Kazakhstan: Tax Alert - January 2016


1. Regarding the Agreement on pension provision for employees of the Eurasian Economic Union (further – the "EEU") member-states

As it was mentioned in previous tax alerts, the draft of the international Treaty on pension provision for employees of the EEU member-states (further –the "Treaty") was approved.

So, in accordance with the Treaty, pension appointment and payment would be implemented in the following order:

  • for the work experience, accumulated before the entry into force of the Treaty, pensions shall be granted and paid in accordance with the legislation of the EEU member-states and international treaties;
  • for the work experience, accumulated after the entry into force of the Treaty, the pensions shall be granted and paid by the EEU member-states on whose territory the relevant work experience was accumulated.

The following Treaty was developed with the purpose to organize free flow of workforce on the territory of the EEU member-states, since the lack of regulation on the pension provision while working in other EEU countries was one of the significant barriers.

2. Regarding the implementation of utilization fee

The Government of the Republic of Kazakhstan (further – the "RoK") approved the Resolution of the Government of the RoK №28 "On approval of realization rules for extended producers (importers) responsibility" dated January 27, 2016 (further –the "Resolution").

As such, under the Resolution the utilization free was implemented in the RoK and shall be paid by the importers of transport vehicles, automobile manufacturers operating within the RoK and citizens who bought automobiles abroad.

The base amount for utilization fee equals to product of 50 monthly calculation index (further – "MCI") and vehicle coefficient specified in the Order of the Minister of Energy of the RoK №762 "On approval of method of fee calculation for organization of collection, transportation, recycle, disposal, use and (or) waste utilization" dated December 25, 2015. It shall be noted that MCI for 2016 equals to 2 121 tenge.

Further, utilization fee would be paid only once (by serial number- VIN - code) at the moment of vehicle registration, except for vehicles imported prior to January, 2016 and vehicles that have already been registered in the RoK.

The Resolution becomes effective from the date of its first official publication – January 28, 2016.

3. Regarding the value added tax (further – the "VAT") offset on services acquired for own employees and/or for individuals

In accordance with the information provided by the Taxpayers Association of the RoK (further - the "TAP") currently taxpayers face the situation, when during the projects taxpayers attract employees and contractor companies on which taxpayers bear the cost of providing them food, accommodation and other services.

Further, individuals who provide such services issue invoices to taxpayer with VAT.

In connection with that, members of the TAP appealed to the State Revenue Committee of the Ministry of Finance of the RoK (hereinafter – "SRC MF RoK"), with request to clarify whether the taxpayers have the right to offset VAT amount on invoices received.

As such, SRC MF RK after consideration of TAP's request in the letter №SRC-07-1-YL-Е-1882-SRC-1432 dated January 22, 2016 explains that in case involved in project personnel was necessary to perform works or services for the purpose of taxable turnover, then taxpayers have the right to offset the VAT amount on such expenses.

In addition, SRC MF RK informs that expenses in the form of employees' benefit in kind are deductible for the corporate income tax purposes as income of employees' without VAT.

4. Regarding the criteria for allocation of goods imported by individuals for business activity purpose

According to the information provided by the TAP, Ministry of Finance of the RoK have signed Order №717 "On confirmation of criteria for allocation of goods imported for business activity purpose" (further – the "Order") dated December 29, 2015.

Thus, in accordance with the Order, shipment and transfer of goods, performance of works and rendering of services for sale, exchange, donation and transfer of the pledged goods to pledge holder that exceeds 12 minimum salaries (hereinafter – "MS") would be recognized as import of individuals for business activities. It shall be noted that MS in 2016 is equal to 22 859 tenge.

The Order becomes effective in 10 calendar days after its first official publication - January 25, 2016 and extends to the relations arose from January 1, 2016.

5. Regarding the terms for allocation of goods, works/services of realization taxed at zero rate to the constant realization

In accordance with the information provided by the members of the TAP on January 27, 2016 the resolution №29 "On approval of rules determining the amount of excess recoverable VAT amount and criteria for allocation of goods, works/services of realization taxed at zero rate to the constant realization (further - the "Resolution") was signed, that amendments the Resolution №373 from March 20, 2009.

In accordance to the amendment, now to the constant realization of goods, works/ services taxed at zero rate (further – "Realization") relates to Realization performed during three consecutive tax periods, at least once in each quarter.

Whereas under the previous version of the Resolution, Realization was defined as Realization performed during two consecutive quarters, prior to the tax period, in which turnover taxed at zero rate was performed and on which the recoverable VAT was determined.

The Resolution enters into force in a retrospective order from - January 1, 2014.

6. Regarding the changes in the rules on tax accounts maintenance

The Ministry of Finance of the RoK by the Order №634 from December 9, 2015 introduced amendments to the Order №622 from December 29, 2008 "On approval of rules for maintenance of tax accounts" (hereinafter – the "Rules").

Henceforth, under the amendments, taxpayers could receive information on existence/absence of tax liability on obligatory pension contributions (hereinafter –"OPC"), obligatory professional pension contributions (hereinafter –"OPPC") and social contributions in electronic format through:

  • web-portal "electronic government";
  • web application of the State Revenue Committee on information systems;
  • State Corporation "Government for citizens" (prior-Citizens Serviсe Center").

Further, according to the changes, amendments to the paragraph 170 of the Rules were introduced, in compliance with which to offset or refund the excessively paid customs duties, taxes and penalties, taxpayer henceforth should communicate with the authority of state revenues at the place of its registration where customs declaration, customs escort of goods and vehicles was performed, in order and terms set by tax legislation.

Additionally, according to the Rules, amendments to the paragraph 90 were introduced, according to which coercive recovery measures of tax liability would apply to the taxpayer within 30 working days from the notification date of a result of tax audit.

The amendments become effective from January 1, 2016.

7. Regarding the range limits for exchange rate

According to the Resolution of the Chairman of National Bank of the RoK №257 as of December 19, 2015 allowed deviations of purchase exchange rate from selling exchange rate for the foreign currency for operations conducted through exchangers of authorized banks and organizations were set:

  • USA dollar - 6 tenge;
  • Euro - 7 tenge.

The Resolution came into force from February 1, 2016.

8. Regarding the draft law on avoidance of double taxation with Czech Republic

On January 22, 2016 the Senate Deputies of the Parliament of the RoK have approved the draft law "On ratification of the Protocol on amendments and additions to the Convention between the RoK and the Czech Republic on avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital (further – the "Draft Law")

Thus, in accordance with the Draft Law amendments were introduced to the paragraph 3 article 2 of the Convention concluded between the RoK and Czech Republic on avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital, in particular clarification of the types of taxes to which Convention applies.

The amendments were introduced in articles "Resident", "Percent", in accordance with which interest received by State, National Bank or any other state organization are not subject to taxation in the state where income was generated.

Aside from the above mentioned, the Draft Law provides the obligation of the Contracting States to exchange information regardless of the existence of the Law "On the confidentiality of information".

As of today, the Draft Law was transferred to the head of the Chamber of the Senate Committee responsible for its preparation.

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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