Execution of notifications for IIT and ST

Individual income tax (IIT) and social tax (ST) are mandatory payments that employers and individual entrepreneurs face regularly.

The state revenue authorities continuously study and analyze taxpayer-submitted reports. If deviations are detected, they provide an opportunity to correct the violations voluntarily by sending notifications or desk control notices.

The most common violations are:

• Based on the tax reporting data, income from entrepreneurial activity has been received, or based on other data sources, it's assumed there are employees. However, the accrued income of these employees has not been declared. This leads to an underestimation of Individual Income Tax (IIT) and Social Tax (ST);
• When a taxpayer makes an arithmetic error while completing their IIT and ST declarations, it leads to an underestimation of the tax amount owed to the state budget;
• The amounts of income paid in the current tax period were underestimated because a taxpayer's debts from previous tax periods were not reflected.

According to Paragraph 2 of Article 96 of the Tax Code of the Republic of Kazakhstan, a taxpayer who receives a notification from state revenue authorities to correct identified violations has 30 working days from the day they receive the notice to comply.

If the taxpayer agrees with the violations listed in the notification, they must rectify the issues by submitting a corrected tax report for the specific tax period to which the violations relate. This process, often referred to as a "tax report on the notification," is the formal method for correcting the identified discrepancies.

If a taxpayer disagrees with the violations outlined in a desk control notification, they must submit a formal explanation. This explanation can be provided on paper or electronically to the specific state revenue authority that issued the notification. This process is the official way for a taxpayer to contest the findings, except for certain cases defined in Paragraph 3 of Article 96 of the Tax Code.

Failure to comply with this notification within the prescribed period shall entail the suspending expenditure transactions on the taxpayer's bank accounts in accordance with Article 118 of the Tax Code.

Therefore, a focus on control, automation, and a competent approach to tax accounting will help avoid errors that lead to the underestimation IIT and ST, thereby reducing the risks of tax surcharges and penalties.