disposition of this provision stipulates three types of possible criminal offences, which can be committed discretely and collectively:
1) evasion of taxes;
2) evasion of other obligatory payments to the budget;
3) evasion of taxes and other obligatory payments to the budget.
Pursuant to the disposition of the commented provision, the above offences should be committed:
1) By non-presentation of the return, when submission of the return is obligatory;
2) By including into the return knowingly false data on income and/or expenses;
3) By concealment of other objects of taxation and/or other obligatory payments.
Thus, the legislator included into the commented provision of RoK CC the exhaustive list of «omissions/actions» which can be recognized as criminal offences, as well as the exhaustive list of means of committing such actions. Both are not subject to broad interpretation.
For the purpose of uniform and correct understanding of the sense and meaning of the disposition of part 1 of Article 245 of RoK CC, the interpretation of some terms and definitions contained in the commented provision should be given.
Thus, the term «evasion of taxes and other obligatory payments» is understood as illegal intended evasion of taxes and other obligatory payments to the budget by individuals or legal entities.
The term «budget» is understood as a centralized monetary fund of the state, intended to financial provision of the implementation of its tasks and functions (clause 12 of Article 3 of the RoK Budget Code). The state budget, where taxes and other obligatory payments are transferred, is divided into the Republic and local (oblast budget, budget of the city of national status, budget of the capital, district budgets).
Types of «taxes» and «other obligatory payments to the budget» are provided in the RoK Tax Code (hereinafter RoK TC). For specific categories of taxpayers there can be stipulated «special tax regimes», i.e. a special procedure for settlements with the budget. An example can be certain major subsoil use contracts, executed in the Republic of Kazakhstan with strategic investors, containing such «special tax regimes». Criminal liability may also be imposed for evasion of taxes and other obligatory payments to the budget stipulated in such «special tax regimes» as provided in Article 245 of RoK CC.
The types of «returns» are stipulated in RoK TC, e.g. a corporate income return, an individual income return, a social tax return, a value added tax return, an excise tax return, an export rental tax return декларация по рентному налогу на экспорт etc. Submission of «returns» directly stipulated by RoK TC is obligatory for taxpayers.
The term «knowingly» is an adverb having meanings «consciously», «unconditionally» and «intentionally». Thus, a taxpayer, making calculation of taxes and other obligatory payments to the budget and distorting data, included in calculations, should do it «consciously, unconditionally, intentionally», i.e. a taxpayer should be «knowingly» aware of included distortions in calculations of income and expenses which are input data for returns. Thus, in order to charge an individual with criminal liability for committing offences stipulated in Article 245 of RoK CC, it is necessary to prove the existence of «express malice».
So, the objective aspect of crime is characterized by the form of intentional guilt, and only as «express malice».
There can be any motive of crime, but in general evasion of taxes and other obligatory payments to the budget is committed for personal gain.
The target of crime is gaining property (material) benefit.
However, the motive and target of this crime do not affect its classification.
The term «distortion of data on income and expenses», with respect to tax relations, means incorrect data recognition and presentation in the accounts, financial and other documents, which are the source for calculation of the taxable base, made in violation of the rules for maintaining accounting records and preparing accounting statements. Pursuant to the auditing standards, distortions of accounting records are divided: by nature of occurrence - into intentional and unintentional, by impact on final indicators - into material and immaterial. The revealed distortions should be documented in writing.
«Concealment of objects of taxation and/or other obligatory payments» shall mean failure to recognize (totally or partially) in accounting and tax records of the entity objects and other circumstances, the existence of which is treated by the legislation as the appearance of a taxpayer’s obligation to calculate and pay taxes. Concealment of objects of taxation can be reflected as inclusion in accounting and tax records of knowingly distorted data relating to these objects, as well as intentional submission to the tax authorities of unreliable accounting records of such objects. In this connection, it is assumed that concealment is difficult to reveal during the audit of a specific entity (the object is really concealed), and the very tax offence is revealed by comparing data obtained, for example, from other entities and banks through third party audits or wide use of current data. This conclusion can be based on the fact that with respect to the documents, business activities (deals, transactions, shipments, property etc.) are primary and therefore there must be an initial business fact which is consequently reflected in either tax or accounting records. At the same time for the appearance of liability to pay taxes significance is given not to the «paper» but a legal fact causing calculation and payment of taxes, i.e. an object of taxation. If facts exist but their respective records are not available, the formal aspect of concealment is present.
Thus, criminal liability for «evasion of taxes and/or other obligatory payments to the budget» arises only if it is committed «intentionally» and only by those «means» which are stipulated in the disposition of part 1 of Article 245 of RoK CC, and if this act resulted in non-payment of taxes and/or other obligatory payments in the «large amount».
In addition, «large amount» means the amount of payments to the budget exceeding twenty thousand monthly calculation indices (hereinafter MCI), which comprised in 2018 an amount of forty eight million one hundred thousand tenge (KZT48,100,000).
For offences stipulated in part 1 of Article 245 of RoK CC one of the following criminal sanctions can be imposed:
1) «fine» in the amount of up to two thousand MCI’s (in 2018 - KZT4,810,000);
2) «correctional work» and withholding from the earnings of the convicted individual in favor of the state the amount of up to two thousand MCI’s (in 2018 - KZT4,810,000);
3) «restriction of liberty» for the term of three years;
4) «imprisonment» for the term of three years.
It should be noted that when imposing principal criminal sanctions (fine, correctional work, restriction of liberty, imprisonment), stipulated in part 1 of Article 245 of RoK CC, the convicted individual is obligatorily subjected to additional criminal sanction in the form of «deprivation of the right to occupy determined posts or to engage in a determined activity»for the term of up to three years. This conclusion is based on the observation that the subordinate clause «with deprivation of the right to occupy determined posts or to engage in a determined activity» is separated from the previous text by a comma, and therefore its meaning and effect apply to the entire previous paragraph of the text, i.e. this additional sanction is obligatorily imposed with all types of principal sanctions stipulated in the commented provision (part 1 of Article 245 of RoK CC).
However, it can be suggested that the legislator assumed that this type of additional sanction is obligatory only with respect to such type of principal sanction as «imprisonment». If it is so, then the comma after the words «imprisonment for the same term» is redundant under the rules of the Russian grammar and punctuation. Given that in the text of sanctions stipulated in parts 1 and 2 of Article 245 of RoK CC the additional sanction is separated from the previous text by the comma, this commentary is based on the rules of the Russian grammar and punctuation. In addition, the attention is paid to the circumstance that the sanction of part 3 of Article 245 of RoK CC stipulates a similar additional punishment which is not separated from the previous text where two types of principal sanctions are specified.
However, the principal sanctions in part 3 of Article 245 of RoK CC in the Kazakh text are separated from the additional sanction by the comma as in parts 1 and 2 of Article 245 of RoK CC in the Russian text, which means a discrepancy between the Kazakh and Russian texts of the commented provision of RoK CC.
Based on the above, there is a need to have this provision interpreted by the legislator or explained by the RoK Supreme Court.
III. The disposition of part 2 of Article 245 of RoK CC stipulates criminal liability for the same offence as stated in part 1 of Article 245 of RoK CC (see the commentary in Section II. However, in order to charge with criminal liability under part 2 of Article 245 of RoK CC it is necessary to prove that «evasion of taxes and/or other obligatory payments to the budget» was committed:
1)«with use of invoice without actual performance of works, rendering of services, shipment of goods», i.e. with use of forged invoice;
2)«by group of persons on previous concert», i.e. the offence was committed by a group consisting of two or three people who coalesce and agree in advance to commit a crime jointly.
For the offence stipulated in part 2 of Article of 245 of RoK CC one or more of the following criminal sanctions can be imposed:
5) «fine» in the amount of up to five thousand MCI’s (in 2018 - KZT12,025,000);
6) «correctional work» and withholding from the earnings of the convicted individual in favor of the state the amount of up to five thousand MCI’s (in 2018 - KZT12,025,000);
7) «restriction of liberty» for the term of up to five years;
8) «imprisonment» for the term of up to five years.
In addition to the above types of principal criminal sanctions there is imposed a sanction in the form of «deprivation of the right to occupy determined posts or to engage in a determined activity for the term of up to three years» (see substantiation in Section II).
VI. The disposition of part 3 of Article 245 of RoK CC stipulates criminal liability for the same offence as stated in parts 1 and of Article 245 of RoK CC (see the commentary in Sections II and III). In order to charge with criminal liability under this commented provision it is necessary to prove that offences stipulated in part 1 and part 2 of Article 245 of RoK CC were committed:
1) By a «criminal group»; or
2) «in especially big amount».
For the offences stipulated in part 3 of Article of 245 of RoK CC one of the following criminal sanctions can be imposed:
1) «fine» in the amount of three-time outstanding payments to the budget (e.g. if the outstanding payment to the budget is KZT1,000,000, the amount of fine will comprise KZT3,000,000);
2) «imprisonment» for the term from five to eight years with «deprivation of the right to occupy determined posts or to engage in a determined activity for the term of up to three years». In this case the additional sanction in the form of «deprivation of the right to occupy determined posts or to engage in a determined activity for the term of up to three years» is imposed only with the principal sanction in the form of «imprisonment», as it is not separated by the comma from the principal sanctions, as it is done in sanctions of parts 1 and 2 of Article 245 of RoK CC (see substantiation hereto in Section II).
V. «Note» in the commented provision of RoK CC is especially important as it stipulates grounds for relief from criminal liability. Thus, pursuant to «Note» to Article 245 of RoK CC, a person committing an offence provided by the commented provision (except for an offence committed by a «criminal group»), shall be released from criminal liability in case of «voluntary payment of tax arears and/or other obligatory payments to the budget, and penalty established by the legislation of the Republic of Kazakhstan».
«Voluntary payment of tax arears and/or other obligatory payments to the budget, and penalty» means committing by a taxpayer acts voluntarily and without coercion. However, the legislative provision contained in the «Note» that «voluntary payment of tax arears and/or other obligatory payments to the budget, and penalty» is not related to compliance with the general procedure of voluntary payment of current taxes and other obligatory payments to the budget under the rules contained in RoK TC, when there is no dispute, no arrears ascertained, no claims of the tax authorities.
There should be the following circumstances to make the provision stated in the commented «Note» effective:
1) The fact of non-presentation of a return, when submission is obligatory, and the fact of tax arrears and other outstanding payments to the budget is supported by the relevant documents (e.g. by a tax or audit report, by a notification from the tax authorities);
2) Actions of a person failing to submit an obligatory return and/or pay taxes and other obligatory payments fall under the elements of offences stipulated in Article 245 of RoK CC (except for the offences committed by a «criminal group»);
3) A person failing to submit an obligatory return and/or pay taxes and other obligatory payments evades submission a return and payment of tax arrears and other obligatory payments.
It should be noted here that actions of a taxpayer appealing the claims of the tax authority (a tax audit report, a tax notification of outstanding payments) at the higher tax authority or court, even in case of refusal to satisfy a taxpayer’s appeals cannot be qualified as a criminal offence stipulated in Article 245 of RoK CC, if there is no proof that this person «knowingly», i.e. consciously, unconditionally and intentionally included into a return distorted data on income and expenses and concealed objects of taxation and other obligatory payments.
VI. The committer of this crime is a sane individual who is obliged to submit income and expense returns to the agencies of the state tax service of the Republic of Kazakhstan.
This commentary to Article 245 of RoK CC has been prepared for the purpose of establishing a uniform investigative and judicial practice aimed at excluding illegal criminal prosecution of individuals.
