Maintaining Confidentiality in the Exchange of Information on Tax Matters in the Republic of Kazakhstan

Abstract

In the era of global data exchange, banking secrecy is no longer absolute, becoming part of a more transparent tax administration system. International exchange of tax information has necessitated a legal analysis of issues related to tax secrecy and banking secrecy in Kazakhstan. The authors analyse the relationship between banking, tax and official secrecy, as well as international and national mechanisms for protecting confidentiality in the context of growing demands for tax transparency. The article discusses international initiatives, including CRS, FATCA and the Convention on Mutual Administrative Assistance in Tax Matters (OECD), as well as their impact on the legal framework governing financial information in Kazakhstan. Focusing on international standards, the article highlights the lack of legal clarity in Kazakhstani legislation regarding the mechanism for ensuring banking secrecy when transferring information to tax authorities. Measures are proposed to harmonise regulatory acts aimed at ensuring a balance between the confidentiality of taxpayer information and the obligation of banking organisations to assist the tax authority in performing its tax administration tasks, as well as legal certainty in the handling of confidential information.

1. Introduction

One of the most sophisticated forms of international relations is economic diplomacy. To promote the exchange of information on financial accounts and income of foreign taxpayers, many countries actively participate in global initiatives such as the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA). In this process, details about financial accounts, income, assets, and transactions of individuals and legal entities across different countries are shared.

At the same time, safeguarding the security of participants in economic and financial relations remains a top priority for the state. To protect the confidentiality of tax data, each country establishes the procedures for exchanging information on tax issues within its national legislation.

In this context, examining the legal issues of the information exchange mechanism for tax administration between tax authorities of different countries holds both theoretical significance and practical relevance.

The study’s topic is especially relevant due to the necessity of maintaining banking and tax secrecy, safeguarding the confidentiality of taxpayer data, and considering international standards that regulate the process and exchange of information between tax authorities.

The conceptual basis of the study, together with the diagnostic approach, made it possible to assess the state of Kazakhstani legislation in terms of its compliance with international standards and to identify ways to improve the national legal regime for confidentiality.

2. Data Privacy and Taxation

Currently, various international acts and regulations regarding confidentiality and the transfer of confidential information are in force. International treaties and agreements play a crucial role in regulating banking and tax secrecy, as well as the transfer of confidential information between countries. Key international acts include the Convention on Mutual Administrative Assistance in Tax Matters (OECD), the Common Reporting Standard (CRS), the Foreign Account Tax Compliance Act (FATCA), and the EU’s General Data Protection Regulation (GDPR) (European Commission 2022).

One of the most significant pieces of legislation in the field of data privacy adopted in the European Union is the General Data Protection Regulation (GDPR). The main purpose of the GDPR is to ensure the protection of individuals with regard to the processing of personal data, as well as rules concerning the free movement of personal data.

The GDPR offers various tools for transferring data outside the EU, including European Commission adequacy decisions adopted in non-EU countries if they provide an adequate level of protection, and pre-approved (standard) contractual clauses. Standard Contractual Clauses (SCCs) are the most commonly used mechanism, a template that is filled in by the parties involved in the data transfer. The main purpose of SCCs is to prevent a reduction in the level of protection guaranteed by the GDPR when data is transferred outside the European Union.

At the same time, specific mechanisms for the exchange of tax information and requirements for tax authorities are found in other regulatory acts.

These standards and regulations require tax authorities to share information with foreign nations. Simultaneously, they present challenges concerning the protection of taxpayers’ personal data and require a careful analysis of their impact on citizens’ rights. Additionally, the national laws of different countries provide varying levels of data protection and adopt different approaches to information exchange. Examining these mechanisms is crucial for understanding best practices and pinpointing potential issues.

It must be emphasised that data privacy is enshrined as a fundamental right in international acts and national legislation. This right guarantees each person the protection of personal data, including information about their identity, financial status, health, political views, and other aspects of life. Violations of this right can lead to serious consequences, such as loss of trust in financial institutions and government agencies due to data leaks or misuse. Therefore, research into the protection of privacy and the secure exchange of information in the field of taxation is not only relevant but also essential for cooperation between tax systems across different countries and for safeguarding human rights.

In international practice, a non-disclosure agreement (also known as an “NDA”) is widely utilised. A non-disclosure agreement is an arrangement to keep confidential information secret, ensuring that a person or organisation, after obtaining important information, will not disclose it to third parties.

Generally, such an agreement is entered into by parties involved in civil law relations when sharing information that the copyright owner wishes to keep confidential to prevent its dissemination. In other words, this agreement aims to guarantee the confidentiality of the information specified within it. At the same time, there is no specific international law governing confidentiality agreements or NDAS. In Kazakhstan, a confidentiality agreement is referenced in several legal acts, such as the Civil Code of the Republic of Kazakhstan (concerning contracts and obligations, including confidentiality commitments), the Labour Code of the Republic of Kazakhstan (relating to non-disclosure agreements for trade secrets and confidential information of employees), and others.

Confidential information includes any data whose access is legally restricted: personal data, information related to professional sectors (such as advocacy, banking, auditing, etc.), as well as commercial, official, and state secrets. In the banking industry, confidential data pertains to banking operations and is protected against unauthorised access, use, and disclosure. This data is vital for safeguarding clients’ interests and maintaining the stability of the financial system.

The difficulty in defining the concept of “confidential data” stems from Kazakhstani legislation’s use of the terms “banking secrecy”, “tax secrecy”, and “personal data” to refer to confidential information (Baigaraev 2014).

Considering the theoretical definition of confidentiality, many scholars agree on its principles. For example, M.A. Shchadnaya describes “confidential information” as data that is restricted, protected, and access is limited, in accordance with current legislation, without the right to disclose or transfer it to others, subject to specified procedures and conditions for its use (data). The procedures and conditions for using such information are determined by an agreement between the parties (Shchadnaya and Kryuchkov 2015).

In the legal literature, there are various approaches to the term “secret.” A.A. Dvornikov describes a secret as information kept confidential under the rules established by legal regulations, where a breach can cause harm to protected interests and lead to legal consequences. He recognises confidentiality as a key feature of a secret, with its circulation being restricted and governed by legislation and other legal acts (Kamalova 2016).

According to Ingo Walter: “Confidentiality in tax and banking matters refers to the obligation of financial institutions and tax authorities to protect sensitive information related to customers’ financial activities and tax matters. This includes ensuring that personal and financial data is not disclosed without proper authorisation, maintaining trust in the financial system and compliance with international legal standards” (Walter 2012).

Therefore, to safeguard the secret, it is essential to establish a confidentiality regime in both national legislation and international acts and standards. Currently, there is no comprehensive legal definition of a secret in Kazakhstani law.

3. The Concept of Secrecy

Since scientific understanding begins with the conceptual framework, firstly, the theoretical concept of “secret” should be clarified.

Many legal scholars share their views on the idea of secrecy. Thus, A.A. Fatyanov defines secrecy as a realm of objective reality, hidden from our perception or understanding. In other words, it includes everything that is not currently consciously known by the human mind; it also covers something already known but kept hidden from others for a specific reason. It is clear that the legal interpretation will align with the second meaning of the broader concept of secrecy (Fatyanov 1998).

According to D.B. Podoprikhin, a secret is information that is protectable, known or trusted by a limited group of authorised entities, the disclosure of which can cause harm to public or personal interests. Access to such information is restricted by the owner or by law, and legal liability is established for violating this regime (Podoprikhin 2016). L.O. Krasavchikova considers a secret to be specific information about the actions, conditions, and circumstances of a particular person (whether a citizen, organisation, or state) that is not subject to disclosure.

In our view, these definitions highlight several key aspects that reveal the concept of a secret. Therefore, a secret is information; this information relates to the actions of a specific person; such information remains confidential and is not subject to disclosure.

However, the provided definitions do not give a complete picture of what a secret is, as they do not specify when this information can be used or how it will be protected (Mazurov 2003).

We believe that the definition of a secret, based on the analysis of legislative acts and scientific works proposed by I.V. Smolkova, has several characteristics inherent to a secret and includes elements of a legal nature.

• A secret is, first of all, information;
• The information must be known or trusted to a narrow circle of people;
• Information may be known or entrusted to certain subjects due to their professional or official activities, or the performance of certain assignments;
• Information is not subject to disclosure (publicity);
• Disclosure of information may result in negative consequences (material and moral damage to its owner, holder, user or other person);
• Persons who are entrusted with confidential information have a legal obligation to preserve it;
• For disclosure of this information, legal liability is established by law (Smolkova 1999).

Based on these features, the author offers the following definition of a secret: “…from the substantive side, a secret can be defined as a block of classified or confidential information (data) specially protected by law, known or entrusted to a narrow circle of subjects due to the performance of official, professional and other duties or individual assignments, the disclosure of which may entail legal liability.” It should also be noted that it does not specify that legal liability arises not only from the disclosure of a secret but also from its illegal receipt and use.

V.A. Mazurov managed to most thoroughly clarify the essence of a secret from a legal perspective during the analysis of the viewpoints mentioned above. The scientist articulated the following legal definition of a secret: “A secret is confidential and secret information protected by law in the areas of private life of citizens, business, financial, political, economic, military, and other spheres, known or entrusted to a specific group of persons by virtue of their professional, official, and other duties, the illegal receipt, use, or disclosure of which causes harm or poses a threat of harm to the rights and legitimate interests of citizens, society, the state, and entails liability of the guilty persons in accordance with current legislation” (Mazurov 2003).

Depending on the content of the information and taking into account the opinion of V.A. Mazurov, we propose dividing secrets into the following types: professional secrets; official secrets; commercial secrets; banking secrets; and tax secrets.

From the point of view of information exchange, we are interested in the relationship between banking, tax, and official secrets.

4. The Case of Banking Secrecy in the Republic of Kazakhstan

The origins of banking secrecy date back to the dawn of banking itself. As entrepreneurship developed, the idea of “deposit secrecy” gradually expanded into the broader concept of “banking secrecy,” encompassing virtually all banking activities.

Since its inception in laws concerning the establishment of banking secrecy, one of its current challenges is defining the concept and legal nature of banking secrecy.

In legal science, it is customary to distinguish between banking and commercial secrets. According to scholar O. M. Oleynikov, it would be wrong to consider banking secrecy as a type of commercial secrecy, since the level of classification of certain information as secret and the legal registration of this action are completely different.

We also believe that a bank, being a commercial organisation, has commercial secrets that require special formalisation at the level of local acts. The amount of information constituting commercial secrets will vary from bank to bank. The list of information constituting commercial secrecy, the regulations on commercial secrecy, the list of persons having access to information constituting commercial secrecy, and the procedure for familiarising oneself with this information are determined by the shareholders of each bank.

In the scientific literature, the understanding of banking secrecy as an obligation of banks has become widespread. Thus, D. Kurshakov argues that “banking secrecy is understood as the professional obligation of a bank to keep in the strictest confidence all information relating to the financial and personal aspects of clients’ activities and certain third parties, provided that such information is obtained through normal banking services to these clients” (Mazurov 2003).

Peter Koslowski shares a similar view: “Banks are obliged to maintain confidentiality about their business relationships with customers and about their customers’ accounts. They must preserve banking secrecy or the “banking secret” (Bankgeheimnis) as it is called in German. First and foremost, the “banking secret” is just a subtype of the non-disclosure of facts communicated under confidentiality, and of the general class of professional and business secrets that are similarly familiar from the medical profession, for example, or from brokerage activities in the case of insider knowledge discussed earlier. Banking secrecy is the banking industry’s own brand of professional confidentiality and trade secrecy. Any knowledge the bank acquires during the course of the business relationship must not be used for insider gain, a principle that follows from the fiduciary duty; nor must it be passed to others or publicly disclosed” (Koslowski 2011).

In the era of global data exchange on tax matters, legal relations concerning banking secrecy are undergoing significant changes. These circumstances necessitate the development of legal provisions which, when applied, will ensure a balance between compliance with banking secrecy and transparency in tax administration. In such conditions, the definition of banking secrecy takes on a new meaning, not as an obligation of the bank, but as a principle of banking activity. Thus, Ingo Walter offers the following definition: “Banking secrecy is a principle that obliges financial institutions to maintain the confidentiality of information about their customers, including their account details, transactions and personal data. This principle is widely recognised in international practice and enshrined in various international agreements and conventions” (Walter 2012).

In this regard, O. M. Oleynik’s approach to banking secrecy deserves attention. He argues that the issue of banking secrecy should be analysed on the basis of specific general principles. These principles are as follows:

• The concept of banking secrecy is one form of the legal regime for information with restricted access.
• This regime is related to such regimes as commercial, religious, medical, investigative and judicial secrecy.
• While complying with general rules, the banking secrecy regime has specific rules and procedures regulated at the legislative level.

Based on this, O. Oleinik concludes that “banking secrecy is a special legal regime that cannot be reduced to any previously known legal regime of information” (Oleynik 1997, p. 219).

In our opinion, O. Oleynik’s interpretation of banking secrecy is consistent with the definition of banking secrecy proposed by Ingo Walter. Based on a summary of the above points of view, we propose to understand banking secrecy as a principle that obliges banks to comply with a special legal regime of confidentiality of information about their clients when carrying out banking activities.

The institution of banking secrecy in Kazakhstan is developing in line with the development of banking and the increasing efficiency of tax authorities.

Ensuring banking secrecy is one of the tasks for the development of the banking sector set by the President of the Republic of Kazakhstan in the Concept for the Development of the Financial Sector of the Republic of Kazakhstan until 2030 (President of the Republic of Kazakhstan 2022).

Despite the fact that banking secrecy is one of the basic concepts in the banking sphere and a key principle of banking activities, there are no provisions in the legislation of the Republic of Kazakhstan that directly define this concept. The meaning of banking secrecy is explained through its content.

Pursuant to paragraph 1 of Article 50 of the Law of the Republic of Kazakhstan dated 31 August 1995, No. 2444 “On Banks and Banking Activities in the Republic of Kazakhstan” (hereinafter—the Law on Banks), banking secrecy encompasses information related to bank clients and correspondents, their transactions, and dealings with banks in the context of receiving banking services. This includes, but is not limited to: data about the existence, owners, and numbers of bank and correspondent accounts, account balances and movement of funds (including the bank’s own accounts), any restrictions applied to such accounts (such as orders or decisions by state authorities on suspension of debit operations, seizures, or pledges), transactions carried out by clients, correspondents, and the bank (excluding general banking terms), details about the existence, ownership, type, and value of client property stored in the bank’s safe deposit boxes, cabinets, or other premises, information on loans obtained by clients (except where explicitly stated in the Law), and the execution of payment and/or money transfer operations, including those performed without opening an account (Law of the Republic of Kazakhstan 1995).

It is vital to emphasise that the scope of banking secrecy, as outlined in Article 50 of the Law on Banks, aligns with international standards, where banking secrecy is broadly understood as any information a bank obtains about its clients and correspondents during banking activities. In this context, it is specifically the conduct of banking transactions that defines what constitutes banking secrecy.

According to paragraph 2 of Article 50 of the Law on Banks, financial institutions must safeguard the confidentiality of depositors’, clients’, and correspondents’ transactions and accounts, as well as information about property held in safe deposit boxes, cabinets, and other bank premises, and any other data that qualifies as banking secrecy under Article 50.

Drawing from this provision and expert opinions in the field, banking secrecy can be categorised into the following groups:

First group: Information related to transactions and accounts of depositors, clients, and bank correspondents.

Second group: Data relating to property stored in bank safe deposit boxes, cabinets, and premises.

Third group: Other information subject to banking secrecy according to Article 50 of the Law.

Specialists further emphasise that the principle of the client’s autonomy in managing their funds extends to banking secrecy. This implies that a client may authorise another person to access their financial information. Furthermore, through a contractual agreement with the bank and mass media outlets, a client may choose to make specific details about their transactions public, aiming to build trust and credibility through transparency.

This theoretical rule is enshrined in paragraph 4 of Article 50 of the Law on Banks. Banking secrecy may only be disclosed to the client or any third party with the account holder’s consent, provided in writing or through the account holder’s identification means, to a credit bureau for bank loans, leasing, factoring, forfaiting operations, discounting of bills of exchange, as well as guarantees, sureties, and letters of credit issued by the bank, in accordance with the laws of the Republic of Kazakhstan. The disclosure of information is also permitted to persons such as state bodies and officials performing criminal prosecution functions, courts, prosecutors, national security bodies, state revenue bodies, and state bailiffs, as well as representatives of natural persons on the basis of a notarised power of attorney, the banking ombudsman, and heirs on the grounds and within the limits provided for in Article 50 of the Law “On Banks”.

We also agree with O.M. Oleinik’s opinion that banking secrecy cannot be considered solely from the point of view of private interests. Banking secrecy implies a balance between private interests (of the bank and the client) and the public need for transparency in the activities of the bank and the client.

We believe it is essential to establish who has the right to access information that is considered a banking secret, not only because the law should specify the group of individuals permitted to access this information without the bank customer’s consent, but also considering the purpose for which such access is granted.

This approach justifies defining the group of subjects entitled to receive banking information in two respects.

The first is internal and professional, as it involves establishing the ability to share this information within the banking system—for example, the exchange of information between different banks regarding a client’s creditworthiness.

The second is external, meaning it goes beyond banking and professional systems and enables individual entities to access clients’ banking information without their consent.

The list of information constituting a banking secret and the grounds for its disclosure are established by the Law on Banks. It should be noted that, in defining the scope of subjects entitled to receive banking information, the Kazakh legislator also emphasises two aspects—internal and external.

The inner circle of entities with access to information constituting a banking secret is defined in paragraph 3 of Article 50 of the Law on Banks. These include: officials and employees of banks, resident bank holding companies within the Republic of Kazakhstan, legal entities specified in subparagraphs (8), (8–1), and (8–2) of part two of paragraph 4 of Article 50, and other persons who, by virtue of their official duties, have access to banking secret information and are criminally liable for its disclosure, except in cases provided for in paragraphs 4–8 and 8–1 of Article 50 (Law of the Republic of Kazakhstan 1995).

The outer circle of subjects receiving information that constitutes a banking secret is considerably broader and distinctly defined.

According to Part 2 of Clause 4 of Article 50 of the Law on Banks, providing information to entities such as state revenue authorities, the authorised body for financial monitoring, or the authorised information body, for example, does not constitute a disclosure of banking secrecy.

The provision of information containing a banking secret to entities authorised to receive banking information is carried out in accordance with specific rules, namely, the procedure for providing such information.

According to paragraph 10 of Article 50 of the Banking Law:

The authorised body (Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market) provides information containing banking secrecy to the organisations specified in paragraph 4 of Article 15 of the Law of the Republic of Kazakhstan “On State Regulation, Control and Supervision of the Financial Market and Financial Organisations”, under the conditions stipulated by Article 15.

The National Bank of the Republic of Kazakhstan provides information containing banking secrecy to the organisations specified in subparagraph (38–2) of Article 8 of the Law of the Republic of Kazakhstan “On the National Bank of the Republic of Kazakhstan”, under the conditions stipulated by Article 8.

The authorised body, the National Bank of the Republic of Kazakhstan, shall only provide information received under international treaties of the Republic of Kazakhstan, including treaties for the exchange of confidential information, to other state bodies of the Republic of Kazakhstan with the consent of the party that provided the information (Law of the Republic of Kazakhstan 1995).

Meanwhile, Article 50 of the Law on Banks stipulates that the transfer of information constituting banking secrecy to tax authorities does not constitute a disclosure of banking secrecy.

Moreover, as noted in the Concept, with the introduction of universal declaration, banking secrecy will become accessible to tax authorities (President of the Republic of Kazakhstan 2022). As part of the declaration, tax authorities will examine the movement of taxpayers’ money in accounts in Kazakh and foreign banks.

Due to the fact that the confidentiality of banking secrecy may be lost, the question of granting tax secrecy status to information containing banking secrecy and transferred to tax authorities becomes relevant in practice, since such information is transferred for administrative purposes. This interpretation is consistent with Article 45 of the Tax Code of the Republic of Kazakhstan (Code of the Republic of Kazakhstan 2026).

5. Tax Secrecy and Compliance

The issue of defining the concept of “tax secrecy” remains contentious.

N. A. Zhirnova considers banking and tax secrecy as forms of information, specifically as information with restricted access. In other words, all features of the legal regime for information with limited access apply to these kinds of information (Zhirnova 2012). From the perspective of Russian scholars Y. A. Krutova, V. A. Ochakovsky, and T. E. Koritina, a secret in tax law theory is information recognised by federal legislation as confidential to protect the rights and interests of individuals, society, and the state, aligning with the conditions of protectability established by law. Issues related to safeguarding confidential information are closely connected to the institution of tax secrecy, which further supports the need for its existence and ongoing development (Krutova et al. 2018).

Non-disclosure of tax secrets by tax officials is a crucial aspect of protecting the rights of business entities and ordinary citizens who are not involved in business activities but are taxpayers.

Tax secrets may include any information related to a taxpayer’s taxation, as well as other types of information that become known to tax authorities and their officials during the course of their official duties. This formulation, in the opinion of the authors, is incorrect, since the concept of “any information” may cover a quite broad range of data, which could be viewed as a flaw of the legislator (Krutova et al. 2018).

This raises the key question of what information should be considered tax secrecy.

The legal literature presents varying opinions on this issue, as the concept of “any information” can cover a broad spectrum of data. As a result, a key question arises regarding which information should be regarded as a tax secret.

During his dissertation research, S.I. Tokarev developed and proposed the following definitions of concepts to address shortcomings and expand the legal instruments in tax legislation.

“Tax secrecy” is a set of interconnected legal norms that govern a special regime of access to tax information about the taxpayer and other participants in tax legal relations, obtained by tax and other authorised bodies in the course of performing their functions, for which legal liability is established.

Information constituting a tax secret” is tax information about the taxpayer and other participants in tax legal relations, obtained by tax and other authorised bodies in the course of exercising their powers (Tokarev 2019).

Therefore, to ensure a balance of interests between the state and taxpayers in the tax domain, it is important to recognise that the simultaneous increase in both the volume and significance of information about taxpayers accessible to tax authorities heightens the need to protect this information. Specifically, there is a growing need for more effective and detailed regulation of the confidentiality of information, which will enable taxpayers’ rights to be exercised and safeguarded in line with modern realities, thereby fostering greater trust in tax authorities.

The Tax Code of the RK, effective as of 1 January 2026, defines tax secrecy as any information regarding a taxpayer (tax agent) received by the tax authority.

Concurrently, in Article 45 of the Tax Code of the RK, the legislator specifically delineates information regarding a taxpayer (tax agent) that does not constitute a tax secret:

(a)

A legal entity, a structural subdivision of a legal entity, a non-resident operating in the Republic of Kazakhstan through a permanent establishment, an individual entrepreneur, or a person engaged in private practice;

(b)

A natural person.

Thus, the Tax Code of the RK contains a list of information concerning a taxpayer (tax agent) received by the tax authority that falls outside the scope of tax secrecy.

Furthermore, the Tax Code envisages cases where the tax authority provides information constituting a tax secret without obtaining the taxpayer’s (tax agent’s) consent:

• To authorised state bodies and the National Bank for the performance of tasks and functions assigned to them by the laws of the Republic of Kazakhstan;
• To banking organisations, payment organisations, local executive bodies, local self-government bodies, and the State Corporation for the performance of tasks and functions assigned to them by the laws of the Republic of Kazakhstan;
• To tax or law enforcement authorities of other states, or to international organisations in accordance with international treaties ratified by the Republic of Kazakhstan.

In such instances, the list of information constituting a tax secret and the procedure for its submission are established by interaction rules approved by a joint act with the authorised body (interaction rules approved by a joint act of the authorised body and the authorised state body providing leadership in the relevant sphere, or the National Bank, within their competence).

For instance, under the *Rules for the Provision by State Revenue Bodies to the Authorised Body for External State Audit and Financial Control of Information in the Sphere of Customs Regulation and Information Concerning a Taxpayer (Tax Agent) Constituting a Tax Secret Without Obtaining Written Permission from the Taxpayer (Tax Agent)*, approved by the Joint Order of the Minister of Finance of the Republic of Kazakhstan dated 30 November 2018, No. 1040, and the Normative Resolution of the Accounts Committee for Control over Execution of the Republican Budget dated 4 March 2019, No. 3-NQ, the list of information concerning a taxpayer (tax agent) constituting a tax secret includes:

• Taxpayer personal accounts and data thereon;
• Taxpayer tax forms and data thereon;
• Information on the results of tax control regarding taxpayers’ compliance with tax and other legislation of the Republic of Kazakhstan;
• Information from the state database of taxpayers;
• Information on offsets and refunds of taxes, other mandatory payments to the budget, penalties, and fines regarding taxpayers;
• Information on methods of securing the fulfilment of tax obligations not performed on time regarding taxpayers;
• Information on measures for the enforced collection of tax arrears applied to the taxpayer;
• Data on the appeal of tax audit results and actions (omissions) of officials;
• Information from authorised bodies providing data on taxpayers and objects of taxation, as well as operations performed by taxpayers;
• Information on the write-off of taxes and penalties (fines and penalties following adopted laws and acts of state bodies on write-offs);
• Analytical reports generated based on taxpayers’ tax reporting;
• Information from electronic invoices: supplier details; recipient details; consignor and consignee details; data on goods, works, services, including name, origin criterion, Code of Commodity Nomenclature of Foreign Economic Activity of the Eurasian Economic Union, unit of measurement, quantity, price, value, excise, value-added tax, reference to the customs declaration (for imports), and date of turnover.

The single example cited above suffices to demonstrate that the composition of tax secrecy is, in practice, determined at the level of subordinate legislation by various state bodies within the limits of their competence.

In light of such circumstances, the taxpayer (tax agent) remains practically unaware of which information concerning them constitutes a tax secret, thereby casting doubt upon the very feasibility of guaranteeing and protecting tax secrecy.

According to B. R. Baigaraev, a practising lawyer: “An analysis of the current legislation of the Republic of Kazakhstan shows that there are contradictions and ambiguities in matters of compliance with tax secrecy by tax officials and their disclosure to other persons.”

In our view, it must be acknowledged that information constituting bank secrecy, upon transfer to tax authorities, acquires the status of tax secrecy and falls within the category of official secrecy. Such an approach would facilitate the elimination of contradictions and ambiguities in ensuring the protection of taxpayers’ rights.

6. Official Secrecy and Taxation

The concept of official secrecy and its link with professional secrecy remain topics of academic debate, similar to the ideas of banking secrecy and tax secrecy. Most scholars tend to view official secrecy as covering specific information about individuals and legal entities that officials encounter during their official duties, but due to its special nature, it cannot be freely disclosed. This includes types of secrecy such as investigative, medical, tax, banking, legal (attorney–client), and others (Zhirnova 2012).

Nonetheless, some scholars contend that official secrecy should be confined to information concerning the “non-public” official activities of state authorities (for instance, details about the organisation and execution of operational efforts by tax authorities in pursuit of their legally mandated duties). From this perspective, tax, legal, and similar types of secrecy should be regarded not as official, but rather as so-called “professional” secrecy.

Nevertheless, it appears more appropriate to consider all the previously mentioned types of confidential information as forms of official secrecy, due to the shared characteristic they possess: such information becomes known to authorised officials in connection with the execution of their official duties. In accordance with N.N. Kovaleva’s view, the following definition of official secrecy can be suggested: it is legally protected confidential information that becomes accessible to state authorities or local self-governing bodies on lawful grounds, by virtue of performing their official responsibilities, as well as information about the activities of the authority itself. N.A. Zhirnova similarly argues that the main types of confidential information constitute official secrecy, as they share the defining feature of becoming known to authorised officials in relation to their official functions. She provides the following definition of official secrecy: legally protected confidential information that is disclosed to state authorities or local self-governing bodies on lawful grounds, by virtue of their official duties, as well as official information concerning the activities of the authority itself (Zhirnova 2012).

Based on this definition, the following criteria for the protectability of information constituting an official secret can be identified: (1) information that includes proprietary official details about the activities of the government body itself; (2) confidential information that is protected, such as commercial, banking, professional secrets, or private life secrets—“someone else’s secret”; (3) information that is not a state secret and does not fall under the list of information whose access cannot be restricted; (4) information obtained through the performance of official duties. The objects of official secrets are distinguished as follows: military secrets, investigative secrets, judicial secrets, and tax secrets.

Therefore, a tax secret is a type of official secret, meaning it involves information obtained by individuals specifically appointed by law, solely through the performance of their official duties related to state or municipal service. We share this view, as a tax secret is not subject to disclosure by tax and other authorities that have access to it.

The classification of banking secrecy as a professional secret stems from the fact that the information defining it is entrusted to employees of credit institutions because they are performing their professional duties, which are usually unrelated to state or municipal service.

It is confirmed that the legal framework of secrecy in tax legal relations pertains to professional confidentiality, including officials of tax and other state authorities. It is established that the concepts of “official secret” and “tax secret” differ both in the subject of protection and in the group of individuals authorised to access protected information related to these secrets.

7. International Exchange of Information

Currently, legislation in most developed countries allows exceptions to banking secrecy for specific state authorities and their officials. The law typically specifies which government agencies can access information protected by banking and tax secrecy. Each country independently determines the list of such authorities. Usually, judicial bodies and agencies involved in investigations and criminal proceedings are granted access to banking secrecy information. Legislation in several countries also allows tax authorities to access this information despite banking secrecy.

As Eleonor Kristoffersson has rightly pointed out:

“For several years now, banking secrecy has no longer been considered a legitimate reason for tax authorities to refuse information exchange. Over a relatively short period, a significant number of tax treaties have been updated to reflect the new standard, indicating a gradual shift from a bilateral approach towards a unified multilateral standard. This new standard is being implemented not only through bilateral agreements but also—particularly via the Multilateral Convention of the Council of Europe—through a multilateral legal instrument. The multilateral aspect of tax and budget transparency is progressively guiding tax systems worldwide towards the automatic exchange of tax-related information, which has led to notable progress in certain regions, such as the European Union”.

Active cooperation between tax authorities is crucial for the precise determination of tax jurisdiction and full compliance with tax obligations. Pursuant to Paragraph 1 of Article 43 of the Tax Code of the Republic of Kazakhstan, tax authorities are entitled to engage in international cooperation on taxation matters, including the exchange of information with authorised bodies of foreign states. The implementation of this provision is carried out in accordance with the OECD Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information, which adheres to a standardised approach to information exchange.

Kazakhstan’s adoption of the OECD Common Reporting Standard (CRS) marked a significant milestone in the field of tax information exchange. Following Kazakhstan’s accession in 2014 to the Convention on Mutual Administrative Assistance in Tax Matters (OECD), the country commenced the automatic exchange of information on residents’ financial accounts and reports with other participating jurisdictions (State Revenue Committee 2024).

An examination of the experience in implementing CRSs in EU countries and Kazakhstan indicates that the effectiveness of implementation is determined not merely by the formal adoption of standards, but by the level of their institutional entrenchment. As indicated in the OECD 2024 report, tax authorities of 116 jurisdictions initiated information exchange under the AEOI standard, and in 2024 alone, jurisdictions automatically exchanged information on over 171 million financial accounts totalling nearly 13 trillion euros (OECD 2025). It is anticipated that this form of cooperation will expand: in the coming years, five additional jurisdictions are set to implement the CRS. The transition to the automatic exchange of financial account information has had a substantial impact on taxpayer behaviour and the ability of tax authorities to ensure compliance with tax legislation. Since committing to the AEOI standard, jurisdictions have identified over 135 billion euros in taxes, interest, and penalties through voluntary disclosure programmes and other offshore tax compliance initiatives; furthermore, studies have shown that financial investments held in international financial centres declined by 20% over the same period, which is also attributed to the implementation of the AEOI standard (OECD 2025).

In the Republic of Kazakhstan, the State Revenue Committee of the Ministry of Finance of the RK annually exchanges information with foreign jurisdictions in accordance with the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (CRS) and the Agreement between the Government of the RK and the Government of the USA to Improve International Tax Compliance (FATCA). Information transmitted and received under CRS and FATCA includes data on non-resident bank accounts, investment assets, insurance contracts, and income.

Reporting financial institutions submit annual reports via forms 026.00 and 019.00 through telecommunication networks to the State Revenue Committee of the Ministry of Finance of the RK (Committee of State Revenues 2021).

To date, exchange is conducted with 89 foreign jurisdictions. Thanks to data exchange, 5.4 billion tenge has accrued to the budget of Kazakhstan. For instance, the State Revenue Committee of the Ministry of Finance of the RK conducted audits of over 2000 Kazakhstan residents based on information received from foreign tax authorities. As a result, 1602 Kazakhstanis paid individual income tax totalling 5.4 billion tenge (State Revenue Committee 2024).

Both mechanisms are aimed at enhancing the transparency of international financial flows and combating tax evasion.

Thus, Kazakhstan is strengthening international cooperation in the sphere of tax transparency, which contributes to an increase in budget revenues.

In our view, the coordination of state efforts to establish effective tax information exchange has been achieved over the past decades within the framework of international organisations, as evidenced by the examples of the OECD, CRS, and FATCA. The level of interaction between tax authorities of various other jurisdictions varies; nevertheless, this process is continuously improving due to established standards, directives, and the implementation of the AEOI standard.

Today, the Kazakhstani tax authorities gather information about financial accounts held abroad by individuals and legal entities who are tax residents of Kazakhstan. In exchange, Kazakhstan provides comparable information about foreign tax residents who maintain accounts in Kazakhstani financial institutions. The list of countries participating in information exchange with Kazakhstan is published on the official OECD website.

Since 2014, Kazakhstan has been a participant in the Strasbourg Convention on Mutual Administrative Assistance in Tax Matters, which aims to improve cooperation among the tax authorities of the participating countries.

Article 6 of the Strasbourg Convention promotes the adoption of the Common Reporting Standard (CRS) to enable the automatic exchange of information regarding financial accounts. On 26 June 2018, to prevent capital outflows disguised as foreign currency transactions, the Committee of State Revenues of the Ministry of Finance of the Republic of Kazakhstan (CSR MF RK) signed the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (Ministry of Finance of the Republic of Kazakhstan; Accounts Committee 2018–2019).

Under CRS, the competent authorities of participating jurisdictions annually:

• Receive information from their domestic financial institutions about accounts held by individuals and legal entities who are residents of other participating jurisdictions;
• Transmit this information to the competent authorities of those jurisdictions;
• Obtain similar information from the competent authorities of other participating jurisdictions regarding accounts held by their own residents;
• Share data on controlling persons (beneficial owners) when they are residents of participating jurisdictions (Suleimenov and Osipov 2018; Tengrinews 2025a).

Building on FATCA’s success, the OECD expanded this mechanism globally, involving numerous jurisdictions. Financial information exchange between tax authorities occurs automatically and reciprocally. Overall, over 100 jurisdictions worldwide have signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (Suleimenov and Osipov 2018).

The OECD’s initiative is based on the U.S. Foreign Account Tax Compliance Act (FATCA). Since the OECD’s Common Reporting Standard is modelled on FATCA, the format and content requirements are largely aligned, with only slight differences.

Within the European Union, the principle of banking secrecy has been abolished. Tax authorities now have access to information about any bank account. Furthermore, the list of taxpayer income types subject to mandatory automatic exchange among EU tax authorities has been expanded. This includes account balances, income from the sale of financial assets, interest, and dividends. Historically, some countries—particularly Switzerland and Liechtenstein—were recognised as financial havens, known for the reliability of their banking systems and strict confidentiality regarding banking operations. Therefore, the most significant achievement of the EU in abolishing banking secrecy is that all European countries now participate in this system, including non-EU states such as Switzerland, San Marino, Liechtenstein, Monaco, and Andorra (Suleimenov and Osipov 2018). In other words, there are no longer any European countries where banking secrecy can be exploited to conceal income (Kristoffersson et al. 2013).

In recent years, Kazakhstan has significantly expanded its international cooperation through signed tax treaties. According to the tax authority, over 2000 Kazakhstani citizens were audited based on information from foreign tax authorities. As a result, 1602 individuals paid personal income tax (PIT) amounting to 5.4 billion tenge. “The largest amounts of income—particularly from dividends and interest—originated from countries such as the UAE, the United Kingdom, the People’s Republic of China, Turkey, and others” (Tengrinews 2025b).

In December 2021, the inaugural automated exchange of data regarding financial accounts was executed involving residents and non-residents of Kazakhstan and foreign jurisdictions (Committee of State Revenues 2024).

Pursuant to the agreement, Kazakhstan provides the tax authorities of 62 participating countries with information comprising: account balances, interest amounts, dividend amounts, and other income derived from assets held in financial accounts, as well as data on offshore jurisdictions.

The aggregate volume of transferred data is characterised as follows:

• In 2021—information regarding residents of 51 jurisdictions;
• In 2022—data on residents of 58 countries;
• In 2023—details on residents of 59 jurisdictions;
• In 2024—this figure increased to 89.

Furthermore, aggregated data will be provided regarding the allocation of income, profit, taxes paid, and economic activity among the tax jurisdictions wherein participants of multinational enterprise groups are registered, representing 91 participating countries.

Within the framework of the agreement, the competent authorities of the participating states annually:

• Receive information from financial institutions of their country regarding accounts of natural and legal persons who are residents of other states participating in the Multilateral Agreement;
• Transmit this data to the competent authorities of the aforementioned countries;
• Receive information from the competent authorities of other participating states regarding accounts of natural and legal persons who are residents of their country;
• Exchange information on controlling persons (beneficial owners) if such persons are residents of countries participating in the Multilateral Agreement.

The automated exchange of tax information has constituted a significant step toward enhancing financial transparency and combating tax fraud at the international level. It enables countries to more effectively monitor the tax obligations of natural and legal persons, which, in turn, contributes to financial stability.

Since the signing of the agreement, the number of countries prepared to participate in the automatic exchange of information has increased significantly, indicating a growing global trend toward cooperation in the field of tax administration. This creates strong incentives for countries to improve their taxation systems and counter tax evasion.

This mechanism, developed by the OECD, plays a crucial role in combating the illicit outflow of capital and assists in the effective management of taxes on income received by residents of Kazakhstan abroad (BiznesCentr 2024).

Thus, the international exchange of tax information not only assists in preventing capital flight but also plays a pivotal role in the mobility of the global economy, fostering a fair competitive environment for business structures. It is imperative that every country actively participate in these initiatives, which will allow for an increased level of trust between tax administrations and ensure the enforcement of tax legislation.

The current stage of development in the international community is characterised by the expanding powers granted to tax authorities, including in Kazakhstan. Collaboration and mutual assistance with countries that are parties to international treaties and agreements on information exchange will help Kazakhstan meet international standards and improve the effectiveness of its tax administration in enforcing compliance and tackling international tax avoidance and evasion schemes. At the same time, the confidentiality of exchanged information must be strictly maintained.

In conclusion, it is fitting to cite the opinion of E.V. Demina, who, based on an analysis of OECD-developed documents, asserts that tax information exchange for taxation purposes may be viewed:

• As an administrative measure to combat tax evasion and to counteract harmful tax practices;
• As a tool for preventing double taxation (Demina 2014).

In this respect, Demina correctly notes that harmful tax practices include the lack of tax information exchange mechanisms comparable to those detailed in OECD model agreements.

The OECD has set out the following standards for the exchange of tax information:

• AEOI (automatic exchange of information): requires countries to exchange financial data about individuals opening foreign bank accounts to combat tax violations (Shchadnaya and Kryuchkov 2015; OECD 2025).
• CRS (Common Reporting Standard): developed by the OECD to expand international tax information exchange and fight tax evasion. Since its adoption in 2014, it has sought to establish a global network for sharing financial account data among countries (Kamalova 2016; OECD 2025).
• The Convention on Mutual Administrative Assistance in Tax Matters (Strasbourg, 25 January 1988): Articles 5 (Exchange on Request), 6 (Automatic Exchange), and 7 (Spontaneous Exchange) specify the types of information to be exchanged under the Convention (Smolkova 1999; OECD 1988).
• BEPS (Base Erosion and Profit Shifting): a project aimed at preventing tax avoidance and artificial profit shifting. It includes 15 actions designed to assist countries in closing loopholes in international taxation (OECD 2015).

These OECD initiatives create an effective framework for countries to share information, enabling more efficient enforcement against tax violations and improving global financial transparency. As the leading international organisation in this area, the OECD has made significant progress in combating international tax evasion, especially after the G20 declared the end of banking secrecy in 2009. Through the OECD and G20’s Global Forum, robust standards have been implemented, resulting in an unprecedented level of transparency in tax matters.

8. Conclusions

Contemporary conditions require a systematic approach to regulating and safeguarding confidential information. Only through such an approach can Kazakhstan fulfil its international obligations while also protecting the rights and legitimate interests of citizens and businesses.

The analysis shows that the current environment is undergoing a fundamental re-evaluation of banking secrecy within tax administration. There is a noticeable shift away from complete protection of banking secrecy towards a more transparent and globally coordinated system for the exchange of financial information. This system emphasises tax transparency and combating tax evasion. The traditional concept of “banking secrecy” as an absolute is gradually being replaced by an understanding of “banking secrecy” as a principle of banking activity. This shift is being promoted by the OECD and is reflected in the adoption of universal standards for the exchange of tax information, including the Common Reporting Standard (CRS).

An important result of this change is that banking secrecy is no longer considered a valid reason to refuse sharing information with tax authorities. The implementation of automatic exchange mechanisms, both bilateral and multilateral, based on OECD standards, is gradually eroding the absolute confidentiality of financial data.

The key findings may be summarised as follows:

Legal imbalance between banking and tax legislation: There is a disconnect between the legal norms governing banking secrecy and those overseeing tax secrecy. This disparity hampers law enforcement and jeopardises the protection of taxpayers’ personal data.

Unclear distinction between legal terms:

The lack of a clear legal distinction between “banking secrecy”, “tax secrecy” and “confidential information” fosters legal uncertainty, complicates the application of law, and risks arbitrary interpretation by authorities and financial institutions.

Transformation towards international transparency: OECD recommendations and the implementation of CRS in Kazakhstan and other jurisdictions reflect a paradigm shift—from secrecy and inviolability of financial data to transparency and accessibility for authorised bodies. This significantly restricts the use of offshore and low-compliance banking jurisdictions for tax avoidance.

Insufficient safeguards for transferred information: The data sent by banks to tax authorities lacks a clearly defined protection framework. It is unclear whether such data should be regarded as banking secrecy, tax secrecy, or another form of confidential information.

Ambiguity of the term “tax administration”: The vague legal definition of “tax administration” may lead to undue interference in the private lives of individuals and legal entities without adequate legal basis or procedural safeguards.

Lack of clear distinction between confidentiality and data protection: Confidentiality relates to controlling access to information, while data protection emphasises its technical security. The absence of a unified approach renders personal data protection fragmented and vulnerable.

Expansion of Kazakhstan’s international tax cooperation: Kazakhstan’s active participation in the CRS, FATCA, and the expanding scope of international information exchange demonstrates its commitment to global transparency standards. These agreements not only strengthen tax discipline but also help modernise national legislation.

9. Findings

Harmonisation of legislation: It is essential to align banking and tax laws, especially the definition and management of confidential information. This will remove legal uncertainty and better protect taxpayer rights.

Introduction of clear legal definitions: Legislators must establish precise and unambiguous definitions for terms such as “banking secrecy”, “tax secrecy”, and “confidential information”, including the scope and limits of information shared within tax administration processes.

Establishment of confidentiality guarantees: Legal safeguards must be implemented to ensure that data received by tax authorities from banks is used exclusively for tax administration purposes and is not disclosed to third parties without lawful justification. Additionally, clear legal objectives of tax administration should be defined.

Revision and enhancement of the basic law on confidentiality: Although Kazakhstan has a legal framework for personal data protection, including financial information, the existing legislation requires updating to address modern challenges. This involves clarifying the distinctions between banking and tax secrecy, establishing mechanisms for inter-agency data exchange, and providing legal safeguards for confidentiality. Specifically, provisions should be expanded to improve the use and protection of data, with stronger technical and organisational security measures. Greater guarantees for data subjects must be established, including protection mechanisms for data shared by banks with tax authorities, along with the removal of redundancy and conflicts in law enforcement practices.

Implementation of legal oversight mechanisms: Effective tools must be introduced to monitor and uphold legal accountability for government bodies involved in receiving, storing, and using banking data. These tools are vital for protecting taxpayer rights and ensuring confidentiality.

Balancing tax transparency with individuals’ rights to financial privacy demands a comprehensive legal approach. Only by harmonising laws, establishing clear legal standards, and implementing robust data protection measures can an effective system be developed—one that safeguards both the state’s interests and individuals’ fundamental rights.