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In 2024, OLYMPEX ADVISERS successfully provided consulting services to a subsoil user company, supporting it through a review of historical data as part of its participation in the horizontal monitoring pilot project. Company experts conducted a comprehensive analysis of disputed issues identified by auditors, assessing tax risks. Throughout the process, they collaborated with the client’s production and other departments, developed a strategy to protect the company’s interests, provided guidance on evidence preparation, and substantiated the legality of the company’s positions at the regulatory level.

The results of the support allowed for the removal of most potential additional assessments by providing the client with well-reasoned explanations on the application of tax regulations. Notably, horizontal monitoring enables companies to engage in voluntary, open, and trusting interactions with tax authorities, thus avoiding penalties. In cases of disagreement with the audit findings, a full tax audit with additional assessments and fines (ranging from 50-80% of the sum) may be triggered, leading to increased obligations and legal costs.

Successful completion of the audit within the pilot project allowed the company to receive objective and substantiated recommendations from tax authorities and a report based on the monitoring results. This provided the company the opportunity to independently correct identified discrepancies without incurring penalties—this being the main purpose of horizontal monitoring.

Thus, balancing the interests of the state and the Company proved to be the most challenging aspect of the Consultant’s work, as initially, the projected tax consequences suggested by the tax authorities were significant, and the voluntary execution of these recommendations placed a substantial burden on the Company. Furthermore, the Company fundamentally disagreed with these issues, considering its actions to be lawful. Moreover, the issues raised could have implications for other subsoil user companies, as they presented a methodological deviation from the established practice in Kazakhstan.

Taking into account negotiations with government representatives, the preparation of response letters reflecting the Company’s position, correspondence with government bodies, and recommendations on strategic behavior, the Company successfully completed the first stage (pre-project work) of implementing the horizontal monitoring pilot project in the form of a five-year historical data review without penalties. As a result, with the support of OLYMPEX ADVISERS experts, the company became one of the first in Kazakhstan to successfully pass the audit as part of the horizontal monitoring pilot project.