Kazakhstan: Legislation Alert - April 2016

Last Updated: 1 August 2016
Article by Grant Thornton

Main amendments to the legislation

1. Regarding changes in the Tax Code of the Republic of Kazakhstan (further – the "Tax Code")

With the purpose to simplify licensing procedures the Law of the Republic of Kazakhstan (further – the "RoK") №479-V dated March 29, 2016 (further –the "Law") introduces the following changes to the certain articles of the Tax Code:

  • paragraph 3 article 273

According to the new version of the paragraph 3 article 273 of the Tax Code, excess value added tax (further – the "VAT") confirmed by a tax audit shall be refunded within 155 calendar days from the date (including the extension period) a VAT declaration was filed for the tax period in which refund request was made.

It shall be noted that previous version of the paragraph stipulated refund of excess VAT within 180 calendar days.

  • paragraph 4 article 273

According to the amendments to the paragraph 4 article 273 of the Tax Code, payer of VAT generating turnover taxable at the zero rate that makes up no less than 70% of total taxable realization turnover for the tax period, shall receive a refund of excess VAT within 55 working days from the period when the VAT declaration incorporating the refund request was made.

The previous version of the current paragraph stipulated that refund of excess VAT confirmed by a tax audit should have been made within 60 working days.

The changes become effective from April 22, 2016.

  • Regarding changes in relation to collection of charge for the placement of advertisement

In accordance with the Law the changes are introduced to the chapter 78 of the Tax Code, according to which charge for the placement of outdoor (visual) advertising on vehicles was cancelled.

The changes become effective from April 22, 2016.

2. Regarding increase of property tax

Based on the information provided by the Taxpayers Association of Kazakhstan (further – the "TAP") the Law №432-V dated December 3, 2015 introduced new subparagraph 1-2 to the article 397 of the Tax Code.

According to the amendments, during the appraisal of the object of the taxation by the taxpayer in accordance with the legislation on Appraisal Activities, market price that defined in valuation report will be the object of the taxation, and has to be no lower than the average book value determined in accordance with International Financial Reporting Standards (further – "IFRS") and the requirements of the legislation of the RoK on accounting and financial reporting.

These changes become effective from January 1, 2017.

3. Regarding legalization of residency certificates with Russian Federation (further – the "RF")

As it was already mentioned in the previous legislation alerts, within the frames of the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains concluded on October 18, 1996; the Government of RF by the order №1531-р dated August 8, 2015 has approved the draft Agreement in the form of notes' exchange, according to which certificates confirming the residency with the official seal attached, that was issued by the competent authority of the one country shall be accepted on the territory of the other country without apostille and consular legalization (further – the "Draft Agreement").

Further, the RoK by the letter №КГД-07-3/15459-И dated September 23, 2015 introduced the Draft Agreement to Secretariat of the Prime Minister of the RoK for further consideration.

However, until today, further information on the status of the documents was absent. In connection with that, TAP filed the request with the State Revenue Committee of the Ministry of Finance of the RoK (further – "SRC MF RoK") to update the status of the documents specified, and also to clarify the procedure of application of the article 219 of the Tax Code, concerning requirements imposed to the document confirming residence.

SRC MF RoK considered TAP's request and by the letter №КГД-07-3-ЮЛ-Е-815-КГД-9823 dated April 20, 2016 replied that SRC MF RoK is working on approval of the Deсree of the Government of the RoK on ratification of the Draft Agreement.

Also, SRC MF RoK replied that until the Draft Agreement in the form of notes' exchange becomes effective, in compliance with article 4 of the Hague Convention, the certificate of residency shall contain apostille, confirming the authenticity of the signature, the capacity in which the person signing the document has acted and, in case the copies of the documents are notarized the signature and stamp of a foreign notary shall be apostilled too.

4. Regarding the limitations on cash payments for legal entities

On April 7, 2016 the Majilis of the RoK introduced the draft Law "On payments and payment systems" (further - the "Draft Law on payment systems").

As it became known, under the Draft Law on payment systems the cash payments and cash remittance could be fulfilled by the legal entity only if it has open accounts in bank, exceptions involve payments of taxes to the budget, social security contributions and voluntary pension contributions which could be paid by cash.

Introduction of this norm is consistent with the requirements of combating money laundering and financing of terrorism; in addition, it aims to strengthen the fight against fictitious-entrepreneurship and shadow economy.

Additionally, the Draft Law on payment systems still preserves the current norm that prescribes that payments between legal entities exceeding 1000 MCI must be made only in the non-cash form. (MCI in 2016 is equal to 2 121 tenge).

It is important to mention that the Draft Law on payment systems does not prescribe any restriction to cash payments in relation to individuals.

5. Regarding the Law on debt collection

On April 5, 2016 Majilis of the RoK has introduced the draft Law "On debt collection activities" (further - the "Draft Law").

Thus, under the Draft Law the amendments in following directions would be implemented:

  • Regarding the organization of the debt collection agency

The terms such as "Debt collection", "Debt collection agency" was introduced under the Draft Law. Further, in accordance with the Draft Law the debt collection agencies would require to pass through licensing procedures such as registration.

  • Regarding the registration requirements

Under the Draft Law, the registration requirements prescribe the inclusion of debt collection agency to the register of the National Bank of RoK (further - the "National Bank")

  • Regarding the competences of National Bank

The Draft Law prescribes the competences of National Bank, in accordance with which National Bank have the right to limit enforcement actions and sanctions for the breach of the law, examine the financial statements of debt collection agencies, as well as conduct inspection of the debt collection agencies' activities.

  • Regarding the competences of the debt collection agency

Further, the Draft Law establishes the requirements to the employees of the debt collection agencies and also establishes a list of dishonest and forbidden actions in interaction with the debtor.

6. Regarding the requirements of internal control rules to counteract legalization income proceeds from crime

The paragraph 2-3 of the Article 3 of the Law "On counteraction to legalization (laundering) of proceeds from crime or terrorism financing" (further - the "Law on CLPC/TF") sets the requirements for internal control rules in order to prevent legalization (laundering) of proceeds from crime and financing of terrorism for lawyers and other independent legal professionals (further - the "Requirements").

In accordance with the Requirements, the lawyers and other independent legal professionals are the subjects of financial monitoring when they are in the name of or on behalf of a client are engaged in operations with money or other assets (further - "Subjects").

Then, Subjects are engaged in operations with money or other assets with following types of activities:

  • purchase and sale of assets;
  • management of money, securities or other property;
  • management of the current bank accounts and securities accounts;
  • accumulation of the expenses for creation, realization, functioning and management of the company;
  • creation, purchase and sale, functioning or managing legal entity.

Further, in accordance to Requirements, Subjects are responsible to comply with the rules of internal control (further - the "RIС") and have administrative responsibility for nonfulfillment of the responsibilities on development, acceptance and execution of RIС and the programs of its implementation in accordance to the Code of the RoK "On administrative violations".

In case of introducing amendments and additions to the Law on CLPC/TF Subjects have to implement related amendments during 30 calendar days.

The amendments introduced under the Decree №708 of Ministry of Finance of the RoK dated December 28, 2015 and become effective in 10 calendar days after its first official publication - from April 9, 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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