Insights on Tax Controversy and Dispute Resolution
in Kazakhstan ​​

Interaction between the state and taxpayers in Kazakhstan is based on two complementary sets of principles.

• Tax Code principles: obligatoriness, certainty, fairness, taxpayer good faith, unity of the system, and transparency. In practice, this means everyone must pay taxes under clear, equal rules without individual preferences.
• Administrative Procedural Code principles: legality, fairness, protection of rights, proportionality, and priority of rights —interpreting doubts in favor of the participant in an administrative procedure.

These principles form the foundation for predictable and fair administration. 

The primary criterion for scheduling periodic (planned) tax audits is the taxpayer’s risk level.

Tax authorities use a risk management system, analyzing tax reports, data from other government agencies, and available information. Based on this, semi-annual audit schedules are prepared.

Unscheduled audits may also occur on these grounds:

• Failure to comply with desk audit notifications: when violations identified during a desk audit are not corrected or adequately explained.
• Taxpayer’s request: for example, in cases of liquidation, reorganization, or to confirm VAT refund claims.

A tax audit is a key tool used by tax authorities to monitor compliance with tax legislation. In essence, it is an in-depth review of a company’s financial and business activities aimed at identifying and preventing violations.

For taxpayers, it is essential to understand that an audit requires thorough preparation of all documentation, clarity on its purpose and the period under review (typically within the statute of limitations), as well as knowledge of their rights and obligations when interacting with tax authorities. The success of an audit largely depends on the completeness and accuracy of the information provided and the ability to substantiate one’s position.

In Kazakhstan, both the actions (inactions) of tax officials and the results of tax audits are subject to appeal. To this end, taxpayers have access to two methods of protecting their rights: pre-trial and judicial appeal procedures.

The pre-trial appeal procedure allows for challenging notifications, decisions, and actions (inactions) of tax authorities. This stage enables the resolution of disputes prior to appealing to judicial instances. Such an appeal is submitted to the Ministry of Finance of the Republic of Kazakhstan (MF RK) in accordance with the Tax Code of the Republic of Kazakhstan.

Furthermore, the taxpayer also has the right to file a lawsuit with the court, guided by the provisions of the Administrative Procedure Code of the Republic of Kazakhstan. The success rate for appealing tax disputes in courts stands at 58%.

In the Republic of Kazakhstan, court decisions do not constitute case law or an independent source of law. However, in administrative legal proceedings, there is a principle of uniformity in the application of legislation, enshrined, in particular, in Article 15-1 of the Administrative Procedure Code of the Republic of Kazakhstan.

This principle implies that when considering cases, courts take into account not only legal norms but also previously adopted administrative acts and decisions on analogous matters, as well as legal principles and normative decrees of the Supreme Court.

Understanding this specificity, the PwC Kazakhstan team, when preparing comprehensive argumentation for appealing tax authority decisions, conducts a research and analysis of current judicial practice on specific tax issues. 

The study of similar court cases helps to identify the courts' approach to interpreting legal norms, allocating the burden of proof, and evaluating evidence, which is critically important for constructing the most effective legal position, forming the evidentiary basis, and increasing the predictability of the dispute's outcome in the interests of our clients.