NORMATIVE RESOLUTION OF THE SUPREME COURT OF THE REPUBLIC OF KAZAKHSTAN

of January 12, 2009 No. 1

About some questions of application of the legislation on pseudo-entrepreneurship

For the purpose of the correct and uniform application of the current legislation about pseudo-entrepreneurship the plenary session of the Supreme Court of the Republic of Kazakhstan DECIDES:

1. The pseudo-entrepreneurship - type of criminal offense in the field of economic activity in case of which the perpetrator creates (acquires) and uses subjects of private entrepreneurship, and equally directs them, without intention to perform business activity, in the illegal purposes provided by disposition of article 215 of the Criminal Code of Kazakhstan (further - UK) provided that these acts caused major damage to the citizen, the organization or the state.

At the same time it is necessary to understand only those actions which are investigated and incriminated to accused (defendant) within specific criminal case as the actions pursuing the aims, stipulated in Article 215 UK.

Criminal case regarding separate actions and circumstances on which for the objective reasons additional and long check at stage of pre-judicial investigation is required can be allocated in separate production according to the procedure of Article 44 of the Code of penal procedure of the Republic of Kazakhstan (further - the Code of Criminal Procedure).

In relation to article 216 UK it is necessary to carry the persons which are constantly performing business activity and not pursuing the illegal aims of system nature to subjects of private entrepreneurship which make separate actions according to the statement of the invoice without the actual performance of works, rendering services, shipment of goods for the purpose of extraction of property benefit. The action of person who created (acquired) the pseudo-company and imitating at the same time fair business activity by making only of single (several) valid transactions qualifications under article 215 UK are subject.

2. As subject to encroachment in case of pseudo-entrepreneurship the public relations in the field of the taxation, crediting and other legal economic activity act.

3. The objective party of pseudo-entrepreneurship includes creation of the subject of private entrepreneurship and share acquisition (share, shares) other legal entities granting the right to determine their decision.

The subject of private entrepreneurship is considered created from the moment of its state registration  which is recognized to the corresponding record ended after entering into the single State register of legal entities.

Obligatory sign of the objective party of criminal offense  is availability of causal relationship between the actions which are forming pseudo-entrepreneurship, and the come effects in the form of major damage.

4. Registration of the subject of private entrepreneurship for fictional person, the wrong specifying of legal address in itself without signs characteristic of pseudo-entrepreneurship, do not form structure of this criminal offense.

5. Motive of creation of the pseudo-company is lack of intention to be engaged in business activity.

On each specific case criminal prosecution authorities in the resolution on qualification of act of the suspect, the indictment, courts shall provide the proofs specifying absence at person of intention during creation of the subject of private entrepreneurship to be engaged in business activity in descriptive and motivation part of sentence.

Sign of lack of such intention is failure in duty, following from constituent documents, during the time necessary and sufficient for their accomplishment according to business customs. Criterion of the last it is possible to consider lack of business activity during tax period after which are determined the taxation object, tax base, the amounts of taxes and other obligatory payments which are subject to payment in the budget are estimated.

Can be other circumstances: the expiration of considerable time after registration, lack of the necessary state, property, introduction of the distorted data on founders, not opening of bank accounts.

6. The subjective party of pseudo-entrepreneurship is characterized by intentional form of fault. In relation to the fact of creation (acquisition) of the pseudo-company actions of person contain direct intention, and to effect which the damage, both direct, and indirect is.

7. Obligatory sign of pseudo-entrepreneurship is initial prosecution by the perpetrator during creation of the pseudo-company of one of the purposes (or several at the same time) specified in disposition of article 215 UK.

8. Can be the purposes of pseudo-entrepreneurship: receipt of the credits, tax exemption, extraction of other property benefit or cover of the prohibited activities.

Receipt of the credit without proofs of intention not to perform business activity can demonstrate making of other criminal actions, but not pseudo-entrepreneurships.

In case of pseudo-entrepreneurship the partner of the pseudo-company is illegally exempted from taxes. Tax exemption is also their understating.

Extraction of other property benefit is that it happens to violation of the law. In this case making legal in form, but dummy on the purpose and contents of transactions which do not demonstrate intention to be engaged in business activity (cashing in of money, intermediary services and so forth) can take place.

It is necessary to understand such actions which are prohibited by the legislation regardless of his subjects, and also separate types of business activity which implementation requires receipt of the license as the prohibited activities which are covered by pseudo-entrepreneurship.

9. Criminal liability for pseudo-entrepreneurship comes when causing major damage. The concept of major damage is this in article 3 UK.

10. The damage integrated to pseudo-entrepreneurship is determined as tax amount from which payment the partner, or credit amount, the income, the property benefit illegally received by the partner evaded. In this regard the damage caused by the partner of the pseudo-company, in the form of unpaid taxes, the credit illegally obtained, the income, other benefit, and also wine in it the head (participant) of the partner are subject to proof with adoption of the proceeding decision on this criminal case or shall be established by the resolution on administrative prosecution which is earlier accepted and taken legal effect, conviction of court or the resolution on the termination of criminal case on not rehabilitating bases.

As the structure of criminal offense, stipulated in Article 215 UK, completely covers actions of the pseudo-entrepreneur for complicity to the partner in tax avoidance, these its actions of additional qualification under article 245 UK do not require.

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