A supplier\u2019s lack of its own equipment or employees may raise questions from the tax authorities. The answer depends on how the contract was performed and what evidence supports its execution. Three court cases illustrate why similar allegations can lead to different outcomes. From 2026, an additional issue arises: which tax regime was applied by the supplier on the date the goods, works or services were received.<\/p>\n\n\n\n
In a dispute between PCF GORDORSTROY LLP and the Department of State Revenue for Pavlodar Region, tax inspectors challenged expenses for transportation services in 2022-2023. The individual entrepreneurs who issued transportation documents did not own vehicles or employ staff. The tax authority also cited the absence of fuel and lubricant purchases, links between the service providers and the customer, and matching IP addresses. However, the company was able to explain how the services had been provided. Vehicles were leased together with drivers. The transportation was supported by trip sheets, consignment notes and other documents. Information from KazAvtoZhol JSC on vehicles travelling along toll roads further corroborated the account. In its decision of 17 March 2026, the Specialized Interdistrict Administrative Court of Pavlodar Region upheld the company\u2019s claim and annulled the contested tax notice. The court focused on the actual use of resources rather than solely on vehicle ownership. Suspicions of artificial documentation were outweighed by the evidence of actual performance. [1]<\/p>\n\n\n\n
For the customer, the key consideration is whether the transaction can be reconstructed from the documents: which vehicles were used, on what basis, who provided the drivers and which journeys were completed. A lease agreement alone does not explain the entire transportation process. However, together with documents evidencing completed journeys, it can help substantiate the claim that the supplier was able to provide the service.<\/p>\n\n\n\n
In the case involving Kurylysekspertproekt LLP, the tax authority concluded that NEXT-O LLP, which had performed work on the preparation of design and cost-estimate documentation, had no employees. The conclusion was based on the supplier\u2019s failure to file individual income tax and social tax returns. During the court proceedings, it emerged that NEXT-O applied the special tax regime based on a simplified declaration and filed Form 910.00. The court took into account the reporting rules applicable to that regime during the periods under audit. The tax authority\u2019s representative acknowledged an oversight in assessing the supplier\u2019s status. In its decision of 16 March 2020, the Specialized Interdistrict Economic Court of Karaganda Region annulled the tax notice. [2]<\/p>\n\n\n\n
In this case, the issue was the correct interpretation of tax information. Before concluding that a supplier has no employees because a particular tax return was not filed, it is necessary to establish whether the supplier was required to submit it. This is why information about a counterparty\u2019s tax regime is also relevant when assessing its resources. However, historical reporting rules cannot automatically be applied to suppliers\u2019 obligations in 2026.<\/p>\n\n\n\n
The case involving MIZAM LLP, however, illustrates the limits of a defence based on documentary evidence alone. The company challenged the disallowance of expenses as tax deductions and the denial of an input VAT credit for transactions in 2021-2022. As in the transportation dispute, questions were raised about equipment, employees and the actual performance of services. This time, however, the evidence led the court to the opposite conclusion. For one supplier, a counter-audit failed to confirm that the services had been provided: the documents had not been retained, and the payment information was inconsistent with the invoice data. For other transactions, separate contracts were missing and discrepancies were identified in trip sheets. Explanations that payments had been made by transfers to a bank card were also insufficiently substantiated. In its decision of 3 March 2026, the Specialized Interdistrict Administrative Court of Aktobe Region dismissed the company\u2019s claim. [3]<\/p>\n\n\n\n
A comparison of the two decisions shows that the same risk indicators do not predetermine the outcome of a dispute. In one case, the documents explained which resources had been used to perform the contract. In the other, the court found the evidence insufficient. To substantiate a deduction, the contract, acceptance certificate, evidence of performance and payment records must be consistent with one another and relate to the specific transaction.<\/p>\n\n\n\n
Although the decisions in these cases were issued in 2026, all three disputes concerned transactions carried out before 2026. They share a common issue: substantiation of expenses. The new Tax Code retains this requirement. Paragraphs 1 and 4 of Article 257 link deductions to expenses actually incurred and supported by documentary evidence in connection with activities aimed at generating income. Subparagraph 2 of Article 286 separately excludes expenses relating to transactions where no actual work was performed, no services were provided or no goods were shipped. [4]<\/p>\n\n\n\n
From 1 January 2026, however, a purchaser applying the general tax regime must consider more than whether the transaction was genuine. Subparagraph 16 of Article 286 prohibits deductions for the purchase of goods, works and services from persons applying the special tax regime based on a simplified declaration on the date the goods, works or services are received. Consequently, expenses under a properly performed and fully documented contract may still be non-deductible because of the supplier\u2019s tax regime. [4, 5] This is a separate ground for disallowing a deduction. Evidence of completed journeys addresses an allegation that transportation did not take place. It does not remove the restriction associated with the simplified declaration regime. Equally, a supplier\u2019s non-application of this regime does not guarantee a deduction: the purchaser must meet the general requirements and take into account any other applicable restrictions.<\/p>\n\n\n\n
The law ties the tax-regime check to a specific date. For goods, this is the date they are physically transferred to the purchaser, as evidenced by supporting documents. For works and services, it is the date the acceptance certificate or another document confirming their completion or provision is signed. The contract date or the date an advance payment is made does not, in itself, replace this criterion. [4, 6] Therefore, a contract concluded in 2025 does not guarantee that expenses for services received in 2026 will remain deductible. The purchaser must determine the date of receipt under Article 286 and establish the supplier\u2019s tax regime on that date. Transitional transactions require a separate assessment, taking into account the dates on which expenses are recognised, the nature of the purchase and the applicable transitional provisions.<\/p>\n\n\n\n
The new criterion shifts part of the tax-risk management process to the procurement stage. The accounting department may receive a complete set of documents only after a service has been provided, but those documents cannot change the supplier\u2019s tax regime as at the date of receipt. It is therefore advisable to include a tax-regime check in the contract approval process and repeat it when goods are received or acceptance certificates are signed. For long-term contracts, checking the supplier\u2019s status only at the time of selection is insufficient. Information on the commencement and termination of the simplified declaration regime is intended to be published on the tax authority\u2019s website. The purchaser should retain evidence of each check, including the date and source, while taking into account the period during which the regime applied. The absence of VAT registration does not replace this check. The prohibition specifically concerns the special tax regime based on a simplified declaration, so extending it to all individual entrepreneurs or to every special tax regime would be incorrect. [5, 6]<\/p>\n\n\n\n
Tax implications should also be considered when comparing prices. If an expense of KZT 1 million would ordinarily have fully reduced taxable income, disallowing the deduction would increase corporate income tax by KZT 200,000 at a 20% tax rate, assuming sufficient taxable income and all other conditions remain unchanged. A lower price offered by a supplier using the simplified declaration regime may therefore not translate into a lower overall acquisition cost for the purchaser. The contract may require the supplier to notify the purchaser of any change in tax regime and provide supporting information. If the parties wish to provide for a price adjustment or compensation for the consequences of inaccurate information, the relevant mechanism should be agreed separately. Such contractual provisions allocate the economic consequences between the parties; they do not change the tax rules governing deductions.<\/p>\n\n\n\n
It is more reliable to collect supporting evidence throughout the performance of the contract. For transportation services, this means information about the vehicles, lease arrangements, drivers and journeys. For design and other professional services, it may include the terms of reference, deliverables, document versions and correspondence relating to approval. The evidence collected should correspond to the subject matter of the contract. At the same time, incomplete payment does not, by itself, mean that an expense has not been incurred: payment terms must be assessed alongside accounting records and the other circumstances of the transaction.<\/p>\n\n\n\n
In 2026, a purchaser needs to reach two substantiated conclusions: first, that the expense is supported by evidence and relates to income-generating activities; and second, that the applicable tax restrictions allow it to be deducted. The first conclusion rests on documents evidencing performance. The second requires, among other things, verification of the supplier\u2019s tax regime on the date specified by law. Addressing only one of these issues leaves the other unresolved.<\/p>\n\n\n\n
Sources<\/strong><\/p>\n\n\n\n [1] Decision of the Specialized Interdistrict Administrative Court of Pavlodar Region dated 17 March 2026, Case No. 5594-26-00-4\/9, PCF GORDORSTROY LLP.<\/p>\n\n\n\n [2] Decision of the Specialized Interdistrict Economic Court of Karaganda Region dated 16 March 2020, Case No. 3514-20-00-2\/694, Kurylysekspertproekt LLP.<\/p>\n\n\n\n [3] Decision of the Specialized Interdistrict Administrative Court of Aktobe Region dated 3 March 2026, Case No. 1594-25-00-4\/1224, MIZAM LLP.<\/p>\n\n\n\n [4] Tax Code of the Republic of Kazakhstan dated 18 July 2025, No. 214-VIII, Articles 257, 286 and 848, as amended on 1 July 2026. https:\/\/prg.kz\/document\/?doc_id=37777973<\/a><\/p>\n\n\n\n [5] Department of State Revenue for Pavlodar Region. Restrictions on deductions when dealing with taxpayers applying the special tax regime. https:\/\/www.gov.kz\/org\/kgd-pavlodar\/press\/news\/details\/1280465?lang=ru<\/a><\/p>\n\n\n\n