E-invoicing and electronic document exchange in Kazakhstan

published on 8 May 2024 | reading time approx. 3 minutes

In Kazakhstan, the digitalisation of the accounting system is being driven by the introduction of E-Invoicing and electronic document exchange. This innovative measure aims to improve the efficiency and transparency of business transactions and reduce costs. The introduction of E-Invoicing and E-documentation in Kazakhstan is an important step towards modernising the accounting system and strengthening the competitiveness of the Kazakh economy. Companies that switch to electronic document processing will benefit from a number of advantages, including faster processing, lower costs, improved transparency and increased efficiency.

Issuing invoices and sending and forwarding documents for business purposes is a huge undertaking for any business in Central Asia. In Kazakhstan, for example, accounting requires the preparation of a list of basic documents needed to confirm business transactions. According to Kazakh law, these are the following documents:

Contract - the basis of the business relationship between the parties.
Invoice - required to confirm an obligation to pay for goods or services.
Proof of payment - including cash cheques and strict reporting forms confirming payment.
Delivery note - issued when goods are delivered, confirming their quantity and quality.
Certificate of work done or services rendered - confirms that work has been done or services rendered.
Invoice - required for tax accounting, including input tax deduction.

The issuance and receipt of certificates by business partners is mandatory. This process involves enormous (labour) costs, e.g. for checking the return of signed documents, postage costs, etc. Issuing and receipt of confirmations by counterparties is mandatory.

The electronic invoice is mandatory. Other documents do not have to be submitted and transmitted in electronic form.

It should be noted that digitalisation in Kazakhstan is penetrating various areas of the economy and public administration, including customs regulation and tax control. An example of the digitalisation of tax administration is the introduction of the "virtual warehouse" - a module that enables the control of the movement of goods within the country, including imports and exports, through the Electronic Invoicing System (EIS). The system went live in April 2018, ensuring transparency in transactions involving certain categories of goods that require special accounting.

The "Virtual Warehouse" system is based on a module integrated with the IS ESF (Electronic Invoicing System) and allows the monitoring of the movement of goods that require special accounting. When the sale of such goods is registered in the ESF system, the data is automatically transferred to the Virtual Warehouse so that the movement of goods can be tracked in real time. This greatly simplifies the control of the movement of goods, ensures the transparency of transactions and thus contributes to the fight against tax fraud.

The introduction of electronic invoicing (E-Invoicing) provides the tax authorities with additional control options.

This digital transformation is helping to improve the efficiency of tax and customs administration in Kazakhstan. In Uzbekistan, tax authorities are already able to automatically verify the accuracy of transactions declared by taxpayers.

In order to avoid an imbalance between the level of digitalisation of tax authorities and that of taxpayers, we believe it is necessary to follow the current trends in digitalisation.

This need relates not only to the mandatory document flow with the tax authorities via the government platforms described above, but also to the electronic document flow with other documents using electronic digital signatures.

In Kazakhstan, electronic document management is being actively developed as part of the government's digitalisation policy. Electronic document management systems speed up the exchange of documents between organisations, improve control over execution and increase overall efficiency. The use of electronic signatures and secure communication channels ensures the legal validity and security of documents.

As described above, electronic systems are being integrated into various public and private structures, including the tax administration, customs authorities and the banking sector. The Government has created all the necessary conditions for the signing and exchange of documents, so that the signing of all documents with an electronic digital signature is legally valid.

With the proliferation of electronic digital signatures (EDS), it is now possible to sign a wide range of documents electronically. EDS can be used to legally sign documents such as contracts, HR documents, references and employment agreements. In addition, EDS can be used to sign any other document that requires a person's signature, whether on behalf of a legal entity or an individual. This greatly simplifies document management.

Imagine if, as a company director, chief accountant or human resources manager, you never had to sign a single paper document. This is already a reality.

The implementation raises a number of issues that need to be addressed. One important aspect is avoiding the risk of unauthorised access to documents, which can lead to confidential information being leaked internally and externally. Implementing a new document management system can raise specific issues around information storage, technology reliability, compliance with regulatory and internal requirements, and employee adoption of new innovative processes.