Unlawful VAT write-off during reorganisation — court reversed 48 million tenge of assessments and interest

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Situation

The client was an active VAT payer. In 2022 another legal entity was absorbed into it through reorganisation. The reorganised company filed its winding-up tax reporting and transfer act on time. In January 2023 the tax authority, under sub-clause 2) of art. 62(8) of the НК РК, transferred to the client's taxpayer account the positive VAT balance of 37,114,933 tenge. Two years later — in April 2025 — the tax authority unilaterally adjusted the taxpayer account: it wrote off the previously transferred balance and assessed VAT of 37,114,933 tenge plus past-period interest of 11,385,019.54 tenge. Total exposure: 48,499,952 tenge. The basis: the tax authority considered that the reorganised legal entity should have recognised its remaining inventory as VAT-taxable turnover under sub-clause 3) of art. 369(1) of the НК РК before the reorganisation was completed; since it had not done so, the legal successor was obliged to pay the corresponding amount. A complaint to the State Revenue Committee (КГД МФ РК) was unsuccessful — the tax authority's actions were deemed lawful.

Our actions

We identified three key legal breaches in the tax authority's position. First: the obligation to file winding-up reporting and to perform actions under sub-clause 3) of art. 369(1) of the НК РК is a personal tax obligation of the reorganised entity and cannot be imposed on the legal successor (art. 62(2) of the НК РК). The client could not perform an obligation that did not apply to it. Second: write-off of excess VAT under art. 429(8) of the НК РК is permissible only from the taxpayer account of a person deregistered from VAT. The client was and continues to be VAT-registered — the rule does not apply. Write-off of excess VAT from the account of an active VAT payer is not provided for by law. Third: by transferring the positive balance to the legal successor in 2023, the tax authority confirmed its lawfulness. All control actions should have been performed before the balance was transferred — at the stage of reviewing the reorganised entity's winding-up returns. Write-off two years after the transfer breaches the principle of protection of legitimate expectations (art. 13 of the Administrative Procedure Code, АППК РК) and exceeds the limits of administrative discretion (art. 11 of the АППК РК).

Result

The specialised inter-district administrative court (СМАС) granted the claim in full. The tax authority's actions to adjust the taxpayer account were declared unlawful. The tax authority was ordered to reverse the assessment of VAT of 37,114,933 tenge and interest of 11,385,019.54 tenge. The state fee was returned to the client. The court stated: write-off of excess VAT from the taxpayer account of a legal successor that has not been deregistered from VAT is not provided for by law. The tax authority, by transferring the balance to the successor, had effectively confirmed its lawfulness and lost the right subsequently to write it off.

Project team

Alibayev Yerkebulan

Director

Khassanov Yerbolat

Managing partner

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Часто задаваемые вопросы

No. By transferring the balance to the legal successor, the tax authority effectively confirmed its lawfulness. All control actions — review of winding-up returns, write-off of any excess on lawful grounds — must be performed before the balance is transferred. Once it has been transferred, the grounds for write-off are lost.

No. Under art. 62(2) of the НК РК, the obligation to submit winding-up tax reporting is a personal obligation of the reorganised entity and is expressly excluded from the list of obligations passing to the legal successor.

No. Art. 429(8) of the НК РК applies only to taxpayers deregistered from VAT. Write-off of excess VAT from the taxpayer account of an active VAT payer is not provided for by this rule.

Adjustment of the taxpayer account without a tax audit and beyond the limitation period is an independent ground for declaring such actions unlawful. The actions must be challenged with the higher authority and, if refused, in the administrative court.

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