Tax Code of the Republic of Taxastan

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Tax Code of the Republic of Taxastan

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A Hypothetical Tax Law
Prepared by the IMF Legal Department
September 29, 2000


	Introduction

170k pdf file	Part I. General Part Division I. General Provisions Chapter 1. The Tax System of the Republic of Taxastan Article 1. Relations Regulated by this Code Article 2. The tax system of the Republic of Taxastan Article 3. Legal basis for taxation Article 4. Tax legislation of the Republic of Taxastan and its operation in time Article 5. Tax Article 6. Taxes of the Republic of Taxastan Article 7. Procedure for Establishment, Amendment, and Elimination of Taxes Chapter 2. Definitions of Terms Used in this Code Article 8. Economic activity Article 9. Entrepreneurial (active) and Nonentrepreneurial (passive) Economic Activity Article 10. Employment Article 11. Charitable Activity Article 12. Religious Activity Article 13. Enterprises Article 14. Resident enterprise and foreign enterprise Article 15. Place of establishment of an enterprise Article 16. Place of management of an enterprise Article 17. Permanent Establishment of a Nonresident Article 18. Noncommercial Organizations Article 19. Budgetary Organization Article 20. Charitable organization Article 21. Religious organization Article 22. Tax agent Article 23. Related persons Article 24. Resident physical persons Article 25. Individual Entrepreneur Article 26. Market prices Article 27. Definitions of other terms used in the Code

187k pdf file	Division II. General Administrative Provisions Chapter 3. General Provisions Article 28. Procedure for application of administrative provisions Article 29. Tax control of full and timely receipt of payments to the budget Article 30. Illegal taxable income or transaction Article 31. Taxpayer identification number Article 32. Rights of the taxpayer Article 33. Right to representation in relations regulated by tax legislation Article 34. Legal representative of the taxpayer Article 35. Actions (inaction) of legal representative of a legal person Article 36. Authorized representative of the taxpayer Article 37. Conversion of foreign currency Article 38. Measures against tax avoidance and alternative methods of taxation Chapter 4. Contacts with Taxpayers Article 39. Procedure for establishing obligations Article 40. Written communications with taxpayers Article 41. Sufficiency of notices and other documents Article 42. Rulings for the application of tax legislation Chapter 5. Presentation and Collection of Information Article 43. Formation and retention of records Article 44. Filing of tax returns Article 45. Provision of information on payments Article 46. Extension of deadline for filing tax returns Article 47. Bank accounts Article 48. Provision of information to the tax authorities Chapter 6. Tax Obligations Article 49. Tax obligation Article 50. Satisfaction of tax obligations Article 51. Satisfaction of tax obligations in the event of the liquidation of an enterprise (organization) Article 52. Satisfaction of tax obligations in the event of the reorganization of a legal person Article 53. Satisfaction of Tax Obligations of Physical Persons Who Are Deceased, Incompetent, or Missing Article 54. Procedures for Satisfaction of Tax Obligations Chapter 7. Assessments Article 55. Assessments Article 56. Notice of Assessment and Demand for Payment of Tax Article 57. Statute of limitations Chapter 8. Payment, Collection and Refund of Tax Article 58. Payment of tax Article 59. Place of payment of tax Article 60. Refund of excess tax paid Article 61. Extension of deadline for payment Article 62. Order of payment of tax debts Article 63. Effect of objection or appeal Chapter 9. Enforced Collection of Tax Article 64. Attachment of property Article 65. Procedure for Collection of Tax From Property of the Taxpayer Article 66. Enforcement of seizure Article 67. Sale of seized property Article 68. Recovery of amounts due to the taxpayer Article 69. Secondary liability for unpaid tax Article 70. Liability for failure to withhold income tax at the source Article 71. Writing off bad tax debts Article 72. Interest on overpayments and tax arrears Chapter 10. Liability Article 73. Definition of Tax Violation Article 74. Persons Subject to Liability for Tax Violations Article 75. Procedure in Tax Violation Cases Article 76. Circumstances Excluding Liability for Tax Violations Article 77. Forms of Guilt for Tax Violations Article 78. Circumstances Excluding Guilt of a Person for a Tax Violation Article 79. Period of Limitations for Liability for Tax Violation Article 80. Fines for late filing of returns Article 81. Fines for understatement of taxes Article 82. Fines for VAT violations Article 83. Liability of banks and other financial-Credit Article 84. Liability for the Impediment of Tax Investigation Article 85. Liability Imposed on Responsible Parties Article 86. Unlawful denial of access to authorized officials of the tax authorities onto territory or premises Article 87. Failure to respect the procedure for possession, use and (or) disposal of attached property Article 88. Failure to Furnish Information Concerning the Taxpayer to a Tax Authority Article 89. Exoneration of taxpayer from liability Chapter 11. Settlement of Disputes Article 90. Review of tax authority decisions Article 91. Burden of proof

146k pdf file	Division III. Status and Structure of the Tax Authorities of the Republic of Taxastan Chapter 12. The Tax Authorities Article 92. Basic functions of the tax authorities Article 93. Legal basis for operation of the Tax Authorities Article 94. Principles of Activity of the Tax Authorities Article 95. Status and Structure of the Tax Authorities Article 96. Authority of the Chairman of the Tax Committee Article 97. The Financing and Material-Technical Support of Tax Authorities Article 98. An Employee of the Tax Authorities Article 99. The Progression of Service Article 100. Relations between Tax Authorities and Government Bodies Article 101. Delegation of Authority Article 102. Annual reports Chapter 13. Powers and Responsibilities of Tax Authorities Article 103. Responsibilities of Tax Authorities Article 104. Rights of Tax Authorities Article 105. Procedures for the Employment of Rights Given to the Tax Authorities Article 106. Liability of Officials of the Tax Authorities Article 107. Conflict of interest Article 108. Confidentiality of information Chapter 14. The Legal and Social Protection of Employees of the Tax Authorities of the Republic of Taxastan Article 109. The Legal Protection of Employees of the Tax Authorities Article 110. The Material and Social Support of Employees of the Tax Authorities and Members of Their Families

141k pdf file	Part II. Special Provisions Division IV. Income Tax on Physical Persons Chapter 15. General Provisions Article 111. Taxpayers Article 112. Object of taxation Article 113. Gross income Article 114. Income received in the form of wages Article 115. Income from nonemployment economic activity Article 116. Adjustment of gross income and deductions Article 118. Income tax rates Article 119. Exemptions

134k pdf file	Division V. Tax on Profits of Legal Persons Chapter 16. General Provisions Article 120. Taxpayers Article 121. Object of taxation Article 122. Tax rates Article 123. Exemptions

164k pdf file	Division VI. General Provisions of the Profits Tax and Income Tax Chapter 17. General rules and definitions Article 124. Scope of Application Chapter 18. Deductions from Gross Income Article 125. Outlays connected with the receipt of income Article 126. Nondeductible expenses Article 127. Limitation on Interest Deduction Article 128. Doubtful debt deduction Article 129. Deduction for allocations to insurance reserve funds Article 130. Deductions for expenditures on scientific- research, project-design, and experimental-design work Article 131. Amortization charges and deductions for fixed assets Article 132. Repair expenses deduction Article 133. Deduction of insurance premium payments Article 134. Expenditures on geological surveying and work to prepare for the extraction of natural resources Article 135. Expenditures on intangible assets Article 136. Limitation on deduction of taxes and fines Article 137. Losses upon the sale or transfer of property Article 138. Carrying losses forward Chapter 19. Withholding of Tax at the Source of Payment Article 139. Procedures for Withholding Tax at the Source of Payment Article 140. Withholding of tax on dividends at the source of payment Article 141. Withholding of tax on interest at the source of payment Article 142. Withholding of tax on income of nonresidents at the source of payment Chapter 20. International Taxation Article 143. Taxation of net profit of the permanent establishment of a foreign legal person Article 144. Foreign tax credit Article 145. Income received in countries with concessional taxation Chapter 21. Rules for Tax Accounting Article 146. The tax year Article 147. Principles for recording income and expenditures Article 148. Principles for recording income and expenditures using the cash basis method Article 149. Moment of receipt of income in certain cases under the cash basis method Article 150. Moment of carrying out of expenditures in certain cases under the cash basis method Article 151. Principles for recording income and expenditures under the accrual basis method Article 152. Moment of receipt of income under the accrual basis method Article 153. Moment of carrying out of expenditures under the accrual basis method Article 154. Joint ownership Article 155. Income and deductions under long-term contracts Article 156. Procedures for recording inventories Article 157. Finance leases Article 158. Recovered deductions and decrease in reserves Article 159. Income and losses upon the sale or transfer of assets Article 160. Cost of assets Article 161. Nonrecognition of gain or loss Article 162. Liquidations Article 163. Formation of a legal person Article 164. Reorganization of legal persons Article 165. Significant change in ownership of legal persons Chapter 22. Administrative Provisions Article 166. Filing of returns Article 167. Current tax payments Article 168. Payment of tax on results for the year

159k pdf file	Division VII. Value-Added Tax Chapter 23. General Provisions Article 169. Concept of value added tax Chapter 24. Taxpayers Article 170. Taxpayers Article 171. Requirement for submission of application to be registered Article 172. Voluntary registration Article 173. Registration Article 174. Cancellation of registration Chapter 25. Objects of Taxation Article 175. Objects of taxation Article 176. Sale or Transfer of Enterprise Chapter 26. Determination of Taxable Turnover and of Taxable Import Article 177. Value of a taxable transaction Article 178. Adjustment of taxable turnover Article 179. Amount of a taxable import Chapter 27. Tax Preferences Article 180. Exemptions from payment of tax Article 181. Regime of Taxation Goods Crossing the Customs Border of the Republic of Taxastan Chapter 28. Transactions Taxed at a Zero Rate Article 182. Taxation of the export of goods (works, services) Article 183. Taxation of international and transit shipments Article 184. Gold transferred to the National Bank of the Republic of Taxastan Chapter 29. Time and Place of Taxable Transaction and Special Rules Article 185. Time of taxable transaction Article 186. Place of supply of goods Article 187. Place where works are fulfilled or services are rendered Article 188. Reverse taxation Article 189. Time of import Article 190. Mixed transactions Article 191. Transactions by agent Chapter 30. Procedure for the Calculation and Payment of Tax Article 192. Rates of value added tax Article 193. Value added tax on taxable turnover payable to the budget Article 194. Value added tax creditable in the determination of payments to the budget Article 195. VAT invoices Article 196. Special Rules Chapter 31. Administrative and Concluding Provisions Article 197. Filing of returns and payment of value added tax Article 198. Value added tax accounting period Article 199. Operations with the budget in cases where the amount of tax to be credited exceeds the amount of tax charged for the accounting period Article 200. Responsibility of taxpayers and control by the tax organs

141k pdf file	Division VIII. Excises Chapter 32. Excise Article 201. The concept of excise Article 202. Taxpayers Article 203. Object of taxation Article 204. Amount of taxable transaction Article 205. Time of taxable transaction Article 206. Taxation of exports Article 207. Exemptions Article 208. Excise credit for inputs Article 209. Tax rates and list of excisable products Article 210. Payment of excise Article 211. Filing of returns Article 212. Refund of excise on re-exports Article 213. Excise stamps Article 214. Excise tax invoices

136k pdf file	Division IX. Social Fees Chapter 33. Social Fees Article 215. Definition and Role of Social Fees Article 216. Taxpayers Article 217. Object of Taxation Article 218. Exemptions Article 219. Tax Rate Article 220. Procedures for the Determination and Payment of Taxes

138k pdf file	Division X. Land Tax Chapter 34. Land Tax Article 221. Taxpayers Article 222. Object of Taxation Article 223. Tax Rates on City Land and Suburban Areas Article 224. Land Tax Rates on Rural Areas Article 225. Procedures for Filing Tax Accounts Article 226. Deadlines for Payment of Land Tax Article 227. Land Tax Concessions

144k pdf file	Division XI. Tax on Subsurface Users Chapter 35. General Provisions Article 228. Identification of the Tax Regime under Contract on Subsurface Users Article 229. Models of a Tax Regime for Subsurface User Contracts Article 230. A Tax Regime for Operations not Pertaining to Subsurface Use Article 231. Stability of the Tax Regime Article 232. Taxation of Rights Assignment Article 233. Special Payments and Subsurface User Taxes Article 234. Tax Audit Chapter 36. Bonuses Article 235. General Provisions on Bonuses Article 236. Signing Bonus Article 237. Procedures for the Liability, Amount and Deadline of Payment of a Subscription Bonus Article 238. Commercial Discovery Bonus Article 239. Procedures for the Calculation, Amount and Deadline of Payment of the Commercial Discovery Bonus Article 240. Extraction Bonus Article 241. Procedures for the Calculation, Amount and Deadline of Payment of the Extraction Bonus Chapter 37. Royalties Article 242. General Provisions on Royalties Article 243. Forms of Payment of Royalties Article 244. General Royalty Principles Article 245. Royalties on Common Mineral Resources and Underground Water Resources Article 246. Royalties on Precious Metals and stones Article 247. Royalties on Hydrocarbons Article 248. Royalties on Solid Minterals, other than Common Minerals Article 249. Procedures for Payment of Royalties Chapter 38. Excess Profits Tax Article 250. General Provisions for the Excess Profits Article 251. Object of Taxation and Procedures for Calculating Article 252. Rates and Deadlines for Payment of the Excess Profits Tax

212k pdf file	Division XII. Enterprise Property Tax Chapter 39. Enterprise Property Tax Article 253. Taxpayers Article 254. Object of Taxation Article 255. The Determination Article 256. Tax Concessions Article 257. Tax Rates and their Calculations Procedure Article 258. Report on Property Tax Article 259. Profits Tax Records

	Division XIII. Tax on Owners of Vehicles Chapter 40. Tax on Owners of Vehicles. Article 260. Taxpayers Article 261. Object of Taxation Article 262. Exemptions Article 263. Tax Rates Article 264. Procedures for Payment and Collection of the Tax

	Division XIV. Simplified Version of the Tax on Small Business Article 265. Taxpayers. Article 266. Object of Taxation Article 267. Tax Rate Article 268. Procedure for Applying the Simplified Version of the Tax

	Division XV. Local Taxes Article 269. General Provisions Article 270. Retail Sales Tax Article 271. Tax on Immovable Property of Physical Persons

Introduction
Over the last five years or so most CIS countries have either adopted tax codes or prepared draft tax codes. These codes are similar in general structure, although different in their details. The process of compiling and revising tax codes in these countries continues. In some countries, the tax code has not been adopted, but the possibility of its adoption is being reviewed. In other countries, work is actively underway to prepare legislative acts. In countries that have already adopted codes, the codes are being applied and these countries are already dealing with issues connected with the interpretation and possible revision of their codes. With time, their further revision is probable as the tax systems of these countries continue to develop.
The International Monetary Fund's Legal Department has developed a sample tax code for a hypothetical country (the Transition Republic of Taxastan) for use as reference material to provide assistance in the preparation of legislative acts and the application of laws. Although there are many possible variants, only one text is proposed. The reason is not that it always represents the best variant for all countries, but rather that the code is based on the actual experience of working with legislation and that the proposed single text of the code is easier to read and understand. The text is based for the most part on the tax codes of Georgia (June 1997) and Tajikistan (November 1998), which in turn rely on the tax code of Kazakhstan (April 1995) and Part I of the tax code of Russia (August 1998). Other legislative tax documents of CIS states (for example, Kyrgyz Republic and Uzbekistan) and other states were also reviewed in the preparation of the text.
The tax code of Taxastan includes all the national taxes of Taxastan: Tax on the income of physical persons, tax on the income of legal persons, value-added tax, excise taxes, social insurance contributions, land tax, tax on the processors of commercial minerals, tax on the property of enterprises, tax on owners of vehicles, tax on small commercial enterprises, and local taxes. Of course, the set of included taxes should be modified for the individual country in order to bring it into correspondence with existing taxes. The text of the sample code does not deal with issues of the distribution of authority for the collection of taxes among state administrative authorities at the national (federal) and regional (local) level inasmuch as there exist important differences in this area among the constitutions of the individual CIS countries.
Naturally, it will be necessary to make substantial changes to the text to satisfy the needs of a specific country. In this connection, it is suggested that the text be used as a guideline, and as reference material, not as a standard. It is not a recommendation from the IMF that certain specific provisions be introduced in any specific country.