The Administrative Procedural Code and the Code of Administrative Offences in Tax Disputes: What the Discussion at Astana Tax Forum Revealed

A formal violation does not in itself annul a decision

Representatives of the judiciary drew attention to the need to distinguish between formal and material procedural violations.

Not every departure from procedure automatically renders an administrative act unlawful. What matters is whether the violation deprived the taxpayer of the opportunity to present their position or evidence, to exercise the right of appeal, or otherwise influenced the outcome of the case. As it was put during the discussion:

"Not every violation is connected with the adoption of an incorrect administrative act."

For business, this means that a defence strategy cannot rest on the mere existence of a procedural error. It must explain to the court precisely which right was breached and what consequences followed.

Advisers: practice is evolving, and business needs to understand the new reference points

Advisers noted that the practice of the cassation courts continues to develop even where the statutory provisions themselves remain unchanged.

One example concerned exceeding the statutory time limit for a tax audit. Where this fact might previously have served as a serious standalone argument, certain cases now raise a further question: in what way did the delay actually infringe the taxpayer's rights?

One adviser summed up the observation as follows: "Practice is changing — not dramatically, not aggressively and not in a revolutionary way, but it is changing."

For business, what matters is not only the outcome of a particular case but the predictability of the approach. Advisers pointed to the need for a more systematic professional dialogue between the courts and the legal community, so that shifts in judicial reference points do not come as a surprise once proceedings are already under way.

The APC and the CAO: the core procedural conflict

The sharpest discussion centred on the relationship between the two codes.

In practice, a taxpayer may still be challenging the results of an audit or another administrative act while proceedings for an administrative offence have already begun. The same set of circumstances is therefore examined simultaneously in two different processes.

A representative of the Court of Cassation described this as a competition between types of proceedings: both the administrative process and the proceedings under the CAO effectively require a finding on whether a violation occurred.

Advisers put it more vividly — "the CAO is a universe of its own" — and offered a central proposal: "In principle, the two need to be married."

The substance of the proposal is closer alignment between the procedures of the APC and the CAO. While a taxpayer retains the right to challenge a decision of a state authority, it is questionable how justified it is to simultaneously apply a sanction based on the very same findings.

The issue is particularly acute for large businesses where significant fines and assessments are at stake. In such situations a company is forced to run several procedures in parallel simply to obtain a stay of enforcement until the principal dispute is finally resolved.

The State Revenue Committee: court practice is already shaping tax administration

A representative of the State Revenue Committee noted that the development of administrative justice has strengthened judicial oversight of state authorities and is gradually changing how revenue bodies work internally.

Court judgments are analysed, staff training and methodological work are conducted on the basis of their findings, and individual internal processes are adjusted accordingly.

Particular attention is paid to desk audits, which accounted for a significant share of the disputes lost by the tax authorities. According to the Committee's representative, some of the problems identified are already being taken into account in the ongoing improvement of legislation and administrative procedures.

The Committee is also developing an electronic administrative case file. The system is intended to allow the entire cycle of a procedure to be monitored: the commencement and completion of an audit, its suspension and resumption, and compliance with procedural deadlines.

The use of artificial intelligence is under discussion as well. AI may be applied as a supporting tool in desk audits — to assess the likelihood that a violation flagged by the system will in fact be confirmed. At this stage, there is no question of granting artificial intelligence the power to take administrative decisions on its own.

Pre-trial appeals: still an open question

A further notable discussion concerned the new Tax Code and the procedure for appealing the results of a tax audit.

The position of the State Revenue Committee representative was that the taxpayer has a choice: to file a complaint with the authorised body or to go directly to court.

Advisers, however, urged caution. In their view, the wording of the Tax Code permits differing interpretations, and only settled court practice will bring final clarity.

This is one example of how the same provision may today be understood differently by a state authority, by advisers and by the courts — with the resulting procedural risk ultimately borne by the taxpayer.

The main takeaway

The discussion showed that administrative justice in tax disputes is entering its next stage of development.

The courts' position — what matters is not only whether a procedural error occurred, but its real effect on the rights of the participant in the administrative procedure.

The State Revenue Committee's position — court practice should serve as a basis for changing internal processes, training staff and improving tax administration.

The advisers' position — the evolution of practice is necessary, but business needs predictability and clear rules, particularly where the APC, the CAO and tax legislation apply simultaneously.

The principal unresolved question of the session remains the alignment of these different procedural mechanisms. The right to a defence should operate not as a set of parallel procedures but as a coherent and comprehensible system. That, judging by the discussion, is where one of the key points of further development in tax and judicial practice now lies.

Short version

The second session of Astana Tax Forum addressed the APC and the CAO in tax disputes — and the conversation ranged well beyond individual procedural provisions.

One of the key signals: tax disputes have already moved into first place among categories of cases in administrative cassation. The approach to procedural violations is shifting too. For the court, it is increasingly a matter not simply of establishing that a procedure was breached, but of understanding exactly how that breach affected the taxpayer's rights.

Hence one of the panel's central conclusions: building a defence on formal violations alone is becoming more difficult. As it was put during the discussion: "Not every violation is connected with the adoption of an incorrect administrative act."

The sharpest topic, however, was the relationship between the APC and the CAO. As long as the same dispute can effectively proceed along several procedural tracks, business faces the need to challenge an act and defend against a fine at the same time. The most precise formulation of the session: "The CAO is a universe of its own. In principle, the two need to be married."

Another significant theme was the position of the State Revenue Committee. Court practice is already being used to change internal procedures, train territorial bodies and develop the electronic administrative case file. The use of AI in desk audits is also under discussion — as a tool for assessing the likelihood that a violation will be confirmed before a notice is issued.

A number of questions remain open. One is whether the pre-trial procedure is mandatory under the new Tax Code. The Committee refers to a right to choose between the authorised body and the court, while some practising lawyers suggest waiting for settled court practice.

The conclusion of the discussion: administrative justice is becoming more substantive, but the next request from business is predictability — not merely the existence of a right to a defence, but a clear mechanism in which the APC, the CAO and tax procedures genuinely operate as a single system.