August 12, 2021
EAEU Law for Entrepreneurs: Myth or Reality
- Case practice
- Improper plaintiff
- Different interpretations about the same thing
- Are the principles of the EAEU being observed?
It would seem that the Eurasian Economic Union, created in accordance with the Treaty on the Eurasian Economic Union of May 29, 2014, is designed to ensure the freedom of movement of goods, services, capital and labor, to conduct a coordinated, coordinated or unified policy in various sectors of the economy.
The EAEU includes the Kyrgyz Republic, the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation.
At the same time, on March 17, 2021, the specialized interdistrict court of the city of Almaty, on the claim of the State Revenue Department, makes a decision to recognize the registration of a legal entity with the participation of a citizen of the Russian Federation invalid. The reason is the absence of a business immigrant visa of category C5.
Earlier, on February 18, 2021, the same court ruled to dismiss the same claim of the State Revenue Department, referring to the existence of an Agreement between the Government of the Republic of Belarus, the Government of the Republic of Kazakhstan, the Government of the Kyrgyz Republic, the Government of the Russian Federation and the Government of the Republic of Tajikistan on mutual visa-free travel of citizens, ratified by the Law of the Republic of Kazakhstan dated December 6, 2001 Year No. 262, as well as the absence in the requirements for the registration of legal entities with foreign participation of the provision of a visa for business immigrants of category C5, according to the law “On State registration of legal entities and registration of branches and representative offices”.
Thus, with a difference of one month, the same court makes different decisions on the same case (!).
This conflict was resolved by the court of appeal, having decided to satisfy such claims from the State Revenue Department, thus forming a precedent.
The appellate instance considered that the conclusions of the court of first instance that, in accordance with the Agreement, a visa-free regime is in effect for a citizen of the Russian Federation should be recognized as inconsistent with the factual circumstances of the case and contrary to the norms of the law.
According to the appellate instance, the provisions of the Agreement could not and cannot be applied to legal relations concerning the stay of a citizen of a State party to the agreement for the purpose of conducting business with the establishment of a legal entity on the territory of another state party to the agreement, but are only aimed at regulating the entry, stay, departure, transit of citizens without visas to based on identity documents.
The conditions of stay of business immigrants on the territory of the Republic of Kazakhstan and their entrepreneurial activity are regulated by the Law “On Migration of the Population”. Thus, according to paragraph 1 of Article 40 of the Law “On Migration of the Population”, a prerequisite for the stay of business immigrants in the territory of the Republic of Kazakhstan is the implementation of entrepreneurial activity.
Paragraph 2 of Article 40 of the Law “On Migration of the Population” provides that it is prohibited to create a legal entity, as well as participation in the authorized capital of commercial organizations by joining the participants of legal entities to foreigners who have not received an entry visa as business immigrants.
Apparently, the reason for filing such lawsuits by the state revenue authorities was the non-fulfillment or improper fulfillment of tax obligations on the part of entrepreneurs, the absence of value added tax in the registration register.
At the same time, the fact of violation by a person of the legislation on migration, which was the basis for recognizing the registration of a legal entity invalid, must be confirmed by the relevant administrative act of the authorized body (migration police committee), for example, following the results of monitoring compliance with the legislation of the Republic of Kazakhstan on migration.
Questions arise as to how legitimate was the claim from the state revenue authority containing the ground – violation of migration legislation? Will having a visa solve the problem of non-payment of taxes?
We believe that the correct basis for the termination of taxpayers’ activities is contained in the tax legislation (for example, Article 93 of the Tax Code of the Republic of Kazakhstan), whereas violation of migration legislation is the prerogative of the migration police.
Following the logic of the state revenue authorities, in this case it is necessary to invalidate the registration of all legal entities with foreign participation – citizens of the Republic of Belarus, the Kyrgyz Republic, the Russian Federation and the Republic of Tajikistan, in the absence of a business immigrant visa of category C5.
Different interpretations about the same thing
If the court and the state revenue authorities interpret the legislation on migration and the international agreement in favor of state interests, then individual state bodies represented by the Migration Police Committee and the Ministry of Justice, on the contrary, unequivocally declare that there is no need to obtain a C5 business immigrant visa for citizens of the above-mentioned countries.
The response of the Chairman of the Migration Service Committee of the Ministry of Internal Affairs of the Republic of Kazakhstan dated September 2, 2020 to the question dated August 25, 2020 No. 637584 (dialog.gov.kz )
The response of the Minister of Justice of the Republic of Kazakhstan dated July 9, 2018 to the question dated June 29 , 2018 No. 505628 (dialog.egov.kz )
The response of the Minister of Justice of the Republic of Kazakhstan dated July 28, 2017 to the question dated July 15, 2017 No. 9340 (adilet.gov.kz )
Are the principles of the EAEU being observed?
The EAEU member States should create favorable conditions for the Union to perform its functions and refrain from measures that could jeopardize the achievement of the Union’s goals. This, at least, is spelled out in the EAEU Treaty.
Domestic practice proves the opposite, when state bodies, in case of an ambiguous understanding of legislation, do not follow the idea of creating the EAEU.
Despite the absence of a direct rule in the EAEU Treaty that allows citizens of the EAEU member states to carry out business activities without a visa, as well as the presence of paragraph 1 of Article 97 of the EAEU Treaty, which provides for no need to obtain a work permit, one should adhere to the logic and common understanding of the purpose of creating the EAEU, namely, the desire to form a single market for goods, services, capital and labor resources within the Union.