Tax NewsFlash - March 2023

Dear Readers,

The Constitutional Court considered the compliance of certain provisions of Tax Code Article 610 regulating state duty rates in courts with the Constitution and issued a normative resolution.¹

Percentage Rates of State Duties

The Constitutional Court states that the establishment of state duty rates in percentage of the value of disputed goods/rights in itself is in line with the provisions of the Constitution. However, the establishment of the percentage rates without reasonable legislative limitation deprives low-income citizens of the ability to pay high duties.

State Duty Amounts for Individuals and Entities

The Constitutional Court believes that the existing wording of point 2 of Article 610 of the Tax Code does not specify the payer’s category – an individual or a legal entity. Such ambiguity may lead to a violation of the conceptual legislative approach to differentiate the amount of the state duty depending on the payer (an individual or a legal entity).

Thus, the Constitutional Court ruled that:

• The lack of instruments in legislation ensuring access to justice for low-income citizens (reducing the duty amount, exemption, deferral, installment payment, and others) impedes the full implementation of everyone's constitutional right to judicial protection of their rights and freedoms.
• Point 2 of Article 610 of the Tax Code does not comply with the Constitution since the existing wording does not specify the payer (an individual or a legal entity) to differentiate the amount of duty.
  
• Until amendments are made to point 2 of Article 610 of the Tax Code, individuals requesting a review of court decisions in cassation must pay the state duty of 50% of the corresponding state duty for individuals as established in subpoint 1 of point 1 of Article 610.
  
• Within three months after the publication of the Normative Resolution (i.e., by 24 May 2023), the Government must submit to the Majilis a draft law aimed at improving the legal regulation of issues related to the payment of state duty in courts.
  
• The Normative Resolution came into force on the day of its adoption on 22 February 2023 and is mandatory in Kazakhstan. It is final, cannot be appealed, and has no retroactive effect.