Kazakhstan: Tax Alert - August 2015

MAIN CHANGES TO TAX LEGISLATION

1. Regarding amendments and additions to the legislative acts on tax and custom administration

According to the information provided by the Taxpayers Association of Kazakhstan (further the "TAP") at the beginning of September 2015 the draft Law "On amendments and additions to certain legislative acts on tax and customs administration" (further the "Draft") was passed to the Mazhilis of the Parliament of the Republic of Kazakhstan (further "RoK"). It should be noted, that currently the Draft is under consideration in Mazhilis of the Parliament of the RoK.

The Draft, among others, provides the following amendments to the Tax Code of the RoK (further the "Tax Code"):

  • Regarding the obligatory record of registration for value added tax (further "VAT")

    The current edition of the article 568 of the Tax Code stipulates that the obligatory VAT registration shall be made in case the minimum turnover of the taxpayer equals to 30000 times the monthly calculation index (further the "MCI") set by the law on the State budget and valid on January 1 of the relevant financial year.

    However, according to the Draft the obligatory VAT registration shall be made in case minimum turnover of the taxpayer amounts to 3234 times the MCI.

    Estimated effective date of the amendment is January 1, 2017.
  • Regarding the calculation of advance payments

    Taking into account that in practice certain taxpayers understate the sum of advance payments, it was suggested to amend paragraph 4 article 141 of the Tax Code with the following paragraph:

    "In case the sum of advance payments was understated in the statement of advance corporate income tax (further the "CIT") payments payable for the period before the CIT declaration is filed for the previous tax period, the tax authority has the right to accrue additional sum of advance payments for the specified period at a rate of a positive difference between the sums of advance payments".

    The change becomes effective from January 1, 2016.
  • Regarding the individuals' non taxable income

    With the purpose of supporting socially vulnerable segments of the population, it is suggested to make changes in paragraph 13 article 156 of the Tax Code.

    In compliance with the current version of the paragraph 13 article 156 of the Tax Code an individual's taxable income excludes the income for the year up to 55 times minimum salary.

    However, according to the proposed changes the income for the year up to 75 times minimum salary shall be excluded from the individual's income.

The following change becomes effective from January 1, 2016.

2. Regarding the transition to sales tax

In accordance with the information provided by the TAP, the Ministry of National Economy of the RoK presented the draft project on introduction of sales tax.

As such, according to the project, the payers of the sales tax (further "ST") shall be legal entities, individual entrepreneurs, branches of the non resident legal entities, individuals importing goods into the territory of the RoK, private notaries, lawyers, court officers and professional mediators.

The object of taxation upon realisation of goods, works/services shall be the cost of goods, works/services, and in case of goods import the cost of imported goods into the territory of the RoK.

Expected ST rate 3 5%.

However, due to the fact that the majority of the taxpayers are against of VAT cancellation and introduction of the ST, no estimated date of introduction of the ST has been set.

3. Regarding the need for the business trip certificate

Currently, the taxpayers are considering the question of the expediency of the business trip certificate usage and the possibility of its exclusion from the document flow of the taxpayers, since in practice, taxpayers' employees have difficulties with getting stamps on the business trip certificates.

The business trip certificates contain the information on departure and arrival dates of the employee, and also contain stamps of the receiving party signatures, seals confirming the indicated data.

It is also should be noted, that business trip certificates are considered as one of the documents, which confirm business trip expenses for the purpose of taxpayer's tax accounting.

In connection with this, TAP sent a request to the Committee of the State Revenue of the Ministry of Finance of the RoK (further the "CSR MF") for clarification of the question on sufficiency of other documents confirming travel expenses for the purpose of taxpayers' tax accounting, since the legislation of the RoK on accounting for commercial organizations does not require presence of the business trip certificates.

Having considered TAP's request CSR MF provided the following answer: in presence of air or train tickets, order or written notice of the employer, which are considered as the documents confirming days spent on a business trip, the presence of the business trip certificates for the purpose of CIT calculation are not required.

4. Regarding the agreement on order of recognition of the documents confirming residency in the RoK and the Russian Federation (further – "RF")

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 has approved the note by the order №1531 р dated August 8, 2015, 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.

The changes become effective in a retrospective order from January 1, 2011.

Currently, the same note is prepared to be approved in the RoK, the process of notes exchange and ratification is planned to be concluded by the end of 2015.

5. Regarding the reсonsideration of terms for introduction of general declaration of the RoK population

On the presentation of the draft Law "On amendments and additions to certain legislative acts of the RoK on the declaration of income and property of individuals" and Constitutional Law of the RoK "On amendments and additions to Constitutional Law of the RoK "On elections in the RoK" it was announced that the Ministry of the Finance of the RoK has reconsidered the terms for introduction of general declaration of the RoK population.

According to the amendments, transition to the general declaration will be implemented in several stages.

At the first stage, starting from 2017, the declaration of assets and liabilities will be submitted by the government workers (individuals who are responsible for filing the declaration by the current legislation), as well as national companies and state enterprises.

At the second stage, starting from 2020 the declarations of assets and liabilities will be submitted by all adult citizens of the RoK, repatriates and individuals who have a residence permit, minors in case of the right of ownership of property or savings in bank accounts over 3.4 million tenge, foreigners (except for those having release in accordance with international agreements).

Under the general declaration, individuals will be obliged to reflect the information about their assets (money, securities, real estate, land, vehicles, etc.), as well as information on acquisition, tax deductions and property realization while making large acquisitions.

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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