Kazakhstan has no financial reporting system in its European sense. Financial statements are prepared primarily for tax purposes, and any element of the financial statements that is not directly relevant to tax assessment is generally unreliable.

Due to this reason, there is no obligation to audit the accounts — except in the case of public or listed companies — and no obligation to publish them!

The entire corporate financial administration is subordinated to the tax assessment, where the rules are very strict:

• each document that is entered in the accounts must be signed by the person authorized to sign (this can of course be delegated),
• the tax-relevant annexes to invoices must also be signed in the company name (delivery note),
• electronic signature systems exist, but only local systems are accepted by the tax authorities (e.g. DocuSign is well known but not accepted),
• there is an online communication between the tax administration and most taxpayers.

Based on its internal data and considering taxpayers’ morale, the tax authority prepares his risk rating, classifying taxpayers into high-medium-low risk categories — and publishes it! In addition, tax debt information is available for all taxpayers…

In the absence of financial statements, credit insurance is also an interesting issue. Apart from the tax authority’s risk rating and late tax payments, the only data available that is relevant for credit insurance is the database of late payments to suppliers – but this only provides data based on court decisions. In the absence of market information, the major international credit insurers are only present through front-end partners, and only two of them: Credendo for the longest time and Coface for a few years, which offers cover – exclusively to CGS clients (Coface Global Service). Russian credit insurance facilities have traditionally been available in Kazakhstan but are now not available to Western companies due to sanctions. There are also interesting cultural differences, with companies in the north being more orderly while in the Shymkent region, for example, companies are notoriously bad at paying each other — representing the diversity of this vast country!

If you liked the article, feel free to read my previous posts on Kazakhstan – and if you are working in Central Asia, please contact me privately, it’s good to know about each other!