Tax Penalties for Non-compliance

Posted on: 20/10/2014 in: Tax

In this third edition of our Kazakhstan Tax Series, we’re taking a closer look at tax penalties exporters can face for non compliance with tax rules and regulations in Kazakhstan and more importantly, how to avoid them!

Penalties can be fairly heavy if businesses fail to comply with local tax rules. Significant fines can be levied, and in certain instances based on your business turnover, rather than the amount of tax underpaid. Fines and penalties are also applied fairly swiftly, certainly by comparison to the UK.  If this alone is insufficient incentive to keep on top of the tax rules, companies should also be mindful of the fact that if taxes / penalties / fines are not paid then the tax authorities follow a strict regime in freezing companies’ local bank accounts until tax accounts have been settled. Such action by the authorities is to be avoided at all costs – a frozen local bank account could have a devastating impact upon your ability to run your Kazakhstan business, as well as your ability to take funds out of the country.

So it’s absolutely vital that you ‘re fully informed on the relevant tax rules and regulations before you start doing business in Kazakhstan. Another good rule of thumb is that you should avoid making any assumptions – in the first edition of this series entitled “Charging UK management costs to your Kazakhstan business“, we explained how important it is that businesses don’t make a charge just to take funds out of the country. Such a charge needs to be reasonable and transparent, demonstrating that it is a legitimate charge for services provided. If management charges aren’t considered to be genuinely related to Kazakhstan (because of lack of supporting evidence), taxes due will be based on a larger sum, fines of 50% will be applied and if you’ve underpaid (because you thought you could get away with the management charges), you could be in for a penalty.

So here are our:

Top 3 Tips for avoiding penalties for non compliance:

  • Make sure you don’t make any assumptions
  • Take advice early
  • Ensure that all transactions are fully backed up with the appropriate evidence.

If you would like further advice on exporting to Kazakhstan, whether you are already a seasoned exporter to the country, an exporter to other countries who is interested in the market potential of Kazakhstan or an SME owner completely new to export, we would be delighted to hear from you. Contact us on 01935 315055 or online.


The above information is for general purposes only and is not intended and should not be construed as legal, accounting or tax advice. The content may not be applicable or suitable for every individual’s particular circumstances and should not be used as a substitute for consultation for professional advice on tax or accounting matters.