Taxes - repression tool against mass media in Kazakhstan

  • 28.01.2011
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On January 26, 2011 in Astana editorial staff of Vzglyad, Respublika, Azat and Alga newspapers brought five boxes of accounting documents to the Tax Committee of the Ministry of Finance of Kazakhstan. The journalists protest against nearly 150 mn tenges of taxes, penalties and fines and consider the actions of tax authorities unprofessional and politically motivated.

Vzglyad newspaper (Ayna Ltd.) was charged the amount of 30 million 854 thousand 629 tenges.

Golos Respubliki (ADP Ltd.) was charged 12 million 803 thousand 530 tenges.

Azat and Alga newspapers (Kiyal Ltd.) were charged 26 million 298 thousand 250 tenges.

„Respublika - dyelovoye obozryeniye” newspaper (Shabyt-info Ltd.) closed as a result of the lawsuit by BTA Bank was charged 76 million 640 thousand 963 tenges.

The newspapers have never actually had any source of revenues which could be charged with such amount of taxes. The journalists initiated their own investigation - where those figures were taken from and interesting facts came out.

Where were the figures taken from?

As it is known, publishing newspapers costs pretty much. The whole staff works on every edition and each member of the staff receives salary and pays taxes. Newspaper offices use telephone and Internet, receive newslines and rent premises. The journalists go on business trips using company’s cars. So, the costs consume the overwhelming part of the newspaper’s budgеt. Naturally, newspapers make profits selling new editions and placing advertisements. Still, the revenue is normally not high and is barely enough to cover all the costs. 

What did the tax inspectors do? They calculated the profits omitting the costs!

So, the inspection shows that:

А. the newspapers did not print new circulations (even the invoices received by Vryemya-print and Biznes-inform printing offices were not taken into account).

B. the staff has not been paid for 4 years (salaries were not taken into account).

C. the office premises were not rented (rental costs were not considered).

D. the newspapers did not use Internet, telephone, neither did they use fuel (connection or fuel costs were ignored).

E. they did not pay for newslines (which means the inspectors did not take into consideration that KazTAG and Interfax-Kazakhstan information agencies received payments from the mentioned newspapers).

….and many other costs were not calculated.

We describe the real situation below based on the figures taken from the accounting documents, receipts, bank statements and these facts can BE EASILY VERIFIED. As an example we propose to examine the situation with Vzglyad and Respublika - Dyelovoye Obozryeniye newspapers.

1. What was omitted by the tax inspectors in Vzglyad case?:

- salaries of the staff – which amount to 14 million 460 thousand 518 tenges in the period of 2007-2009.

(It is curious that the inspector calculated the taxes paid on salaries, yet the salaries themselves were omitted).

- bills for printing newspapers by the printing office - which amount to 38 million 982 thousand 617 tenges in the period of 2007-2009.

- office rental costs - which amount to 3 million 474 thousand 305 tenges in the period of 2007-2009.

- costs for Internet, domestic and international calls - which amount to 1 million 057 thousand 001 tenges in 2007-2009.

… Subscription to newslines - 766 thousand 682 tenges, fuel costs - 487 521 tenges, social deductions - 410 964 tenges, etc.

2. What was omitted by the tax inspectors in Respublika - Dyelovoye Obozryeniye case:

- salaries of the staff – which amount to 45 million 233 thousand 316 tenges in 2005-2009.

(It is curious that the inspector calculated the taxes paid on salaries, yet the salaries themselves were omitted).

- bills for printing newspapers by the printing office - which amount to 100 million 513 thousand 520 tenges in 2005-2009.

- office rental costs - which amount to 2 million 424 thousand 376 tenges in 2005-2009.

- costs for Internet, domestic and international calls - which amount to 2 million 230 thousand 575 tenges in 2005-2009.

- bank services, GSM, stationery, depreciation, dispatch and transportation of newspapers, newsline subscriptions, etc. - amount to 6 million 172 thousand 001 tenges in 2005-2009.

…However, the inspector decided to increase VAT by the amount of 11 million 964 thousand 374 tenges and revenues from selling and advertising - by the amount of 167 million 569 thousand 780 tenges.

The situation looks similar with Azat, Alga and Golos Respubliki newspapers.

No ACTIVITY? YOU’LL BE ADDED SOMETHING!!!

But the most interesting case happened with Shezhire Ltd. The company is an owner of Golos Respubliki newspaper. Since the company was founded (in May 23, 2006) it has not been running any activities EVER and during all those years it has submitted tax declarations with no activity to tax authorities, as it passed the rights to publish and sell the newspapers to other company called ADP Ltd, where the editorial staff works.

You can believe it or not, but the tax inspector made the company with no activity a millionaire!

According to the tax inspector, the company which did not work even for a day was able to earn 19 million 451 thousand 400 tenges.

The tax inspector included the following to this amount (!):

- revenue for the whole accountable period of Golos Respubliki newspapers as if sold by Shezhire Ltd. (please, keep in mind that they are sold by ADP Ltd.);

- the taxes which were not paid at the amount of 3 million 890 thousand 280 tenges. 

So, even though Golos Respubliki is published and sold by other company, Shezhire Ltd. was also said to receive those revenues. Some sort of double taxation, we can say. 

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