After lengthy court battles, when the case returned from the Supreme Court, in September 2021 the appellate court granted the regional electric grid company's application to declare unlawful the tax audit notification that assessed 893 million tenge and reduced losses by 1.4 billion tenge.
The main assessment consisted of property tax charges resulting from including transformer equipment in the taxable object. Tax authorities treated transformers and transformer substations as a single real estate object, leading to increased facility book values.
The taxpayer argued that only the external structure constitutes a facility, while the transformers themselves should be classified as equipment and not subject to property tax. The court found the taxpayer's position legitimate and overturned the tax audit results.
Importantly, this decision has a positive effect for the country overall, as it eliminates the need to increase electricity tariffs to cover property tax expenses.
The court ruling also overturned the assessed corporate income tax (CIT) and declared unlawful the tax adjustment of carried-forward losses used in calculating CIT for subsequent periods. In total, the taxpayer will save 1.2 billion tenge.
The company's interests were represented by GK & Partners law firm partner Nurlan Zekenov.
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