Universal Declaration of Individuals' Income

Current tax legislation provides for the phased declaration of individuals' income and expenses. In general this is a good initiative, but in some respects it seems to me excessive and costly. Let me try to explain what I dislike about the current declaration system. From next year we move to the final stage, when all citizens will be required to file a declaration recording all their assets and liabilities, and will then file one every year stating what they acquired and what they disposed of over the past year.

I am trying to file Form 270 right now. It has been changed several times, and the online form was made available only 3 weeks before the filing deadline. There are no clear instructions for completing it, and the form requires many fields that people simply do not know how to fill in. The forms are neither adaptive nor readable. If you enter amounts in foreign currency, you cannot specify non-integer numbers and have to round, which introduces a significant error. For example, if a share costs 0.4 dollars, the rounding rules require you to enter zero, while if you enter 1, the figure will be more than 2.5 times the real value. There are many such inaccuracies.

Today the state has virtually all the data it needs to determine the income and expenses of individuals, with the exception of the property and accounts that individuals hold abroad, their cash, and luxury goods. Disclosing foreign property, cash and luxury goods is a voluntary part of the declaration, and those who disclose them in the initial declaration will later have a good instrument for justifying them as a source of income. Most of our population does not have much of this kind of property, so they will be filing declarations that are practically empty.

The people who actually have something to declare are, as a rule, executives, company owners and civil servants.

The remaining people who fall under the last stage of declaration, and they are the majority, have no real estate abroad, no luxury goods, no expensive jewelry, no expensive works of art. All of their data is already in the databases of government agencies. Forcing people to fill in declarations with data that the state already has is a waste of time and money. Some of our villages still have no internet, and many rural residents lack the necessary skills. Some will simply ignore the requirement, which will cause a wave of violations and force the State Revenue Committee (SRC) to spend its resources issuing fines for offenses that could have been avoided.

To solve this problem, I believe, a declaration should be marked as filed automatically, using the data the state already holds, for people who have not submitted one. If a citizen has property he wishes to declare, he does so voluntarily and files the declaration himself before the set deadline. Subsequently, he files a declaration if he has sold property or used cash that the state cannot see. Everyone else should be released from filling in a declaration, and it should be done for them.

A proactive stance by the state would save most citizens substantial money and time and spare them the stress of declaring.

We need to understand that the main purpose of declaration is to identify, in the future, income that has fallen outside the tax base, and accordingly to collect tax on it.

Nowadays there is no need for blanket declaration to achieve this. What we need is to develop analytics and desk-based audits.

For example, if a person buys a car, an apartment or jewelry worth more than KZT 10 million (and jewelry stores do report such information to the Financial Monitoring Agency), these purchases should be automatically matched against the person's savings and income. If there is a discrepancy, a desk-based audit is launched immediately, followed by a field audit.

To this end, it would be better to focus on the databases, their integration and the SRC's capabilities, so that they can be used to build an analytical center.