On taxes and other obligatory payments to the budget (Tax Code)

New Unofficial translation

Code of the Republic of Kazakhstan of December 25, 2017 № 120-VI

      Unofficial translation

      This Code establishes basic principles of taxation, regulates the government-directed imposition, introduction, change, abolition of taxes, procedure for calculation and payment of taxes and other obligatory payments to the budget, as well as relations pertaining to the fulfillment of tax obligations.

1. GENERAL PART SECTION 1. GENERAL PROVISIONS Chapter 1.BASIC PROVISIONS

Article 1. Basic definitions used in this Code

      1. Basic definitions used in this Code for tax purposes are as follows:

      1) information processing services – services for the collection and generalization of information, systematization of bulk information (data) and making the outcome of information processing available to the user;

      2) special tax regime –special procedure for the calculation and payment of certain types of taxes and other obligatory payments to the budget, as well as filing tax returns on them by certain types of taxpayers;

      Note of the RCLI!
      This wording of subparagraph 3) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      3) social welfare payments – mandatory pension contributions, mandatory professional pension contributions paid in accordance with the legislation of the Republic of Kazakhstan on pension protection, social contributions paid in accordance with the Law of the Republic of Kazakhstan “On Compulsory Social Insurance”, contributions for compulsory social health insurance paid in accordance with the Law of the Republic of Kazakhstan “On compulsory social health insurance”;

      4) securities – shares, debt securities, depositary receipts, shares of mutual funds, Islamic securities;

      5) arrears – calculated, assessed and overdue amounts of taxes and payments to the budget, including advance and (or) current payments of them, except for those stated in an audit findings report under appeal with regard to the amount in dispute in accordance with the procedure set by the legislation of the Republic of Kazakhstan;

      6) debt securities – government issue-grade securities, bonds and other securities recognized as debt securities in accordance with the legislation of the Republic of Kazakhstan;

      7) discount on debt securities (hereinafter referred to as discount) - difference between nominal value and that of primary placement (exclusive of a coupon) or purchase price (exclusive of a coupon) of debt securities;

      8) coupon on debt securities (hereinafter referred to as coupon) - amount payable (due) by the issuer in excess of the nominal value of debt securities in accordance with the terms of issue;

      9) premium on debt securities - difference between the value of primary placement (exclusive of a coupon) or the purchase price (exclusive of a coupon) and the nominal value of debt securities, the terms of issue of which provide for payment on a coupon;

      10) other obligatory payments to the budget (hereinafter referred to as payments to the budget) - mandatory money contributions to the budget in the form of fees, allowances, duties, except for customs payments effected in the amount and in cases set forth in this Code;

      11) market exchange rate - the rate of the tenge to a foreign currency set in accordance with the procedure prescribed by the National Bank of the Republic of Kazakhstan together with the authorized state body regulating the activity in the field of accounting and financial reporting;

      12) web application – a customized website of the authorized body protected from unauthorized access, designed to enable taxpayers to receive electronic tax services and fulfill their tax obligations;

      13) grant – non-repayable assets for the achievement of certain goals (tasks) provided by:

      states, governments of states to the Republic of Kazakhstan, the Government of the Republic of Kazakhstan, both individuals and legal entities;

      international and state organizations, foreign and Kazakhstani non-governmental public organizations and foundations, whose activities are of charitable and (or) international nature and not contrary to the Constitution of the Republic of Kazakhstan, entered into the list fixed by the Government of the Republic of Kazakhstan following state bodies’ resolutions, to the Republic of Kazakhstan, the Government of the Republic of Kazakhstan, both individuals and legal entities;

      foreigners and stateless persons to the Republic of Kazakhstan and the Government of the Republic of Kazakhstan;

      14) humanitarian aid – assets provided on a non-reimbursable basis to the Republic of Kazakhstan in the form of food products, consumer goods, machinery, equipment, medicinal products and pharmaceuticals, other assets sent by foreign countries and international organizations to improve living and welfare conditions of the population, and also to prevent and recover emergency situations of military, ecological, natural and man-made nature, which are distributed by the Government of the Republic of Kazakhstan through authorized organizations;

      15) sponsorship – assets provided on a non-reimbursable basis to disseminate information on a person rendering this assistance:

      among individuals in the form of financial (except for social) support for their participation in competitions, contests, exhibitions, festivals and for the development of creative, scientific, scientific and technical, inventive activity, to boost the level of education and sportsmanship;

      among non-commercial organizations to enable them to achieve their statutory goals;

      16) dividends are income:

      in the form of net income or part thereof that is payable on shares, including underlying assets of depositary receipts;

      payable on shares of a mutual fund, except for income on shares repurchased by a fund management company;

      in the form of net income or part thereof distributed by a legal entity among its founders, participants;

      from the distribution of assets in case of liquidation of a legal entity or reduction of its charter capital, and also from the repurchase of a participatory interest in a legal entity or part thereof from its founder, participant by this legal entity, the repurchase of shares from a shareholder by a legal entity that issued those shares;

      payable on Islamic participation certificates;

      received by a shareholder, participant, founder or their related party from a legal entity in the form of:

      positive difference between the market price of goods, works, services and the price at which such goods, works, services are sold to a shareholder, participant, founder or their related party;

      negative difference between the market price of goods, works, services and the price at which such goods, works, services are purchased from a shareholder, participant, founder or their related party;

      the cost of expenses or obligations, not related to the entrepreneurial activity of a legal entity, arising for its shareholder, participant, founder or their related party to a third party, which the legal entity recovers without receiving compensation from a shareholder, founder, participant or their related party;

      any assets and material benefit provided by a legal entity to its shareholder, participant, founder or their related party, except for the income specified in Articles 322-324 of this Code, and that from the sale of goods, works, services.

      Income from the distribution of assets specified in this subparagraph shall be calculated as follows:

      I = Vr – Ap,

      where:

      I – income from the distribution of assets;

      Vr – the book value of assets (to be) received by a shareholder, participant, founder upon the distribution of assets, including those (to be) received in return for earlier contributed ones, at the date of transfer, (to be) stated in the accounting records of the transferring party, without revaluation and depreciation;

      Ap:

      the amount of paid-up charter capital attributable to the number of shares for which the assets are distributed;

      the amount of paid-up charter capital attributable to the participatory interest for which the assets are distributed, but not exceeding the amount of expenses for its acquisition and (or) payment of contributions to the charter capital made by the participant for whose benefit the assets are distributed.

      The positive or negative difference specified in this subparagraph is calculated when adjusting taxable items. Taxable items are adjusted in the cases and in accordance with the procedure established by the legislation of the Republic of Kazakhstan on transfer pricing. For the purposes of this subparagraph, related parties are defined in accordance with paragraph 2 of this article;

      17) design services - services for designing artistic forms, the appearance of products, facades of buildings, interiors of premises; artistic design;

      18) standard procedure for taxation – a procedure for calculating, paying taxes and payments to the budget, filing tax returns on them, which is set forth in the Special Part of this Code, except for the procedure prescribed by Section 20 of this Code;

      19) private practice owner - a private notary, private law enforcement officer, lawyer, professional mediator;

      20) social support of an individual – compensation-free transfer, within a year, by a tax agent of assets worth up to 55 times the minimum wage established by the law on the republican budget and effective as of the start of a relevant financial year to an individual eligible for social support in accordance with the legislation of the Republic of Kazakhstan.

      The list of categories of persons covered by this subparagraph shall be approved by the central authorized body for state planning in coordination with the authorized body;

      21) personal property of an individual - tangible items of personal property that are owned by him/her or are his/her share in common property, provided all of the following requirements are met:

      they are not used by an individual for business purposes;

      they are not subject to the imposition of a self-assessed individual income tax;

      22) subsoil use contract - an agreement between a competent authority or an authorized body for exploration and use of subsurface resources or a local executive body of a region, a city of national significance, the capital within their competence established by the legislation of the Republic of Kazakhstan on subsoil and subsoil use, and an individual and (or) a legal entity on the exploration, extraction, combined exploration and extraction of mineral resources, or construction and (or) operation of underground facilities not related to exploration and (or) extraction, or for national geological study of subsurface resources.

      For the purposes of this Code, a subsoil use contract shall also stand forsubsoil use licenses and other forms of granting rights to subsoil use and (or) water use in accordance with the legislation of the Republic of Kazakhstan.

      Given this, the terms “exploration contract”, “extraction contract”, “contract for combined exploration and extraction” and “exploration or extraction license” used in this Code are identical to the term “subsoil use contract”, the term “exploration and extraction contract” is identical to that of “combined exploration and extraction contract”;

      23) subsoil use operations - works related to the geological study of subsoil, exploration and (or) extraction of mineral resources, including those connected with the exploration and production of groundwater, therapeutic muds, subsoil exploration for wastewater discharge, and also for construction and (or) operation of underground facilities not related to exploration and (or) extraction;

      24) subsoil users - individuals and legal entities entitled to conduct subsoil use operations, including oil ones, and (or) water use operations in the territory of the Republic of Kazakhstan in accordance with the laws of the Republic of Kazakhstan;

      25) employee:

      an individual who is in labor relations with an employer and performs work under an employment agreement (contract);

      a civil servant;

      a member of board of directors or another management body of a taxpayer that is not asupreme management body, except for civil servants;

      a foreigner or a stateless person assigned for work under an outstaffing contract by a non-resident whose activity does not constitute a permanent establishment in accordance with the provisions of paragraph 7 of Article 220 of this Code to a resident or another non-resident operating in the Republic of Kazakhstan through a permanent establishment;

      26) structural unit of a legal entity - branch, representative office;

      27) investment gold - gold, which meets the following requirements:

      to gold coins:

      such gold coins shall have no numismatic value;

      the purity of gold coins shall be equal to or greater than 900/1000 of gross mass (which is equivalent to 900 fineness, 900 promille, 90.0 percent, or 21.6 karat).

      A gold coin is recognized as that of numismatic value in case one of the following requirements is met:

      it was minted before 1800;

      it was minted using the technology ensuring a mirror-like surface, “proof” quality;

      the mintage is not more than 1000 copies;

      its market price exceeds the value of gold contained in the coin by more than 80 percent.

      The value of gold contained in a coin is determined by way of multiplying a.m. gold fix (price quotation) set by the London Bullion Market Association as of the date of sale of the gold coin by the market exchange rate set on the previous business day of the date specified.

      As to other gold:

      such gold is affined (the purity of such gold is equal to or greater than 995/1000 of the total mass (which is equivalent to 995 fineness, 995 promille, 99.5 percent, or 23.88 karat);

      such gold is up to the national or international standard, shall be manufactured in the shape of a measured or standard ingot and/or plate and carry the following marks:

      as to a standard ingot and (or) plate:

      serial number (may include a year of manufacture);

      the trademark of a manufacturer;

      gold purity (content);

      year of manufacture, if not included in the serial number;

      for a measured ingot:

      type of metal;

      the trademark of a manufacturer;

      gold purity (content);

      mass of an ingot;

      28) engineering services - engineering and consulting services, research, design, calculation and analysis, development of feasibility studies of projects, elaboration of recommendations in the field of production management and administration, sales of products;

      29) online marketplace – information system in the Internet providing intermediary services for the organization of e-commerce;

      30) online store – information system in the Internet for the sale of goods through one’s own website;

      31) Islamic securities – Islamic lease certificates and Islamic participation certificates;

      32) professional mediator - a mediator who carries out his/her activity on a professional basis as required by the Law of the Republic of Kazakhstan “On Mediation”;

      33) arithmetic-mean market exchange rate for the period – the rate calculated using the following formula:

      R = (R1 + R2 + … + Rn)/n,

      where:

      R – arithmetic-mean market exchange rate for the period;

      R1, R2.., Rn – the daily market exchange rate of a relevant currency set on the previous business day of each day of the period;

      n – the number of calendar days in the period;

      34) non-contract activity - any other activity of a subsoil user that is not expressly set out in a subsoil use contract;

      35) contract activity - activity of a subsoil user carried out in compliance with the provisions of a subsoil use contract;

      36) consulting services – services for providing explanations, recommendations, advice and other forms of consultation, including identification and (or) evaluation of problems and (or) possibilities of a person, in order to address managerial, economic, financial and investment issues, as well as those of strategic planning, organization and implementation of entrepreneurial activities, personnel management;

      Note of the RCLI!
      This wording of subparagraph 37) is in effect until 01.07.2018 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      37) oil treatment - a set of technological processes for the treatment of oil, including its gathering, delivery for treatment, inflow of borehole fluid into measuring units, degassing, dehydration, desalination, stabilization, demercaptanization;

      38) charitable assistance - assets provided on a non-reimbursable basis:

      in the form of sponsorship;

      in the form of social support of an individual;

      to a non-commercial organization to support its statutory activity;

      to an organization operating in the social sphere to enable it to implement the types of activity specified in paragraph 2 of Article 290 of this Code;

      to an organization operating in the social sphere and meeting the requirements specified in paragraph 3 of Article 290 of this Code;

      39) participatory interest - share participation of an individual and (or) legal entity in a joint activity, the charter capital of a legal entity, except for joint-stock companies and mutual funds;

      40) non-disclosure agreement - a contract (agreement) between a subsoil user and the authorized body for the exploration and use of mineral resources, used as a basis for the disclosure of geological information. A contract (agreement) for acquisition of information is also among such contracts (agreements);

      41) heated tobacco products - tobacco products intended for inhaling aerosol produced as a result of heating tobacco electronically or otherwise, without tobacco burning process;

      42) marketing services - services associated with research, analysis, planning and forecasting in the sphere of production and circulation of goods, works, services for the purposes of identifying steps to create better economic conditions for the production and circulation of goods, works, services, including characteristics of goods, works, services, elaboration of pricing and advertising strategies;

      43) recipient on behalf of the state (state authorized recipient) - a legal entity assigned by the Government of the Republic of Kazakhstan and acting on behalf of the state as a recipient of mineral resources transferred in kind by a subsoil user for the fulfillment of his/her/its tax obligation stipulated by the tax legislation of the Republic of Kazakhstan and (or) production sharing agreements (contracts), a subsoil use contract approved by the President of the Republic of Kazakhstan,which are provided for by Article 722 of this Code and;

      44) state revenue body - a state body ensuring, within its competence, revenues from taxes and payments to the budget, customs regulation in the Republic of Kazakhstan, exercising powers to prevent, detect, suppress, clear up and investigate criminal and administrative offences, which the legislation of the Republic of Kazakhstan places under the jurisdiction of this body, and also exercising other powers provided for by the legislation of the Republic of Kazakhstan;

      45) mineral raw materials – part of subsoil extracted to the surface (rock, ore raw materials and others) containing mineral (minerals);

      46) primary processing (enrichment) of mineral raw materials - a mining activity that includes on-site gathering, crushing or grinding, classifying (sorting), briquetting, agglomeration and enrichment by physicochemical methods (without qualitative changes in the mineral forms of minerals, their aggregate-phase state, crystallochemical structure) and may also include processing technologies that are special types of mining operations (underground gasification and smelting, chemical and bacterial leaching, and mining of alluvial deposits by dredging and hydraulicking);

      47) oil operations - works on exploration, production of hydrocarbons, construction and (or) operation of necessary technological and production facilities;

      48) operator - a legal entity that is set up or assigned in accordance with the laws of the Republic of Kazakhstan by subsoil users carrying out subsoil use operations within a simple partnership (consortium) under a production sharing agreement (contract);

      49) mining - the whole scope of works (operations) relating to the extraction of minerals from the subsoil to the surface, including the removal of groundwater, as well as from technogenic mineral formations;

      50) realization - shipment and (or) transfer of goods or other assets, performance of works, rendering of services for the purpose of sale, exchange, gratuitous transfer, transfer of assets under a lease agreement, as well as transfer of pledged goods to a pledgee if a debtor fails to fulfill apledge-secured obligation;

      51) minerals - natural mineral formations, hydrocarbons and groundwater contained in the bowels of the earth, as well as natural mineral formations and organic substances containing useful components, the chemical composition and physical properties of which allow their use in the sphere of material production and (or) consumption and (or) for other needs, as they are or after their processing;

      52) royalty - payment for:

      the right to use mineral resources in the process of extraction of minerals and processing of technogenic formations;

      the use of or the right to use copyrights, including software, drawings or models, except for full or partial sale of property (exclusive) rights to an intellectual property item; the use of or the right to use patents, trademarks or other similar types of rights;

      the use of or the right to use industrial equipment, including seagoing vessels leased under bareboat-charter or demise-charter agreements and aircraft leased under demise-charter agreements, as well as commercial or scientific-research equipment; the use of know-how; the use of or the right to use movies, video films, sound recordings or other recording media;

      53) tax agent - an individual entrepreneur, a private practice owner, a legal entity, including its structural units, as well as a non-resident legal entity, that are assigned the duty to calculate, withhold and transfer taxes withheld at the source of payment in accordance with this Code;

      54) tax regime – set of regulations of the tax legislation of the Republic of Kazakhstan applied by a taxpayer to calculate all tax obligations for the payment of taxes and payments to the budget established by this Code;

      55) taxes – obligatory monetary payments to the budget legally established by the state on a unilateral basis, except for cases provided for by this Code, made in certain amounts, which are non-returnable and unrequited;

      56) tax audit report – an opinion drawn up pursuant to tax audit findings in accordance with the legislation of the Republic of Kazakhstan;

      57) taxpayer - a person and (or) a structural unit of a legal entity that is a payer of taxes and payments to the budget;

      58) personal account of a taxpayer (tax agent) - a document, also in electronic form, for the accounting of calculated, assessed (reduced), transferred and paid (including offset and refunded) amounts of taxes and payments to the budget, social welfare payments, and also amounts of penalties and fines;

      59) electronic document of a taxpayer - an electronic document transmitted in the established electronic format, certified with an electronic digital signature of the taxpayer, after its acceptance and confirmation of authenticity;

      Note of the RCLI!
      Thiswording ofsubparagraph60) isin effectuntil01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstanas of 25.12.2017).

      60) electronic digital signature of a taxpayer - a sequence of electronic digital symbols created by means of an electronic digital signature and confirming the authenticity of an electronic document, its belonging to a taxpayer and invariability of its content;

      61) tax debt - amount of arrears, as well as unpaid amounts of penalties and fines. Tax debt shall not include the amount of penalty stated in an audit findings report, as well as the amount of fines stated in a resolution on the imposition of an administrative sanction during an appeal period in accordance with the procedure established by the legislation of the Republic of Kazakhstan with regard to the amount in dispute;

      62) remuneration - all payments:

      relating to a credit (loan, microcredit), except for the borrowed (lent) amount of a credit (loan, microcredit), money transfer fees charged by second-tier banks and other payments to a person who is not a lender, a related party to a borrower;

      relating to a credit (loan, microcredit), the right of claim under which is assigned to a legal entity specified in the laws of the Republic of Kazakhstan “On Banks and Banking Activity in the Republic of Kazakhstan” and “On Microfinance Organizations”, except for the borrowed (lent) amount of a credit (loan, microcredit), money transfer fees and other payments to a person who is not a lender, a related party to a borrower;

      relating to the transfer of property under a financial lease agreement, including payments to a related party in connection with such an agreement, except for:

      the cost at which such property was obtained (transferred);

      those in connection with the change in the amount of lease payments when applying the factor (index) in accordance with the terms of a financial lease agreement;

      those to a person who is not a lessor, a related party to a lessee;

      those on deposits, except for the amount of a deposit, as well as payments to a person who is not a depositor, a related party to a deposit-taker;

      payments under an accumulative insurance contract, except for the insured amount, to a person who is not an insurer, a related party to an insurant;

      debt securities in the form of discount or a coupon (inclusive of discount or premium from the cost of primary placement and (or) the cost of acquisition), payments to a person who is a holder of debt securities, a related party to a person paying remuneration;

      those on a bill, except for the amount indicated in a bill, payments to a person who is not a bill holder, a related party to a drawer;

      those on repo transactions - in the form of the difference between repo closing and opening prices;

      those on Islamic lease certificates.

      For the purposes of this subparagraph, fees paid under bank account agreements are also recognized as remuneration;

      63) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VIasof 25.12.2017;

      64) import of goods - importation of goods into the customs territory of the Eurasian Economic Union in accordance with the customs legislation of the Eurasian Economic Union and (or) the customs legislation of the Republic of Kazakhstan, as well as importation of goods into the territory of the Republic of Kazakhstan from the territory of another member state of the Eurasian Economic Union;

      65) e-commerce - business activity for the sale of goods to individuals carried out using information technologies through an online store and (or) an online marketplace provided all of the following requirements are met:

      transactions for the sale of goods are registered in electronic form;

      goods are paid for by bank transfer;

      existence of an own service of goods delivery to acustomer (recipient) or contracts with persons providing services for the carriage of goods, performing courier and (or) postal activities;

      66) tour operator services - services of an individual entrepreneur and a legal entity having a license for tourism operator activity (tour operator activity) in accordance with the legislation of the Republic of Kazakhstan on tourism activity, for the sale of a tourism product created by them to travel agents and tourists;

      67) a person – an individual and a legal entity; an individual that is a citizen of the Republic of Kazakhstan, a foreigner or a stateless person; a legal entity that is an organization set up in accordance with the legislation of the Republic of Kazakhstan or of a foreign state (a non-resident legal person). For the purposes of this Code, a company, organization or other corporate entity established in accordance with the legislation of a foreign state is treated as an independent legal entity, regardless of whether it has the status of a legal entity in the foreign country of its incorporation;

      68) an authorized legal entity - a legal entity assigned by an authorized body to sell the property of a taxpayer (tax agent) and (or) a third party, which has restrictions on the title to it and (or) is pledged in accordance with this Code;

      69) authorized state bodies - state bodies of the Republic of Kazakhstan, except for tax authorities and local executive bodies authorized by the Government of the Republic of Kazakhstan to calculate and (or) collect payments to the budget, and also to interact with tax authorities in accordance with this Code within their competence established by the legislation of the Republic of Kazakhstan;

      70) authorized body - a state body in charge of ensuring revenues from taxes and payments to the budget;

      71) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      72) winnings - any types of income in kind and in cash received by taxpayers at contests, competitions (olympiads), festivals, lotteries, drawings, including drawings on deposits and debt securities, as well as income in the form of material benefit obtained through gambling and (or) betting;

      Note of the RCLI!
      This wording of subparagraph 73) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      73) electronic taxpayer - a taxpayer interacting with tax authorities electronically on the basis of a tax application for registration as an electronic taxpayer in accordance with the procedure setforth in this Code;

      74) electronic cigarettes - tobacco-free devices that electronically heat a nicotine-containing liquid (in cartridges, tanks and other containers used in electronic cigarettes) and thereby produce aerosol for inhaling;

      75) electronic invoicing system - information system of the authorized body for receiving, processing, registering, transferring and storing invoices issued in electronic form.

      2. For the purposes of this Code, individuals and (or) legal entities shall be recognized related parties if their relationships meet at least one of the following requirements:

      1) one person is recognized an affiliated person of the other in accordance with the laws of the Republic of Kazakhstan;

      2) one person is a major participant in the other;

      3) persons are bound by an agreement under which one of them is entitled to influence decisions taken by the other;

      4) a legal entity is under control of a major participant or executive officer of the other legal entity;

      5) a large shareholder, a major participant or an executive officer of one legal entity is a major shareholder, a major participant or an executive officer of the other legal entity;

      6) both legal entities are under control of a third party;

      7) a person and his/her affiliated persons jointly own, use, dispose of 10 or more percent of participatory interests of a legal entity or legal entities specified in subparagraphs 2)-6) of this paragraph;

      8) an individual is an executive officer of a legal entity specified in subparagraphs 2)-7) of this paragraph, except for non-executive director of a joint-stock company;

      9) an individual is a close relative or an in-law relative (brother, sister, parent, son or daughter of the spouse) of a major participant or executive officer of a legal entity.

      For the purposes of this paragraph, a large participant shall be understood to mean a participant whose share in the assets of a legal entity, except for joint-stock companies, is equal to or greater than 10 percent.

      Control over a legal entity shall be understood to mean a possibility to influence decisions made by this legal entity.

      3. Other special concepts and definitions of the tax legislation of the Republic of Kazakhstan are used in the meanings defined in relevant articles of this Code.

      4. The concepts of civil and other branches of the legislation of the Republic of Kazakhstan used in this Code shall have the meanings in which they are used in these branches of the legislation of the Republic of Kazakhstan, unless otherwise provided for by this Code.

Article 2. The tax legislation of the Republic of Kazakhstan

      1. The tax legislation of the Republic of Kazakhstan is based upon the Constitution of the Republic of Kazakhstan, consists of this Code, as well as regulatory legal acts, the adoption of which is provided for by this Code.

      2. No one shall be liable to pay taxes and payments to the budget not provided for by this Code.

      3. Where a contradiction exists between this Code and other laws of the Republic of Kazakhstan, for tax purposes, the provisions of this Code shall apply.

      4. It is prohibited to include rules regulating tax relations in the non-tax legislation of the Republic of Kazakhstan, except for cases provided for by this Code.

      5. Where an international treaty ratified by the Republic of Kazakhstan establishes rules other than those contained in this Code, the rules of the said treaty shall apply.

      Note of the RCLI!
      This wording of article 3 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

Article 3. Validity of the tax legislation of the Republic of Kazakhstan

      1. The tax legislation of the Republic of Kazakhstan is valid throughout the territory of the Republic of Kazakhstan and applies to individuals, legal entities and their structural units.

      2. Legislative acts of the Republic of Kazakhstan introducing amendments and additions to this Code, except for those concerning tax administration, special considerations in establishing tax reporting, as well as improvement of the situation of taxpayers (tax agents), may be adopted on or before December 1 of a current year and take effect on or after January 1 of a year following the year of their adoption.

Article 4. Principles of taxation

      1. The tax legislation of the Republic of Kazakhstan rests on the principles of taxation established by this Code.

      The principles of taxation include those of obligatory nature of taxation, definiteness of taxation, fairness of taxation, taxpayer’s conscientiousness, unity of the tax system and publicity of the tax legislation of the Republic of Kazakhstan.

      The provisions of the tax legislation of the Republic of Kazakhstan shall not be contrary to the principles of taxation.

      2. Where contradictions are revealed between the provisions of the tax legislation of the Republic of Kazakhstan and the principles of taxation, such provisions shall not apply, if contradictions are revealed in the course of consideration of complaints about audit findings reports, the latter shall be subject to revision.

Article 5. The principle of obligatory nature of taxation

      A taxpayer is obliged to fulfill a tax obligation, a tax agent - to calculate, withhold and transfer taxes in full and on time in accordance with the tax legislation of the Republic of Kazakhstan.

Article 6. The principle of definiteness of taxation

      Taxes and payments to the budget of the Republic of Kazakhstan shall be well-defined. The definiteness of taxation means the establishment by the tax legislation of the Republic of Kazakhstan of all the grounds and procedures for the commencement, fulfillment and termination of a taxpayer’s tax obligation, the duty of a tax agent to calculate, withhold and transfer taxes.

Article 7. The principle of fairness of taxation

      1. Taxation in the Republic of Kazakhstan is universal and obligatory.

      2. It is prohibited to grant tax reliefs on a case-by-case basis.

      3. No one may be subject to reimposition of the same type of tax, the same type of payment to the budget for the same taxable item over the same time period.

Article 8. The principle of the taxpayer’s conscientiousness

      1. A taxpayer (tax agent) is assumed to perform actions (inaction) to fulfill his/her/its tax obligation in good faith.

      2. A taxpayer (tax agent) may not benefit from his/her/its illegal actions in order to obtain tax benefits (tax savings) and reduce tax payments.

      3. If a tax obligation fulfilled by a taxpayer (tax agent) in compliance with previously received individual written explanation from a tax authority, later withdrawn, is found to be wrong or a new, different, explanation was delivered, the tax obligation is subject to adjustment (correction) in the course of consideration of a complaint about an audit findings report without charging fines and penalties to the taxpayer.

      4. Violation of the tax legislation of the Republic of Kazakhstan by a taxpayer (tax agent) shall be described in the course of tax audits. Tax authorities are obliged to support arguments and disclose circumstances providing evidence of the fact of violation of the tax legislation of the Republic of Kazakhstan.

      5. When considering a complaint about an audit findings report, all uncertainties and open issues of the tax legislation of the Republic of Kazakhstan shall be construed in favor of a taxpayer (tax agent).

Article 9. The principle of the unity of the tax system

      The tax system of the Republic of Kazakhstan is uniform throughout the territory of the Republic of Kazakhstan in respect of all taxpayers (tax agents).

Article 10. The principle of publicity of the tax legislation of the Republic of Kazakhstan

      Regulatory legal acts regulating taxation issues are subject to mandatory official publication.

Article 11. Tax policy

      Tax policy is a set of measures to establish new and abolish current taxes and payments to the budget, to change rates, taxable and tax-related items, to alter the tax base for taxes and payments to the budget in order to satisfy financial needs of the state through the harmonization of economic interests of the state and taxpayers.

      Note of the RCLI!
      Part two of article 11 takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (text deleted).

Article 12. Advisory Council on taxation issues

      1. The Government of the Republic of Kazakhstan is entitled to set up Advisory Council on taxation issues for the purposes of eliminating ambiguities, inaccuracies and contradictions that may arise in the course of fulfillment of tax obligations, and also for suppressing possible schemes to evade the payment of taxes and payments to the budget.

      2. Provisions on the Advisory Council and its membership shall be approved by the Government of the Republic of Kazakhstan.

Chapter 2. THE RIGHTS AND OBLIGATIONS OF A TAXPAYER AND A TAX AGENT. REPRESENTATION IN TAX RELATIONS

Article 13. The rights and obligations of a taxpayer

      1. A taxpayer has the right:

      1) to receive from tax authorities information on current taxes and payments to the budget, on amendments to the tax legislation of the Republic of Kazakhstan, clarification how to apply the tax legislation of the Republic of Kazakhstan;

      2) to represent his/her/its interests in relations governed by the tax legislation of the Republic of Kazakhstan, either personally or through a legal or authorized representative in accordance with Article 16 of this Code, or involving a tax consultant;

      3) to conclude a tax audit contract in accordance with the legislation of the Republic of Kazakhstan;

      4) to obtain the results of tax control in the cases specified by this Code;

      5) to receive from a tax authority free forms of standard tax applications and (or) software necessary for filing tax returns and applications in electronic form;

      6) to appeal against an audit findings report, a notice of the results of consideration of a complaint of the taxpayer (tax agent) about the audit findings report, as well as actions (inaction) of officials of tax authorities;

      7) not to submit information and documents not relating to taxable and/or tax-related items, except for information and documents, which submission is provided for by the tax legislation of the Republic of Kazakhstan, the legislation of the Republic of Kazakhstan on transfer pricing, as well as the legislation of the Republic of Kazakhstan regulating the production and turnover of certain types of excisable goods, aviation fuel, biofuels and fuel oil.

      2. A taxpayer has the right to submit information on his/her/its telephone numbers and e-mail addresses to a tax authority for the purpose of being informed of the existence of obligations for a vehicle tax, land tax and personal property tax.

      3. A taxpayer is obliged:

      1) to timely and fully fulfill tax obligations;

      2) to submit, at the request of tax authorities, a tax audit contract and a tax audit report in case of conclusion of such a contract;

      3) to submit information and documents provided for by the tax legislation of the Republic of Kazakhstan, the legislation of the Republic of Kazakhstan on transfer pricing, and also the legislation of the Republic of Kazakhstan regulating the production and turnover of certain types of excisable goods, aviation fuel, biofuels and fuel oil;

      4) to comply with the requirements for the use of cash registers;

      5) for five years from the date of printing or complete filling, to keep shift reports, cash and commodity check books, as well as checks of cancellation, refund and checks of cash registers that were cancelled and refunded.

      4. A taxpayer has other rights and performs other duties established by the tax legislation of the Republic of Kazakhstan.

Article 14. The rights and obligations of a tax agent

      A tax agent has the same rights and fulfills the same obligations as a taxpayer, except for the cases provided for by this Code.

Article 15. Ensuring and protection of rights of a taxpayer (tax agent)

      1. A taxpayer (tax agent) shall be guaranteed the protection of his/her/its rights and legitimate interests.

      2. Protection of the rights and legitimate interests of a taxpayer (tax agent) is carried out in accordance with the procedure prescribed by this Code and other laws of the Republic of Kazakhstan.

      3. Tax authorities, their officials and employees are prohibited from requiring taxpayers to perform duties not provided for by the tax legislation of the Republic of Kazakhstan.

Article 16. Representation in tax relations regulated by this Code

      1. A taxpayer (tax agent) has the right to participate in relations regulated by the tax legislation of the Republic of Kazakhstan via a legal or authorized representative, unless otherwise provided for by this paragraph.

      The provision of this paragraph shall not apply in the case of filing:

      1) VAT returns by a taxpayer that was VAT deregistered by the decision of a tax authority in accordance with paragraph 4 of Article 85 of this Code;

      2) a tax application forVAT registration.

      2. A person authorized to represent a taxpayer (tax agent) in accordance with the laws of the Republic of Kazakhstan is recognized as a legal representative of a taxpayer (tax agent).

      3. An individual or legal entity authorized by a taxpayer (tax agent) to represent his/her/its interests in relations with tax authorities, other participants of the relations regulated by the tax legislation of the Republic of Kazakhstan is recognized as an authorized representative of a taxpayer (tax agent).

      An authorized representative of a taxpayer (tax agent) who is an individual, including an individual entrepreneur, acts on the basis of a notarized power of attorney or that equated to it, issued in accordance with the civil legislation of the Republic of Kazakhstan, which specifies relevant powers of the representative.

      An authorized representative of a taxpayer (tax agent) who is a legal entity or its structural unit acts on the basis of constituent documents and (or) a power of attorney issued in accordance with the civil legislation of the Republic of Kazakhstan, which specifies relevant powers of the representative.

      4. Personal participation of a taxpayer (tax agent) in relations regulated by the tax legislation of the Republic of Kazakhstan does not deprive him/her/it of the right to have a representative, nor does the participation of a representative deprive the taxpayer (tax agent) of the right to personal participation in the said relations.

      5. Actions (inaction) of an authorized representative of a taxpayer (tax agent) committed on behalf of a taxpayer (tax agent) are recognized as actions (inaction) of the taxpayer (tax agent).

      6. Actions (inaction) of a legal representative of an individual committed on behalf of that individual are recognized as actions (inaction) of the legal representative of the individual.

Article 17. Participation in tax relations via an operator in conducting subsoil use operations under a production sharing agreement (contract)

      1. Subsoil users conducting subsoil use operations within a simple partnership (consortium) under a production sharing agreement (contract) have the right to participate in relations regulated by the tax legislation of the Republic of Kazakhstan via an operator.

      2. Powers of an operator in relations regulated by the tax legislation of the Republic of Kazakhstan shall be determined in accordance with a production sharing agreement (contract) to the extent consistent with this Code.

      3. Fulfilling tax obligations in accordance with subparagraph 2) of paragraph 3 of Article 722 of this Code, an operator has all the rights and obligations provided for by this Code for taxpayers (tax agents), and the tax administration procedure provided for by this Code for taxpayers (tax agents) is applied to the operator.

      4. Actions (inaction) of an operator committed on behalf and (or) instructions of subsoil users, in connection with the participation of these subsoil users in relations regulated by the tax legislation of the Republic of Kazakhstan, are recognized as actions (inaction) of such subsoil users and the operator acting on their behalf and (or) instructions.

Chapter 3.TAX AUTHORITIES. INTERACTION OF TAX AUTHORITIES WITH AUTHORIZED STATE BODIES AND OTHER PERSONS

Article 18. Tax authorities, their tasks and system

      1. Tax authorities are national revenue agencies that perform the tasks of:

      1) ensuring the compliance with the tax legislation of the Republic of Kazakhstan;

      2) ensuring full and timely revenues from taxes and payments to the budget;

      3) ensuring full and timely calculation, withholding and transfer of social welfare payments in accordance with the legislation of the Republic of Kazakhstan and this Code;

      4) involvement in implementation of the tax policy of the Republic of Kazakhstan;

      5) ensuring, within their competence, economic security of the Republic of Kazakhstan;

      6) creating, supporting the development of information and communication infrastructure and accessibility of electronic services for taxpayers;

      7) performance of other tasks provided for by the legislation of the Republic of Kazakhstan.

      2. Tax authorities consist of the authorized body and its territorial subdivisions in the regions, the cities of Astana and Almaty, districts, cities and city boroughs, as well as inter-district territorial subdivisions. In case of creation of special economic zones, territorial subdivisions of the authorized body may be set up inside these zones.

      Tax authorities have codes approved by the authorized body.

      3. The authorized body is in charge of tax authorities.

      4. Tax authorities have a symbol, the description and procedure for the use of which shall be approved by the authorized body.

Article 19. The rights and obligations of tax authorities

      1. Tax authorities are entitled:

      1) within their competence, to develop and approve regulatory legal acts provided for by this Code;

      2) to carry out international cooperation on taxation issues, including the exchange of information, with authorized bodies of foreign states;

      3) in the course of tax control, to require of a taxpayer (tax agent) the access to software data for the automation of book-keeping and tax accounting and (or) an information system containing data on primary accounting documents, accounting registers, information on taxable and (or) tax-related items, where a taxpayer (tax agent) uses such software and (or) information system, except for the access to software data and (or) information system of second-tier banks and organizations carrying out certain types of banking operations, which contain information constituting a bank secret in accordance with the laws of the Republic of Kazakhstan.

      Note of the RCLI!
      This wording of part two of subparagraph3) is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstanas of 25.12.2017).

      The exception set forth in part one of this subparagraph does not apply to tax authorities’ requirements specified in the course of a tax audit in respect of income and expenses;

      4) to require of a taxpayer (tax agent):

      the submission of documents confirming the accuracy of calculation and duly payment (withholding and transfer) of taxes and payments to the budget, complete and timely calculation, withholding and transfer of social welfare payments;

      written explanations about tax forms drawn up by a taxpayer (tax agent), as well as financial statements of a taxpayer (tax agent), including consolidated financial statements of a resident taxpayer (tax agent), as well as financial statements of its subsidiaries, located outside the Republic of Kazakhstan, together with an audit report in the event that the laws of the Republic of Kazakhstan prescribe a mandatory audit for such a person;

      5) to receive information, the submission of which is provided for by subparagraphs 1), 2), 3) and 6) of Article 24 and Article 27 of this Code, from second-tier banks and organizations carrying out certain types of banking operations, custodians, the integrated securities registrar, brokers and (or) dealers entitled to maintain clients’ accounts as nominee holders of securities, investment portfolio managers, as well as insurance organizations;

      6) to receive from second-tier banks and organizations carrying out certain types of banking operations information on the existence and numbers of bank accounts, on the balances and movements of money in these accounts, in compliance with the requirements set by the laws of the Republic of Kazakhstan for disclosure of information constituting commercial, banking and other law-protected secrets, with regard to persons specified in subparagraph 13) of Article 24 of this Code;

      7) in the course of a tax audit, in accordance with the procedure prescribed by the Code on Administrative Offences of the Republic of Kazakhstan, to seize documents of a taxpayer (tax agent) indicative of administrative offences;

      8) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      9) to involve specialists in tax audits;

      10) to bring to court claims for declaring transactions invalid, for liquidation of a legal entity on the grounds set forth in subparagraphs 1), 2), 3) and 4) of paragraph 2 of Article 49 of the Civil Code of the Republic of Kazakhstan, and also other claims within their competence and consistent with the tasks set by the legislation of the Republic of Kazakhstan.

      2. Tax authorities shall:

      1) observe the rights of a taxpayer (tax agent);

      2) protect interests of the state;

      3) provide a taxpayer (tax agent) with information on current taxes and payments to the budget, amendments to the tax legislation of the Republic of Kazakhstan, clarify issues concerning the application of the tax legislation of the Republic of Kazakhstan;

      4) within their competence, explain and comment on the commencement, fulfillment and termination of a tax obligation.

      Note of the RCLI!
      Part two of subparagraph 4) takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (text deleted).

      5) ensure, within a limitation period, the safety of the data confirming the payment of taxes and payments to the budget;

      6) give access to tax authorities’ information system to the authorized state body that carries out financial monitoring and takes other measures to counteract money laundering in accordance with the legislation of the Republic of Kazakhstan;

      7) in accordance with the procedure and in cases specified by this Code, place on the website of the authorized body information on taxpayers (tax agents) who:

      have tax debt;

      are recognized as inactive in accordance with the tax legislation of the Republic of Kazakhstan;

      have registration declared invalid pursuant to a final and binding court judgment;

      8) provide a taxpayer (tax agent) with free forms of standard tax applications and (or) software required for filing tax returns and applications in electronic form;

      9) consider a complaint of a taxpayer (tax agent) about actions (inaction) of officials of tax authorities;

      10) annually, at the request of the National Chamber of Entrepreneurs of the Republic of Kazakhstan, submit information on the names and identification numbers of business entities, which total annual income meets the criteria set by the Law of the Republic of Kazakhstan “On the National Chamber of Entrepreneurs of the Republic of Kazakhstan”;

      11) apply methods of ensuring the fulfillment of a tax obligation and forcibly collect tax debt from a taxpayer (tax agent);

      12) control the compliance with the procedure for recording, storing, valuing, further use and realization of property transferred into state ownership, for its complete and timely transfer to an appropriate authorized state body in accordance with the legislation of the Republic of Kazakhstan, as well as full and timely receipt of money by the budget in case of its sale;

      13) monitor activities of authorized state bodies and local executive bodies in terms of accuracy of calculation, fullness of collection and timely transfer of taxes and payments to the budget;

      14) pursuant to a tax application of a taxpayer (tax agent), produce a statement on the amount of income received by a non-resident from sources in the Republic of Kazakhstan and on taxes withheld (paid) in accordance with the procedure and within the time limits established by this Code,

      15) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      3. Tax authorities have other rights and perform other duties established by the legislation of the Republic of Kazakhstan.

      4. If, in the course of a tax audit, tax authorities reveal facts of evasion from payment of taxes and payments to the budget, as well as deliberate, false bankruptcy indicative of a criminal offence, they shall forward materials classified as the jurisdiction of investigative authorities to relevant law enforcement bodies for delivering a procedural judgment in accordance with the laws of the Republic of Kazakhstan.

Article 20. Material support, legal and social protection of tax officials

      1. Performing his/her official duties, an official of tax authorities shall be protected by law.

      2. Failure to comply with lawful requirements of an official of tax authorities, insult, threat, violence or encroachment on the life, health, property of an official of tax authorities or his/her family members in connection with his/her official activities, other actions that prevent an official of tax authorities from performing official duties, entail responsibility established by the laws of the Republic of Kazakhstan.

      3. In case of average-severity damage to health in connection with the performance of official activities, an official of tax authorities is paid one-time subsidy equal to five monthly salaries from the budget.

      4. In case of a serious injury to health, in connection with the performance of official duties, disabling a tax official from further performance of professional activities, he/she is paid one-time subsidy equal to five years’ earnings from the budget, as well as the difference between his/her salary and pension (for a lifetime).

      5. In the event of the death of an official of tax authorities during the performance of his/her official duties, the family of the deceased or his/her dependants (heirs):

      1) are paid one-time subsidy from the budget equal to ten years’ earnings for the position last held by the deceased;

      2) are granted a state social allowance due to the loss of a breadwinner, the amount of which and procedure for which are established by the legislation of the Republic of Kazakhstan on state social allowances due to disability, loss of bread-winner and old age in the Republic of Kazakhstan.

      6. Damage to the health and property of an official of tax authorities, as well as damage to the health and property of family members and close relatives of an official of tax authorities in connection with the performance of his/her official duties, is subject to compensation in accordance with the legislation of the Republic of Kazakhstan.

Article 21. Powers of local executive bodies

      1. Akims of towns of district significance, settlements, villages, rural districts (hereinafter referred to as akims) organize collection of taxes on property, vehicles, land to be paid by a taxpayer that is an individual.

      2. The collection of taxes specified in paragraph 1 of this article shall be carried out on the basis of a receipt that is a document of strict reporting. The form of a receipt is approved by the authorized body.

      3. Organizing the collection of taxes specified in paragraph 1 of this article, akims shall ensure:

      1) delivery of a notice of tax amount to a taxpayer that is an individual within five business days from its receipt from tax authorities;

      2) issuance of a payment receipt to a taxpayer that is an individual if the latter paid taxes in cash;

      3) transfer of tax amounts to a second-tier bank or an organization carrying out certain types of banking operations, on a daily basis, not later than the next business day after the money was received, for its further transfer to the budget. If daily cash receipts are less than 10 times the monthly calculated index established by the law on the republican budget and effective as of January 1 of a relevant financial year, and if there is no second-tier bank or organization carrying out certain types of banking operations in a populated locality, the money is transferred once in three business days;

      4) accurate completion and safety of receipts;

      5) submission to a tax authority of reports on the use of receipts and also on the transfer of tax amounts to a second-tier bank or an organization carrying out certain types of banking operations, in accordance with the procedure and within the time limits established by the authorized body.

Article 22. Interaction of tax authorities with authorized state bodies, local executive bodies and other persons

      1. Tax authorities interact with authorized state and local executive bodies, develop and adopt joint control measures in accordance with the legislation of the Republic of Kazakhstan, provide mutual exchange of information.

      2. Authorized state and local executive bodies are obliged to assist tax authorities in the performance of tasks related to implementation of tax control.

      3. The authorized state body in the field of environmental protection and its territorial bodies are required to submit, in accordance with the procedure set forth in paragraph 3 of Article 573 of this Code, information on the results of their checks of compliance with the environmental legislation of the Republic of Kazakhstan (state environmental control).

      4. Authorized state bodies are obliged to submit to the authorized body information on individuals included in the list in accordance with the procedure and within the time limits set forth in Article 26 of this Code.

      5. Tax authorities and local executive bodies shall interact with each other for implementation of tax collection in accordance with the procedure set forth in Article 21 of this Code.

      6. Powers of authorized state and local executive bodies, the National Road Operator for the collection of payments to the budget and submission of information on them are determined by the Special Part of this Code.

      7. Tax authorities have the right to interact with authorized state bodies, local executive bodies and other persons electronically in accordance with the procedure established by this Code.

      8. In the course of a tax audit, tax authorities interact with the National Bank of the Republic of Kazakhstan in terms of receiving an opinion on an audited taxpayer regarding the compliance of the amount of insurance reserves for unearned premiums, avoided losses, losses reported but not settled, and losses incurred but not reported with the requirements established by the legislation of the Republic of Kazakhstan on insurance and insurance activity.

      The National Bank of the Republic of Kazakhstan, upon the request of the authorized body, shall submit such an opinion in accordance with the procedure established by the authorized body together with the National Bank of the Republic of Kazakhstan.

      9. takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;
      10. takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      11. Quarterly, tax authorities provide the authorized state body in the field of environmental protection with information on manufacturers, indicating their legal addresses, volumes and types of products (goods) manufactured in the territory of the Republic of Kazakhstan which are subject to extended obligations of manufacturers (importers).

      12. Authorized state bodies granting subsoil use rights and local executive bodies shall submit to a tax authority copies of subsoil use contracts and (or) non-disclosure agreements concluded with subsoil users and (or) minutes of the State Commission on mineral reserves of the Republic of Kazakhstan ofthe approval of reserves of useful fossils and entry of mineral reserves in the state balance sheet, as well as additions and amendments to them within five business days from their conclusion or introduction of additions and amendments to them, also by way of automated exchange of information.

      13. Local executive bodies submit information to local tax authorities on the use of tickets by taxpayers with regard to urban public transportation services in the form approved by the authorized body.

      Note of the RCLI!
      Article 23 takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

Article 23. Interaction of the authorized body with military authorities

Article 24. Responsibilities of second-tier banks and organizations carrying out certain types of banking operations

      Second-tier banks and organizations carrying out certain types of banking operations are obliged:

      1) when opening bank accounts for a taxpayer that is an individual, including a non-resident, its structural units, an individual registered as an individual entrepreneur or when changing a personal identification code of a bank account due to reorganization of a second-tier bank, to notify the authorized body of the opening or the change of these accounts via telecommunications networks ensuring guaranteed message delivery, within one business day following the day of their opening or change, indicating the identification number.

      No notification is required for bank accounts intended for keeping pension assets of the single accumulative pension fund and voluntary accumulative pension funds, assets of the social medical insurance fund, assets of the State Social Insurance Fund, assets that are security bonds of a special financing company, and assets of an investment fund, accounts of non-resident legal persons, foreigners and stateless persons, correspondent accounts of foreign correspondent banks, bank accounts intended for receiving allowances and social welfare payments paid from the state budget and (or) the State Social Insurance Fund, current accounts intended for placing money under the terms of a notarial deposit, escrow accounts, bank accounts under an agreement on educational accumulative deposit concluded in accordance with the Law of the Republic of Kazakhstan “On State Educational Accumulation System”.

      Information on taxpayers, including individuals registered as individual entrepreneurs or private practice owners, is provided to second-tier banks and organizations carrying out certain types of banking operations to enable them to fulfill their obligations under this subparagraph and subparagraphs 4), 6), 8), 11), 13) and 15) of this article, in accordance with the procedure established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan.

      If it is impossible to notify of the opening or change of these accounts via a telecommunications network due to technical problems, the notice shall be sent to the tax authority at the taxpayer’s location (place of residence) in hard copy within three business days;

      2) in accordance with the international treaty of the Republic of Kazakhstan on the exchange of information, to provide information on the existence of bank accounts and their numbers, on the balance of money in these accounts, as well as information on the existence, type and value of other assets, including those placed on metal accounts or managed by non-resident individuals, non-resident legal entities, as well as legal entities, whose beneficial owners are non-residents, in accordance with the procedure and within the time limits established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan;

      3) to provide, upon the request of the authorized body, information on the existence of bank accounts and their numbers, on the balance of money in these accounts, as well as information on the existence, type and value of other assets, including those placed on metal accounts or managed by individuals and legal entities, specified in the request of the authorized body of a foreign state, sent in accordance with the international treaty of the Republic of Kazakhstan on the exchange of information, in accordance with the procedure and within the time limits established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan;

      4) when accepting payment documents for the payment of taxes and payments to the budget, social welfare payments, to verify the identification number in accordance with the rules for identification number creation.

      If an identification number indicated in a payment document differs from the data of the authorized state body in charge of creation of identification numbers and maintenance of national registers of identification numbers or does not exist, second-tier banks or organizations carrying out certain types of banking operations shall refuse to execute such a payment document.

      The provisions of parts one and two of this subparagraph shall not apply to making payments to the budget, provided for by subparagraph 2) of paragraph 1 of Article 189 of this Code, by a foreigner and stateless person;

      5) to refuse to execute a payment document for tax on vehicles of individuals in case of discrepancy of the identification number of cars and trucks, buses indicated in the payment document with the data submitted by the authorized body for road safety.

      If there is no vehicle identification number in the data submitted by the authorized body for road safety, second-tier banks or organizations carrying out certain types of banking operations may not refuse to execute a payment document for tax on vehicles of individuals;

      6) upon closing bank accounts of a taxpayer specified in subparagraph 1) of this article, to notify the authorized body of their closure via telecommunications network ensuring guaranteed message delivery, within one business day following the closing day, indicating the identification number.

      If it is impossible to notify of the closure of these accounts via telecommunications network due to technical problems, the notice shall be sent to the tax authority at the location (place of residence) of the taxpayer in hard copy within three business days;

      7) upon termination of recognition of income in the form of remuneration for a granted credit (loan) by suspending the payment of such remuneration to an individual registered as an individual entrepreneur or to a legal entity, to notify the authorized body thereof on or before March 31 of a year following the tax accounting period determined in accordance with Article 314 of this Code, in which such recognition was terminated, in the form established by the authorized body;

      8) if there is enough money in bank accounts of a client to satisfy all demands made on him/her/it, to execute the taxpayer’s payment orders for taxes and payments to the budget from his/her/its bank account as a matter of priority. Likewise, to execute collection orders of tax authorities on the recovery of tax debt within one business day following the receipt of tax authorities’ instructions.

      If money in bank accounts is insufficient to satisfy all demands made on a client, a second-tier bank withdraws money to pay off tax debt in the order of priority set by the Civil Code of the Republic of Kazakhstan;

      9) to transfer the amounts of taxes, payments to the budget and social welfare payments:

      on the day of their initiation by a taxpayer, except for cases where payment is made using a payment card;

      not later than one business day from writing off money from a taxpayer’s bank account in cases where payment is made using a payment card;

      during a business day, but not later than the next business day of the payment at cash departments of second-tier banks or organizations carrying out certain types of banking operations, or payment in cash through point-of-sale terminals of second-tier banks or organizations carrying out certain types of banking operations;

      10) ensure access of an official of tax authorities to checks of the availability of money and transactions in bank accounts of an audited individual registered as an individual entrepreneur or a private practice owner or a legal person, given a relevant order;

      11) upon the decision of a tax authority, in cases provided for by this Code, to suspend all debit transactions in bank accounts, except for correspondent ones, of an individual registered as an individual entrepreneur or a private practice owner, a legal entity, a structural unit of a legal entity or structural unit of a non-resident legal entity operating in the Republic of Kazakhstan through a permanent establishment, in accordance with the procedure established by

      the laws of the Republic of Kazakhstan, with due regard to paragraph 2 of Article 118 of this Code;

      12) in accordance with the civil legislation of the Republic of Kazakhstan, upon termination of obligations for credits (loans) granted to a borrower, who is an individual registered as an individual entrepreneur or a legal entity as of the date of termination of an obligation, within thirty calendar days, to notify the tax authority at the location (place of residence) of the borrower of the amount of the terminated obligation.

      The provisions of part one of this subparagraph shall not apply if an obligation is terminated due to its execution;

      13) within ten business days from the receipt of a tax authority’s request, to submit information on the existence of bank accounts and their numbers, on the balances and movements of money in these accounts:

      of a legal entity and (or) its structural unit audited for tax-related issues;

      Note of the RCLI!
      Item three of part one of subparagraph 13) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (text deleted).

      of an individual registered as an individual entrepreneur or a private practice owner audited for tax-related issues;

      of an individual entrepreneur, a private practice owner, a legal entity subject to special considerations in the performance of a tax obligation when the activity is terminated in accordance with Articles 59 and 66 of this Code;

      of an individual registered as an individual entrepreneur or a private practice owner, a legal entity and (or) its structural unit, whose actual absence from the place of location is confirmed by the procedure set forth in Article 70 of this Code, and who failed to submit tax returns within six months after the deadline for their filing set by this Code, except for its extension in cases provided for by this Code;

      of an individual deregistered as an individual entrepreneur in accordance with Article 67 of this Code for a time period not exceeding the limitation period set in paragraph 2 of Article 48 of this Code;

      of a legal entity, a structural unit of a legal entity, an individual registered as an individual entrepreneur having unpaid tax debt within four months from the date of its emergence, which exceeds 10000 times the monthly calculated index established by the law on the republican budget and effective as of January 1 of a relevant financial year;

      of an inactive individual registered as an individual entrepreneur, a legal entity in accordance with the procedure prescribed by the authorized body in coordination with the National Bank of the Republic of Kazakhstan;

      of a person registered in accordance with the procedure established by the law of the Republic of Kazakhstan as a candidate for President of the Republic of Kazakhstan, as a deputy of the Parliament of the Republic of Kazakhstan and maslikhat, as well as a member of local self-government bodies and his/her spouse;

      of a person who is a candidate for public office or for a position related to the performance of state functions or those equated to them, and his/her spouse;

      of a person holding a public office, during the period of his/her being in office, and his/her spouse during the same period;

      of a person released on parole from serving a sentence.

      Note of the RCLI!
      Part two of subparagraph 13) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      Information specified in part one of this subparagraph, except for item eight, shall be furnished in the form established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan;

      14) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      15) to refuse to open bank accounts, except for correspondent accounts, as well as bank accounts intended for receiving allowances and social welfare payments from the state budget and the State Social Insurance Fund, bank accounts under an educational accumulation deposit agreement concluded in accordance with the Law Republic of Kazakhstan “On State Educational Accumulation System”, to:

      a taxpayer recognized inactive in accordance with the procedure set forth in Article 91 of this Code;

      a taxpayer who has an open bank account with this second-tier bank, which is subject to collection orders or orders to suspend debit transactions in the taxpayer’s bank accounts issued by tax authorities;

      Note of the RCLI!
      Item four of part one of subparagraph 15) takes effect on 01.07.2018 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (text deleted).

      The provisions of part one of this subparagraph shall not apply in case of opening bank accounts by a parent bank in lieu of bank accounts transferred by a second-tier bank within operations for simultaneous transfer of assets and liabilities of second-tier banks in accordance with the legislation of the Republic of Kazakhstan on banks and banking activity and bank accounts opened by a successor bank in lieu of those transferred by a second-tier bank in case of its incorporation within their reorganization;

      16) to submit information on contracts containing terms of transfer of the right (to claim) in respect of taxpayers engaged in debt collection activity to the tax authority at the location of the said taxpayers on or before the 25thday of a month following a quarter in the form established by the authorized body in coordination with the National Bank Republic of Kazakhstan;

      17) to submit information on the existence of bank accounts and their numbers, on the balances and movements of money in these accounts of taxpayers registered for the activity provided for by subparagraph 10) of paragraph 1 of Article 88 of this Code, in accordance with the procedure and within the time limits established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan.

      For the purposes of this article, accounts of state institutions opened with the central authorized body for budget execution are treated as bank accounts, and the central authorized body for budget execution is treated as an organization carrying out certain types of banking operations.

      Reports and information provided for in subparagraphs 7), 12), 13) and 16) of part one of this article shall be submitted via a telecommunications network. In case of impossibility of their submission via a telecommunications network due to technical problems, these reports and information shall be sent in hard copy.

      Information provided by second-tier banks and organizations carrying out certain types of banking operations in accordance with this Code is used by tax authorities in accordance with the procedure established by the authorized body.

Article 25. Interaction of authorized state bodies for the implementation of tax administration

      For the implementation of tax administration, tax authorities interact with authorized state bodies:

      1) performing state registration, reregistration of legal entities, state registration of termination of the activity of legal entities, registration, reregistration, deregistration of structural units;

      2) in the field of state statistics;

      3) performing accounting and (or) registration of taxable and tax-related items, including:

      state registration of rights to real estate;

      state registration of pledge of movables and ship mortgage, as well as state registration of irrevocable authority for deregistration and exportation of an aircraft;

      state registration of radio electronic means and high-frequency devices;

      state registration of space objects and rights to them;

      state registration of vehicles;

      state registration of medicinal products, medical devices and equipment;

      state registration of rights to works and objects of related rights, license agreements on the use of works and objects of related rights;

      registration of mass media;

      4) issuing licenses, certificates or other licensing and registration documents;

      5) registering individuals at their place of residence in the Republic of Kazakhstan;

      6) registering vital statistics acts;

      7) performing notarial acts;

      8) forguardianship and trusteeship;

      9) fortransport and communications;

      10) carrying out state regulation in the field of subsoil use in accordance with the legislation of the Republic of Kazakhstan on subsoil and subsoil use;

      11) carrying out foreign policy activity;

      12) other authorized state bodies determined by the Government of the Republic of Kazakhstan.

Article 26. Obligations of authorized state bodies, the National Bank of the Republic of Kazakhstan, local executive bodies and authorized persons in their interaction with tax authorities

      1. Authorized state bodies performing state registration, reregistration of legal entities, state registration of termination of the activity of legal entities, registration, reregistration, deregistration of structural units are required, within three business days from the day of state registration, reregistration of a legal entity, state registration of termination of the activity of legal entities, registration, reregistration, deregistration of a structural unit, to submit information in electronic form on state registration, reregistration of a legal entity, state registration of termination of the activity of legal entities, registration, reregistration, deregistration of a structural unit to a tax authority, second-tier banks or organizations carrying out certain types of banking operations.

      2. Unless otherwise provided for by this article, authorized state bodies issuing licenses, certificates or other licensing and registration documents are required to submit to tax authorities at their location information on taxpayers to whom licenses and annex (annexes) thereto were issued (terminated), as well as certificates or other licensing and registration documents, and also on items taxed with payments to the budget in accordance with the procedure and within the time limits established by Section 18 of this Code, and in the forms established by the authorized body.

      Internal affairs bodies issuing permits to a labor immigrant are required to submit to tax authorities at their location information on taxpayers who received labor immigrant permits in accordance with the procedure, within the time limits and in the form established by the authorized body.

      3. Authorized state bodies responsible for the record and (or) registration of taxable and (or) tax-related items are required to provide information on taxpayers owning taxable and (or) tax-related items, as well as on taxable and (or) tax-related items to tax authorities in accordance with the procedure, within the time limits and in the form established by the authorized body.

      4. Authorized state bodies collecting payments to the budget, recording and (or) registering taxable and (or) tax-related items are required to indicate a taxpayer identification number in submitted information, except for individuals using specially protected natural areas for scientific, environmental-educational, tourist, recreational and limited economic purposes.

      5. The authorized state body responsible for registering the arrival (departure) of foreigners is obliged to submit information on foreign incomers indicating the purpose, place and duration of their stay to a tax authority, within ten business days after the registration of their arrival (departure) in accordance with the procedure established by the authorized body.

      6. The authorized body for investments is obliged to submit to the authorized body information:

      1) on investment contracts concluded in accordance with the legislation of the Republic of Kazakhstan in the field of entrepreneurship and providing for the implementation of priority investment projects, as well as information on the termination of these investment contracts and other information in accordance with the procedure, within the time limits and in the form established by the authorized body in coordination with the authorized body for investments;

      2) on legal entities that collect scrap metal and waste of non-ferrous and ferrous metals, and individuals engaged in the sale of such scrap and waste in accordance with the procedure, within the time limits and in the form established by the authorized investment body in coordination with the authorized body.

      7. Authorized state and local executive bodies exercising state regulation within their competence in the field of subsoil use in accordance with the legislation of the Republic of Kazakhstan on subsoil and subsoil use are required to submit to a tax authority at their location information on participants and details of a transaction for which tax obligations arise in accordance with Article 650 of this Code, including information on a non-resident who is a tax agent, within ten business days from the date of transactions on purchase and sale of participatory interests in the form established by the authorized body.

      8. The Ministry of Foreign Affairs of the Republic of Kazakhstan is required to submit to a tax authority at the location of a diplomatic mission or equivalent representative office of a foreign country accredited in the Republic of Kazakhstan documents confirming the accreditation and location of such a diplomatic mission and equivalent representative office, within ten business days from their accreditation.

      9. At the request of the authorized body, the National Bank of the Republic of Kazakhstan shall submit an opinion on an audited taxpayer regarding the compliance of the amount of insurance reserves for unearned premiums, avoided losses, losses reported but not settled, and losses incurred but not reported with the requirements set by the legislation of the Republic of Kazakhstan on insurance and insurance activity in accordance with the procedure established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan.

      10. On or before the 25th day of a month following a quarter, the National Bank of the Republic of Kazakhstan is obliged to submit to the authorized body information on contracts containing terms of transfer of the right (to claim) in respect of a taxpayer engaged in debt collection activity in accordance with the form established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan.

      11. On or before the 25th day of a month following a quarter, territorial subdivisions of the National Bank of the Republic of Kazakhstan are obliged to submit to tax authorities information on exchange offices of authorized organizations having a license for the organization of exchange transactions with foreign currency in cash in the form established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan.

      Note of the RCLI!
      Paragraph 12 is in effect until 01.01.2021 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      12. The authorized body in the field of agro-industrial complex development is obliged to provide information on the amounts of VAT-based budget subsidies received by procurement organizationsin accordance with the procedure, within the time limits and in the form established by the authorized body.

      13. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VIasof 25.12.2017.
      14. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VIasof 25.12.2017.
      15. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VIasof 25.12.2017.
      16. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VIasof 25.12.2017.
      17. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VIasof 25.12.2017.
      18. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VIasof 25.12.2017.
      19. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VIasof 25.12.2017.

      20. Submission of information on taxpayers, taxable items (items subject to taxation (collection of) with payments to the budget) and (or) tax-related items in electronic form using appropriate software intended for automated interaction of tax authorities and authorized state bodies is performed within ten business days in accordance with the procedure and in the forms established by the authorized body.

      In case information on taxpayers, taxable items (items subject to taxation (collection of) with payments to the budget) and (or) tax-related items is submitted in electronic form, authorized state bodies are not required to submitthis information in hard copy.

      21. The authorized body for road traffic safety, when submitting information on the state registration of vehicles, ensures the submission of information on the day of primary importation into the territory of the Republic of Kazakhstan, as well as on the country of origin of such a vehicle.

      22. Local executive bodies shall, on or before the 20th day of a month following a reporting quarter, submit to tax authorities at their location a report on the use of tickets by taxpayers with regard to urban public transportation services in the form approved by the authorized body.

Article 27. Obligations of custodians, the integrated registrar, brokers and (or) dealers entitled to maintain clients’ accounts as nominal holders of securities, investment portfolio managers, as well as insurance organizations in their interaction with tax authorities

      1. Custodians, the integrated registrar, brokers and (or) dealers entitled to maintain clients’ accounts as nominal holders of securities shall:

      1) submit information on the existence of securities accounts opened for non-resident individuals, non-resident legal entities, legal entities whose beneficial owners are non-residents, as well as on the balances and movements of securities in these accounts;

      2) submit, upon the request of the authorized body, information on the existence of securities accounts opened for individuals and legal entities indicated in the request of the authorized body of a foreign state sent in accordance with an international treaty of the Republic of Kazakhstan, as well as on the balances and movements of securities in these accounts.

      2. Custodians managing an investment portfolio are required to:

      1) submit information on the existence of other assets, except for securities owned by non-resident individuals, non-resident legal entities, as well as legal entities whose beneficial owners are non-residents, to the authorized body via a telecommunications network;

      2) submit, upon the request of the authorized body, information on the existence of other assets, except for those specified in paragraph 1 of this article, owned by individuals and legal entities indicated in the request of the authorized body of a foreign state sent in accordance with the international treaty of the Republic of Kazakhstan.

      3. Insurance organizations carrying out the activity in the field of “life insurance” are obliged to:

      1) submit information on concluded accumulative insurance agreements, beneficiaries of which are non-resident individuals, to the authorized body via a telecommunications network;

      2) submit, upon the request of the authorized body, information on concluded accumulative insurance agreements, beneficiaries of which are individuals indicated in the request of the authorized body of a foreign state sent in accordance with the international treaty of the Republic of Kazakhstan.

      4. Information provided for in paragraphs 1, 2 and 3 of this article shall be submitted in keeping with the international agreement of the Republic of Kazakhstan on the exchange of information in accordance with the procedure and within the time limits established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan.

Article 28. Obligations of collection agencies and taxpayers engaged in e-commerce related activity

      1. Collection agencies are obliged to submit information on contracts containing terms of transfer of the right (to claim) to a collection agency to a local tax authority on or before the 25th day of a month following a quarter in accordance with the form established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan.

      2. Persons engaged in e-commerce and applying rules of the tax legislation of the Republic of Kazakhstan in terms of reducing the calculated amount of corporate income tax, reducing the taxable income of an individual entrepreneur by the taxable income of an individual entrepreneur, reducing the taxable income of an individual by the taxable income of an individual entrepreneur, are obliged to submit information on such an activity to a tax authority at their location in accordance with the procedure, within the time limits and in the form approved by the authorized body.

      3. Persons engaged in the dispatch, transportation, delivery of goods related to e-commerce shall submit information upon the request of a tax authority in accordance with the procedure, within the time limits and in the form approved by the authorized body.

Article 29. Obligations of a person and (or) structural units of a legal entity when receiving, spending money and (or) other assets from foreign states, international and foreign organizations, foreigners, stateless persons in certain cases

      1. Persons and (or) structural units of a legal entity are obliged:

      1) in accordance with the procedure, in the form and within the time limits established by the authorized body, notify tax authorities of the receipt of money and (or) other assets from foreign states, international and foreign organizations, foreigners, stateless persons, the amount of which exceeds that set by the authorized body, in the case when the activity of a recipient of money and (or) other assets is aimed at:

      the provision of legal assistance, including legal awareness raising, protection and representation of interests of citizens and organizations, as well as their consulting;

      the study and conduct of public opinion polls, sociological surveys, except for public opinion polls and sociological surveys conducted for commercial purposes, as well as dissemination and placement of their results;

      collection, analysis and dissemination of information, except for cases when the specified activity is carried out for commercial purposes;

      2) in the case provided for by subparagraph 1) of part one of this paragraph, to submit to tax authorities information on the receipt and spending of money and (or) other assets received from foreign states, international and foreign organizations, foreigners, stateless persons in accordance with the procedure, within the time limits and in the form established by the authorized body.

      Requirements provided for by this paragraph do not apply to:

      1) state institutions;

      2) persons holding top management public positions, persons authorized to perform state functions, deputies of the Parliament of the Republic of Kazakhstan and maslikhats, except for deputies of maslikhats performing their activity on a part-time basis, servicemen, law enforcement and special state employees when they perform official duties;

      3) second-tier banks, organizations carrying out certain types of banking operations, insurance organizations;

      4) taxpayers subject to tax monitoring;

      5) preschool and secondary educationalinstitutions, educational institutionswith technical and professional, post-secondary, higher and postgraduate educational programs, as well as autonomous educational institutions and international schools;

      6) money and (or) other assets received in connection with the activity of private practice owners, arbitrators, appraisers, auditors;

      7) quasi-public sector entities;

      8) diplomatic missions and equivalent representative offices of a foreign state, consular offices of a foreign state accredited in the Republic of Kazakhstan, as well as their employees;

      9) money and (or) other assets aimed at the development of national, technical and applied sports, support and promotion of physical education and sport, as well as those intended for conducting sporting events, including international sports competitions, public sporting events;

      10) money and (or) other assets received under international treaties of the Republic of Kazakhstan;

      11) money and (or) other assets received for the purpose of paying for medical treatment or taking health-improving and preventive care procedures;

      12) money and (or) other assets received in the form of revenue under foreign trade contracts;

      13) money and (or) other assets received for the organization and conduct of international transportation, the provision of international postal services;

      14) money and (or) other assets received under investment contracts concluded in accordance with the legislation of the Republic of Kazakhstan;

      15) the amount of dividends, rewards, winnings previously levied with individual income tax at the source of payment, given documents confirming the withholding of such a tax at the source of payment;

      16) other cases established by the Government of the Republic of Kazakhstan.

      2. Information and materials published, disseminated and (or) placed by the persons, specified in subparagraphs 1) and 2) of part one of paragraph 1 of this article, for the money of foreign states, international and foreign organizations, foreigners and stateless persons must contain information on the persons who made the order, indication that information and materials are produced, distributed and (or) placed at the expense of foreign countries, international and foreign organizations, foreigners and stateless persons.

      3. The procedure for tax authorities’ maintaining a database on persons specified in subparagraphs 1) and 2) of part one of paragraph 1 of this article, the specified information and other information subject to placement, as well as the procedure for addition to and removal from the database are determined by the authorized body.

Article 30. Tax secret

      1. A tax secret is any information received by a tax authority on a taxpayer (tax agent), except for that:

      1) on the amount of taxes and payments to the budget paid (transferred) by the taxpayer (tax agent), except for individuals;

      2) on the amount of refund to a taxpayer from the budget that is a difference between the excess ofVAT to be offset and the amount of the assessed tax;

      3) on the amount of tax debt of a taxpayer (tax agent);

      4) on inactive taxpayers;

      5) subject to placement in the database on the website of the authorized body in the case provided for byArticle 19 of this Code;

      6) on submission by a taxpayer of a tax application for a tax audit in connection with liquidation (termination of activity);

      7) on the assessed amount of taxes and payments to the budget fora taxpayer (tax agent), except for individuals;

      8) on the assessed amount of property tax, land tax, vehicle tax for individuals;

      9) on sanctions applied to a taxpayer (tax agent) who violated the tax legislation of the Republic of Kazakhstan;

      10) on the existence (absence) of taxpayer registration of a non-resident operating through a permanent establishment, a structural unit or without the formation of a permanent establishment in accordance with Article 650 of this Code;

      11) on the following registration data of a taxpayer (tax agent):

      identification number;

      last name, first name, patronymic (if it is indicated in an identity document) of an individual, head of a legal entity;

      the name of an individual entrepreneur, legal entity;

      the date of registration, the date of deregistration, a reason for deregistration of a taxpayer (tax agent);

      the date of commencement and termination of suspension of anactivity;

      the residence of a taxpayer;

      the registration number of a cash register with a tax authority;

      the point of use of a cash register;

      applicable tax regime;

      2) on the failure of a taxpayer (tax agent) to file tax returns;

      13) not confidential in accordance with the legislation of the Republic of Kazakhstan on rehabilitation and bankruptcy;

      14) on the tax burden ratio of a taxpayer (tax agent), calculated according to the procedure established by the authorized body, except for individuals not registered with tax authorities as individual entrepreneurs and private practice owners;

      15) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VIasof 25.12.2017;
      16) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VIasof 25.12.2017;
      17) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VIasof 25.12.2017;

      18) on the results of risk categorization of taxpayers.

      2. Information on a taxpayer (tax agent), which is a tax secret, may not be submitted by tax authorities to another person without written permission of the taxpayer (tax agent), unless otherwise provided for by this article.

      3. Tax authorities provide information on a taxpayer (tax agent) constituting a tax secret without obtaining written permission from the taxpayer (tax agent), if it is required by:

      1) law enforcement and special state bodies within their competence established by the legislation of the Republic of Kazakhstan on the basis of a reasoned request in hard copy or in the form of an electronic document authorized by a prosecutor. No sanction is required if such information is requested by a prosecutor;

      2) a court in the course of legal proceedings in cases related to the calculation, withholding and transfer of taxes in accordance with the procedure established by this Code;

      3) a law enforcement officer within his/her competence established by the legislation of the Republic of Kazakhstan, with regard to cases of enforcement proceedings maintained by him/her on the basis of a resolution certified by the stamp of a private law enforcement officer or territorial subdivision;

      4) central state bodies of the Republic of Kazakhstan in the field of state planning, state statistics, foreign trade activity, environmental protection, social protection of the population, the authorized body for external state audit and financial control, an antimonopoly body and the authorized body in the field of interaction with non-governmental organizations in cases provided for by this Code and (or) laws of the Republic of Kazakhstan.

      State bodies of the Republic of Kazakhstan, indicated in this subparagraph, shall approve the list of officials having access to information constituting a tax secret.

      The procedure and list of submitted information constituting a tax secret shall be fixed by joint acts with the authorized body;

      5) the central authorized state body for state planning, the authorized state body conducting financial monitoring and taking other measures to counter money laundering and the authorized body for internal state audit in cases provided for by the laws of the Republic of Kazakhstan.

      The authorized state bodies specified in this subparagraph shall approve the list of officials having access to information constituting a tax secret;

      6) a person involved in conducting a tax audit as a specialist;

      7) tax or law enforcement agencies of other states, to international organizations in accordance with international treaties (agreements) on mutual cooperation between tax or law enforcement agencies to which the Republic of Kazakhstan is a party, as well as treaties concluded by the Republic of Kazakhstan with international organizations;

      8) state corporation “Government for Citizens” and state bodies with regard to information required for the provision of public services;

      9) local executive bodies, local self-government bodies with regard to information on individuals, on property tax, land tax, vehicle tax, as well as on payment for the placement of outdoor (visual) advertising and individual income tax on income subject to self-assessment by an individual.

      The bodies specified in this subparagraph shall approve the list of officials having access to information constituting a tax secret;

      10) state bodies and (or) persons who, under the laws of the Republic of Kazakhstan, are entitled to obtain information on the absence (existence) of debts, the record of which is maintained by tax authorities;

      Note of the RCLI!
      This wording of subparagraph 11) is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstanas of 25.12.2017).

      11) the National Bank of the Republic of Kazakhstan with regard to information necessary to control the satisfaction of the requirement to repatriation of the national and foreign currency and its transfer to authorized banks that are currency control agents.

      The procedure for submitting information constituting a tax secret is determined by rules for the execution of export-import currency control in the Republic of Kazakhstan and residents’ obtainment of account numbers of export and import contracts approved by the National Bank of the Republic of Kazakhstan in coordination with the authorized body;

      12) members of an appeal commission considering a complaint of a taxpayer (tax agent) about an audit findings report;

      13) a structural unit of the authorized body that considers complaints about an audit findings report and (or) notice of the elimination of violations, with regard to information required for the consideration of complaints of taxpayers (tax agents) about an audit findings report;

      14) authorized state bodies with regard to information on submitted assets and income declarations, indicating the date of submission and the code of a tax authority, by persons on whom the Law of the Republic of Kazakhstan “On Combating Corruption” imposes such a duty.

      The procedure for submitting the specified information is determined by the authorized body.

      4. The rules of paragraph 3 of this article do not apply to data and information on a taxpayer received by tax authorities through legalization in accordance with the Law of the Republic of Kazakhstan “On amnesty to citizens of the Republic of Kazakhstan, oralmans and persons having a residence permit of the Republic of Kazakhstan, due to legalization of their property”.

      5. A tax secret is not subject to disclosure by persons having access to a tax secret, both during their official period of service and after it.

      6. The loss of documents containing information constituting a tax secret or disclosure of such information entails responsibility established by the laws of the Republic of Kazakhstan.

      7. Transfer for storage of the backup copy of an electronic information resource to a single platform for the backup storage of electronic information resources is not the disclosure of a tax secret.

      In this case, data transferred for storage may only be used by the authorized body.

      The transfer and storage of the backup copy of an electronic information resource is carried out in accordance with the procedure and within the time limits set by authorized bodies in the field of information security and national security in coordination with the authorized body.

SECTION 2. TAX OBLIGATION Chapter 4. GENERAL PROVISIONS

Article 31. Tax obligation

      1. A tax obligation is a taxpayer’s obligation to the state arising in accordance with the tax legislation of the Republic of Kazakhstan, by virtue of which the taxpayer is obliged to perform the actions specified in paragraph 2 of Article 36 of this Code.

      2. The state, represented by a tax authority, has the right to require a taxpayer (tax agent) to perform his/her/its tax obligation in full, and in the event of a failure to perform or improper performance of the tax obligation, to apply measures for its fulfillment and enforcement in accordance with the procedure established by this Code.

Article 32. A taxable and (or) tax-related item

      A taxable and (or) tax-related item are assets and actions, owing to the existence and (or) on the basis of which a tax obligation arises for a taxpayer.

Article 33. Tax base

      A tax base is a set of value, physical or other properties of a taxable item, on the basis of which amounts of taxes and payments payable to the budget shall be assessed.

Article 34. Tax rate

      1. Tax rate is the value of a tax obligation for the calculation of a tax and a payment to the budget per unit of a taxable item or tax base.

      2. Tax rate is set in percentage terms or in absolute amount per unit of a taxable item or tax base.

Article 35. Taxable period

      A taxable period shall be understood to mean a period of time established for certain types of taxes and payments to the budget, after the end of which a taxable item, a tax base are assessed, amounts of taxes and payments payable to the budget are calculated.

Chapter 5. FULFILLMENT OF A TAX OBLIGATION

Article 36. Fulfillment of a tax obligation

      1. A tax obligation is fulfilled by a taxpayer on his/her/its own, unless otherwise provided for by this Code.

      2. To fulfill a tax obligation, a taxpayer shall:

      1) register with a tax authority;

      2) keep record of taxable and (or) tax-related items;

      3) based on taxable and (or) tax-related items, the tax base and tax rates, calculate the amounts of taxes and payments payable to the budget, as well as advance and current payments on them, in accordance with the Special Part of this Code;

      4) draw up and submit tax forms and other forms established by this Code, except for tax registers, to tax authorities in accordance with the established procedure;

      5) pay the calculated and assessed amounts of taxes and payments to the budget, advance and current payments for taxes and payments to the budget in accordance with the Special Part of this Code.

      3. A taxpayer must fulfill a tax obligation in accordance with the procedure and within the time limits established by the tax legislation of the Republic of Kazakhstan.

      In cases provided for by the Special Part of this Code, a tax obligation may be fulfilled by a taxpayer that is an individual by making several payments during a taxable period, the total amount of which shall not be less than the calculated amount of tax.

      4. The tax obligation of a taxpayer to pay taxes and payments to the budget and also the obligation to pay fines and penalties in a non-cash form are considered to be fulfilled from the date of receipt of a payment order for the amount of taxes and payments to the budget, penalties and fines by a second-tier bank or an organization carrying out certain types of banking operations, or from the date of payment through ATMs or point-of-sale terminals, and as to obligations executed in cash - from the date a taxpayer pays these amounts to a second-tier bank or an organization carrying out certain types of banking operations, the authorized state body, a local executive body.

      5. When an authorized representative of a taxpayer pays taxes, payments to the budget, transfers social welfare payments, in the cases specified in this Code, the sender of money shall indicate his/herlast name, first name, patronymic (if it is indicated in an identity document) or the name of the taxpayer and its identification number.

      6. The tax obligation of a taxpayer to pay tax, which is executed by a tax agent, is considered to be fulfilled on the day of tax withholding.

      7. A tax obligation to pay taxes, payments to the budget, as well as an obligation to pay penalties and fines may be fulfilled by offsetting in accordance with the procedure set forth in Article 102 of this Code.

      8. A tax obligation to pay taxes, payments to the budget, as well as an obligation to pay penalties and fines shall be executed in the national currency, except for cases provided for by this Code, the Law of the Republic of Kazakhstan “On Joint Stock Companies”, and when the legislation of the Republic of Kazakhstan and production sharing agreements (contracts), a subsoil use contract approved by the President of the Republic of Kazakhstan, specified in Article 722 of this Code, provide for payment in kind or in foreign currency.

Article 37. Features of calculation of taxes and payments to the budget for the fulfillment of a tax obligation

      1. The calculation of the amount of taxes withheld at the source of payment shall be made by a tax agent.

      2. In cases provided for by the Special Part of this Code, the responsibility for calculating the amount of certain types of taxes and payments to the budget may be assigned to a tax authority and authorized state bodies.

Article 38. Time period for the fulfillment of a tax obligation

      1. Time period for the fulfillment of a tax obligation is established by this Code.

      2. The running of the time period starts on the day following the occurrence of an actual event or legal action that marks the beginning of the time period for the fulfillment of a tax obligation.

      The time period expires at the end of the last day of a taxable period. If the last day of the time period falls on a non-business day, the period shall expire at the end of the next business day.

      3. A taxpayer (tax agent) has the right to fulfill a tax obligation ahead of schedule.

      Unless otherwise provided for by this Code, the tax obligation to file tax returns is executed by a taxpayer (tax agent) at the end of a taxable period.

Article 39. Order of payment of tax debts

      Payment of tax debts shall be made in the following order:

      1) the amount of arrears;

      2) assessed penalty;

      3) the amount of fines.

Article 40. Fulfillment of tax obligations in transfer of assets into trust management

      1. For the purposes of this Code, a tax obligation for trust management activity means a tax obligation arising as a result of the establishment of trust management of assets, in the course of its performance and (or) termination.

      A tax obligation for corporate and individual income taxes on trust management activity is fulfilled:

      1) by the founder of trust management under a trust management agreement, an act on the establishment of trust management of assets or by the beneficiary in other cases of emergence of trust management of assets (hereinafter referred to as the founder of trust management) for:

      participatory interest and (or) shares transferred into trust management;

      assets transferred into trust management under an act on the establishment of trust management of assets;

      income received by a legal entity, an individual entrepreneur for trust operations from a second-tier bank;

      drawing up and submitting a declaration in accordance with the Constitutional Law of the Republic of Kazakhstan “On Elections in the Republic of Kazakhstan”, the Penal Code of the Republic of Kazakhstan and the Law of the Republic of Kazakhstan “On Combating Corruption”, if the founder of trust management is an individual entrusted with this duty.

      For the purposes of this Code, an act on the establishment of trust management of assets means a document giving rise to the emergence of trust management of assets, the trust manager of which is a non-resident individual or a non-resident legal entity not operating in the Republic of Kazakhstan;

      2) by a trust manager - in other cases. At the same time, a tax obligation for income received by an individual, except for an individual entrepreneur and a non-resident legal entity operating in the Republic of Kazakhstan without establishing a permanent establishment, from trust operations performed by a second-tier bank that is a tax agent, is fulfilled by this second-tier bank by way of performing duties of a tax agent.

      A trust manager fulfills tax obligations arising on the date of:

      state registration of the right to trust management of assets - in the event that this right is subject to state registration in accordance with the legislation of the Republic of Kazakhstan;

      conclusion of a trust management agreement or a document confirming the occurrence of another case of the emergence of trust management of assets - in the event that the right to trust management is not subject to state registration in accordance with the legislation of the Republic of Kazakhstan.

      2. Fulfillment of an obligation arising for VAT on trust management activity shall be effected by a trust manager in accordance with the procedure set forth inSection 10 and Articles 82 and 83 of this Code.

      3. Fulfillment of an obligation arising for taxes not specified in paragraphs 1 and 2 of this article and payments to the budget shall be effected by a person recognized as a payer of such a tax, a payment to the budget in accordance with this Code, unless otherwise provided for by Article 41 of this Code.

      4. A trust manager that is a resident individual must register with a tax authority as an individual entrepreneur in accordance with the procedure set forth in Article 79 of this Code, unless assets received for trust management are participatory interest and shares.

      5. The provisions of this article and Articles 41-45 of this Code shall not apply to tax obligations arising as a result of the establishment, performance and (or) termination of trust management of the assets of an investment fund by a management company in accordance with the legislation of the Republic of Kazakhstan on investment funds.

Article 41. Features of fulfillment of tax obligations in transfer of state institutions’ assets into trust management

      1. When state institutions transfer property into trust management, tax obligations for property tax, land tax and vehicle tax shall be fulfilled by a trust manager unless otherwise provided for by a trust management agreement or an act on the establishment of trust management of assets.

      2. A trust manager fulfills tax obligations, unless otherwise provided for by a trust management agreement or an act on the establishment of trust management of assets, with regard to the calculation and payment of taxes, drawing up and filing tax returns from the date:

      of state registration of the right to trust management - in the event that this right is subject to state registration in accordance with the legislation of the Republic of Kazakhstan,

      of conclusion of a trust management agreement or an act on the establishment of trust management of assets - in the event that the right of trust management is not subject to state registration in accordance with the legislation of the Republic of Kazakhstan.

      3. A trust manager:

      fulfills tax obligations, unless otherwise provided for by a trust management agreement or an act on the establishment of trust management of assets, for the calculation and payment of taxes, drawing up and filing tax returns on his/her/its behalf, at rates and in accordance with the procedure set forth in the Special Part of this Code for persons, including this trust manager;

      shall maintain separate accounting in accordance with Article 194 of this Code in order to fulfill a tax obligation in case of transferring assets into trust management.

      4. If, in case of transferring assets of state institutions into trust management, the assets of a state institution are not recognized by the trust manager in fixed assets, real estate investments in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, the act of acceptance and transfer of such assets shall state the balance sheet value of such assets as of the date of its drawing up.

Article 42. General provisions on the accounting of income, expenses and assets arising as a result of trust management of assets for corporate and individual income taxes

      1. For the purposes of this Code, income, expenses and assets from trust management of assets shall be understood to mean those arising in the course of performance of duties of trust management of assets by a trust manager in his/her/its own name and in the interests of the founder of trust management, respectively:

      income (to be) received;

      expenses to be paid (incurred), the compensation of which is provided for by a trust management agreement, an act on the establishment of trust management of assets or in other cases of the emergence of trust management of assets, including remuneration;

      assets acquired and (or) received by a trust manager through the performance of duties of trust management of assets in his/her/its own name and in the interests of the founder of trust management.

      2. For the purposes of fulfilling a tax obligation for corporate and individual income taxes for activity under a trust management agreement, a trust manager is required to keep separate accounting in accordance with Articles 194 and 195 of this Code.

      3. The transfer of assets to a trust manager by the founder of trust management shall not mean the sale of such assets by this founder and is not recognized as the income of the trust manager.

      4. The trust manager’s return of assets to the founder of trust management upon termination of a trust management agreement, an act on the establishment of trust management of assets or in other cases of the emergence of trust management of assets is not the sale of this property by a given manager and is not considered to be the income (loss) of the founder of trust management.

      5. The positive difference between income and expenses from trust management over a taxable period, which is determined on the basis of the trust manager’s report on his/her/its activity provided for by the civil legislation of the Republic of Kazakhstan, is net income of the founder of trust management from trust management.

      6. In cases where, in accordance with paragraph 1 of Article 40 of this Code, the fulfillment of tax obligations for corporate and individual income taxes on trust management activity is performed by a trust manager, the founder of trust management is not entitled to recognize as deduction the amount of remuneration provided for by the trust management agreement or in other cases of the emergence of trust management of assets and paid to the trust manager.

Article 43. Features of tax accounting by a trust manager fulfilling tax obligations for corporate and individual income taxes

      1. In the event that a tax obligation for corporate and individual income taxes on trust management activity in accordance with Article 40 of this Code is fulfilled by a trust manager, income, expenses and assets from trust management of assets are income expenses and assets of the trust manager for income tax purposes.

      Remuneration provided for by a trust management agreement or in other cases of the emergence of trust management of assets is included in the total annual income of a trust manager that is accounted separately from the proceeds from the trust management of assets.

      Identifying a taxable item for trust management activity, a trust manager recognizes as deduction the amount of remuneration included in his/her/its total annual income that is accounted separately from the proceeds from the trust management of assets.

      2. A trust manager shall draw up and submit a single corporate income tax declaration for all the activity, including that in the interests of the founder of trust management, and annexes to the declaration for trust management activity separately for each trust management agreement or another case of emergence of trust management of assets and other activities.

      3. A trust manager that is a legal entity fulfills obligations for corporate income tax in accordance with the procedure set forth in this Code, with due regard to that:

      the rate of corporate income tax on the activity on trust management of assets specified in paragraph 1 of Article 313 of this Code shall be applied;

      the provisions of Chapter 29 and Section 21 of this Code for the activity on trust management of assets shall not apply;

      special tax regimes for the activity on trust management of assets shall not apply.

      4. In cases when the founder of trust management is a legal entity, a trust manager, who is an individual,:

      fulfills a tax obligation for calculating individual income tax on the activity on trust management of assets at the rate specified in paragraph 1 of Article 313 of this Code without applying the provisions of Article 341 of this Code;

      is not entitled to apply special tax regimes to the activity on trust management of assets;

      fulfills other tax obligations for individual income tax in accordance with the procedure set forth in the Special Part of this Code for persons, including a trust manager.

      5. In cases when the founder of trust management is a resident individual, a trust manager, who is an individual,:

      fulfills a tax obligation for calculating individual income tax on the activity on trust management of assets without applying the provisions of Article 341 of this Code;

      is not entitled to apply a special tax regime to trust management activity while observing the conditions established by Section 20 of this Code;

      fulfills other tax obligations for individual income tax in accordance with the procedure set forth in the Special Part of this Code for persons, including a trust manager.

      6. In cases when the founder of trust management is non-resident individual, a trust manager, who is an individual, fulfills tax obligations for individual income tax in accordance with the procedure determined by this Code, with due regard to that:

      the rate specified in subparagraph 1) of paragraph 1 of Article 646 of this Code for the activity on trust management of assets shall be applied;

      the provisions of Article 341 of this Code shall not apply;

      special tax regimes shall not apply.

Article 44. Features of tax accounting for corporate and individual income taxes in case of trust management of assets in the form of participatory interest and shares

      1. For the purposes of tax accounting:

      income in the form of dividends on participatory interest and shares held in trust management, reduced by the amount of expenses incurred by a trust manager, reimbursed (subject to reimbursement) on the basis of a trust management agreement, an act on the establishment of trust management of assets or other cases of the emergence of trust management of assets and the trust manager’s report on his/her/its activity (hereinafter - trust management dividends) is the income of the founder of the trust manager;

      assets from trust management of participatory interests and shares are assets of the founder of trust management.

      Remuneration provided for by a trust management agreement, an act on the establishment of trust management of assets or in other cases of the emergence of trust management of assets, subject to payment to a trust manager, is the expense of the founder of trust management.

      The income of a trust manager from trust management of participatory interests and shares shall include:

      remuneration provided for by the act on the establishment of trust management of assets;

      the amount of expenses incurred by a trust manager, the compensation of which is provided for by a trust management agreement, an act on the establishment of trust management of assets or in other cases of the emergence of trust management of assets and the trust manager’s report on his/her/its activity.

      Expenses related to trust management of participatory interests and shares incurred by a trust manager, the compensation of which is provided for by a trust management agreement, an act on the establishment of trust management of assets or in other cases of the emergence of trust management of assets and the trust manager’s report on his/her/its activity are those of such trust managers, for the purposes of tax accounting.

      Such expenses reduce the income of the founder of trust management in the form of dividends on participatory interests and shares that are in trust management and not accounted as costs and expenses of the founder of trust management.

      2. The founder of trust management fulfills a tax obligation for corporate and individual income taxes in accordance with the procedure set forth in this Code.

      3. A trust manager fulfills a tax obligation for corporate and individual income taxes on income, expenses and assets from trust management of participatory interests and shares in accordance with the procedure set forth in the Special Part of this Code for persons, including such a trust manager.

Article 45. Features of tax accounting for corporate and individual income taxes on acts on the establishment of trust management of assets, except for participatory interest and shares

      1. For the purposes of tax accounting:

      income on property in trust management, except for participatory interest and shares, reduced by the amount of expenses incurred by a non-resident trust manager, reimbursed (subject to reimbursement) on the basis of an act on the establishment of trust management of assets and the trust manager’s report on his/her/its activity, is the income of the founder of trust management;

      assets from trust management of such assets belong to the founder of trust management;

      remuneration provided for by an act on the establishment of trust management of assets, subject to payment to a trust manager, is the expense of the founder of trust management.

      The income of a trust manager from trust management of assets, except for participatory interest and shares, shall include:

      remuneration provided for by the act on the establishment of trust management of assets;

      the amount of costs incurred by the trust manager, the compensation of which is provided for by the act on the establishment of trust management of assets and the trust manager’s report on his/her/its activity.

      Expenses related to trust management of assets, except for participatory interest and shares, incurred by a trust manager, the compensation of which is provided for by the act on the establishment of trust management of assets and the trust manager’s report on his/her/its activity, are those of such a trust manager.

      Such expenses reduce the income of the founder of trust management on assets, which are in trust management and not accounted as expenses of the founder of trust management.

      2. The founder of trust management fulfills a tax obligation for corporate and individual income taxes on income from trust management and assets from trust management in accordance with the procedure set forth in this Code for persons, including such a founder.

      3. A trust manager fulfills tax obligations for corporate and individual income taxes on income, expenses and assets from trust management in accordance with the procedure set forth in this Code for persons, including such a trust manager.

Article 46. Fulfillment of tax obligations of an individual declared missing

      1. A tax obligation of an individual shall be suspended from the moment of his/her being declared missing by a final and binding court judgment.

      2. Tax debt of an individual declared missing by court is paid by a person entrusted with the custody of assets of the individual declared missing.

      3. If the assets of an individual declared missing are not sufficient to pay off tax debt, the outstanding part of his/her tax debt is written off by a tax authority pursuant to a court decision on insufficiency of assets.

      4. When a court revokes a decision on declaring a person missing, the tax debt earlier written off by a tax authority is reinstated in court regardless of the limitation period established by Article 48 of this Code.

Article 47. Payment of tax debt of a dead individual

      1. Tax debt, generated on the day of the death of an individual or on the day he/she was declared dead by a final and binding court judgment, shall be paid by his/her heir (heirs) within the value of inherited property and in proportion to the share in inheritance as of the day of coming into possession of it.

      If the assets of a dead individual, also of an individual declared dead by a final and binding court judgment, are not sufficient to pay off his/her tax debt, the unpaid portion of the tax debt is written off by a tax authority pursuant to a court decision on insufficiency of assets.

      2. If an heir (heirs) is (are) underage, an obligation to pay the tax debt of an individual, which generated on the day of his/her death or on the day he/she was declared dead, within the value of inherited property and in proportion to the share in inheritance as of the day of coming into possession of it is imposed on this (these) heir (heirs) only by a final and binding court judgment.

      3. Tax debt of an individual, generated on the day of the death of an individual or on the day he/she was declared dead by a final and binding court judgment, is deemed paid in cases if:

      1) underage heir (heirs) is (are) exempted from the fulfillment of the tax obligation to pay such debt by a final and binding court judgment;

      2) there is no heir (heirs).

      When a court revokes its decision on declaring an individual dead, the tax debt earlier written off by a tax authority is reinstated in a judicial proceeding regardless of the limitation period established by Article 48 of this Code.

      4. The provisions of this article shall apply to the payment of tax debt generatedas of the date of the death of an individual entrepreneur, a private practice owner or declaring him/her dead by a final and binding court judgment.

      Note of the RCLI!
      Thiswording ofarticle 40isin effectuntil01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstanas of 25.12.2017).

Article 48.Limitation period for a tax obligation and claim

      1. The limitation period for a tax obligation and claim is the period of time during which:

      1) a tax authority has the right to calculate, assess or revise the calculated, assessed amount of taxes and payments to the budget;

      2) a taxpayer (tax agent) is obliged to file tax returns, has the right to introduce alterations and additions to tax returns, to revoke tax returns;

      3) a taxpayer (tax agent) has the right to require the offset and (or) refund of taxes and payments to the budget, penalties.

      2. Unless otherwise provided for by this article, the limitation period is five years. The running of the limitation period begins after the end of a relevant taxable period, except for the cases provided for by paragraphs 4, 5, 6 and 10 of this article.

      3. A taxpayer, a tax authority have the right to calculate, assess or revise the calculated, assessed amount of taxes:

      1) when applying Chapter 80 of this Code to taxes specified in an investment contract providing for the implementation of a priority investment project, during the validity period of such a contract and five years from the date of expiration or other termination of an investment contract;

      2) when applying subparagraph 4) of paragraph 1 of Article 288 of this Code - during the period of training of an individual and five years from the date of completion of training of an individual.

      4. With regard to taxpayers carrying out activities in accordance with a subsoil use contract, a tax authority is entitled to assess or revise the calculated, assessed amount of atax on excess profits, on shares of the Republic of Kazakhstan in production sharing, taxes and payments to the budget, the calculation methodology of which uses one of the following indicators: internal rate of return (IRR) or internal revenue rate or R-factor (index of profitability) - during the validity term of a subsoil use contract and five years after the termination of a subsoil use contract.

      5. The running of the limitation period begins in the cases of:

      1) application of paragraph 1 of Article 432 of this Code to a tax obligation and claim for the return of excess amount of VAT for the period of construction of buildings and industrial facilities - at the end of a taxable period, during which such buildings and facilities were first put into operation in the territory of the Republic of Kazakhstan;

      2) application of paragraph 2 of Article 432 of this Code to a tax obligation and claim for the return of excess amount of VAT for the period of geological exploration and development of a deposit - at the end of a taxable period, during which the export of minerals extracted under a relevant contract for subsoil use, except for common minerals, groundwater and therapeutic mud, began.

      If the export took place before January 1, 2016, the limitation period begins on January 1, 2016;

      3) refund and (or) offset, in accordance with Article 104 of this Code, of the confirmed excess amount of VAT specified in Article 432 of this Code - at the end of a taxable period, during which the reliability of excess amount of VAT was confirmed, also pursuant to an appeal against results of a tax audit in accordance with the legislation of the Republic of Kazakhstan.

      6. For the purposes of calculating or revising the calculated, assessed amount of VAT specified in subparagraphs 1) and 2) of paragraph 5 of this article, the limitation period begins at the end of a taxable period, during which the taxpayer submits a VAT declaration with a claim to return the excess amount of VAT.

      7. The limitation period shall be extended:

      1) for one calendar year - in the case of filing by a taxpayer (tax agent) of additional tax returns for the period, for which the limitation period, set forth in paragraph 2 of this article, expires in less than one calendar year, with regard to the assessment and (or) revision of the calculated amount of taxes and payments to the budget;

      2) for three calendar years - in case a taxpayer files additional tax returns with alterations and additions regarding the transfer of losses for the period, for which the period of limitation of actions set forth in paragraph 2 of this article, expires in less than one calendar year, with regard to the assessment and (or) revision of the calculated amount of corporate income tax to the budget;

      3) before the execution of a decision made subsequent to the results of consideration of a complaint (application), in cases of:

      appeal of a taxpayer (tax agent) against an audit findings report in accordance with the procedure established by the legislation of the Republic of Kazakhstan, as well as actions (inaction) of officials of tax authorities – with regard to the part under appeal;

      consideration of a tax application of a non-resident for the return of income tax from the budget under an international treaty;

      appeal by a non-resident, in accordance with the procedure established by the legislation of the Republic of Kazakhstan, against the decision of a tax authority made subsequent to the results of consideration of a tax application for the return of income tax from the budget under an international treaty;

      appeal by a non-resident against the decision of the authorized body made subsequent to the results of consideration of a non-resident’s complaint specified in item four of this sub-paragraph;

      4) before the execution of a decision of the authorized body and (or) competent authority of a foreign state adopted following the results of a coordination procedure – if the authorized body conducts the coordination procedure in accordance with Article 221 of this Code;

      5) before the execution of a notice of elimination of violations revealed by tax authorities subsequent to the results of an in-house audit, sent and delivered before the expiration of the limitation period;

      6) from the day of delivering recommendations on the results of horizontal monitoring until a decision on the results of horizontal monitoring is made;

      7) if an investor initiated proceedings in international arbitration tribunal, a tax authority has the right to assess or revise the calculated, assessed amount of taxes and payments to the budget of the taxpayer, over which the investor initiated proceedings, for the period running from the beginning of that the investor complains of and until a final and binding court judgment is delivered on such arbitration proceedings - within five years after the completion of such arbitration proceedings.

      8. The limitation period for calculating or revising the calculated, assessed amount of taxes and payments to the budget is suspended for the period:

      1) of preparing and submitting a written objection by a taxpayer (tax agent) to the preliminary act of a tax audit and its consideration by a tax authority in accordance with the procedure established by the legislation of the Republic of Kazakhstan;

      2) of sending requests and receiving documents and (or) information on them during a tax audit in accordance with the legislation of the Republic of Kazakhstan on transfer pricing.

      In such cases, the general limitation period for the revision of the calculated, assessed amount of taxes and payments to the budget, taking into account its suspension, may not exceed seven years;

      3) of time from the date of completion of a tax audit until completion of criminal proceedings, in case a tax audit is conducted as part of pre-trial investigation.

      9. The assessed amount of taxes and payments to the budget for the action (actions) of issuing an invoice with regard to a private business entity without actual shipment of goods, performance of works, provision of services, is calculated or revised by a tax authority for a tax obligation and (or) a demand pursuant to a final and binding court judgment, a sentence, or a court decision within the limitation period.

      10. The amount of a tax and a payment to the budget, penalties paid in excess (erroneously) is subject to offset and (or) return within the amounts paid during a current year and previous five calendar years, except for the case specified in Article 108 of this Code.

Chapter 6. CHANGE OF DEADLINES FOR THE FULFILLMENT OF TAX OBLIGATIONS TO PAY TAXES AND (OR) FEES. A GROUND FOR THE TERMINATION OF TAX OBLIGATIONS

Article 49. General provisions on changing deadlines for the fulfillment of tax obligations to pay taxes and (or) fees

      1. Change of deadlines for the fulfillment of a tax obligation to pay taxes and (or) fees is extension of the time period established by this Code for their payment or postponement of atax debt maturity date. The provisions of this paragraph do not apply to the amounts of fines.

      For the purposes of this chapter, fees shall be understood to mean those for:

      land use;

      surface water use;

      emissions into the environment.

      2. Change of deadlines for the fulfillment of a tax obligation to pay taxes and (or) fees is made in the form of deferred payment, payment by installments of taxes and (or) fees calculated by a taxpayer in accordance with filed tax returns, as well as assessed by a tax authority subsequent to the results of tax audits, data furnished by state bodies.

      Deadlines for the payment of taxes and (or) fees may be changed in respect of the entire amount of tax payable and (or) fee or part thereof.

      3. Deadlines for the fulfillment of a tax obligation for taxes withheld at the source of payment, excises, VAT on goods imported from the territory of the member states of the Eurasian Economic Union, as well as tax received by the National Fund of the Republic of Kazakhstan in accordance with the budget legislation of the Republic of Kazakhstan, are not subject to change.

      Deadlines for the payment of indirect taxes on imported goods, except for goods imported from the territory of the member states of the Eurasian Economic Union, are changed with respect to value-added and excise taxes, except for excise tax on imported goods subject to marking in accordance with this Code in accordance with the procedure specified in paragraphs 9 and 10 of this article.

      4. Deadlines for the fulfillment of a tax obligation to pay taxes and (or) fees may not be changed if a tax authority suspends its previous decision to change deadlines for the fulfillment of a tax obligation to pay taxes and (or) fees due to the taxpayer’s disruption of the schedule for the fulfillment of a tax obligation within three years preceding the day of the taxpayer’s submission of an application for changing deadlines for the fulfillment of a tax obligation to pay taxes and (or) fees.

      5. Change of deadlines for the fulfillment of a tax obligation to pay taxes and (or) fees is made against the pledge of assets of a taxpayer and (or) a third party and (or) under bank guarantee.

      6. A tax application for changing deadlines for the fulfillment of a tax obligation to pay taxes and (or) fees shall be submitted by a taxpayer in the form set by the authorized body together with an estimated schedule for the payment of taxes and (or) fees.

      7. Change of deadlines for the fulfillment of a tax obligation to pay taxes and (or) fees does not exempt a taxpayer from paying a penalty for their late payment in accordance with Article 117 of this Code, except for the case of granting a deferred payment or payment by installments of taxes and (or) fees:

      within the procedure for resolving insolvency provided for by the legislation of the Republic of Kazakhstan on rehabilitation and bankruptcy;

      on the ground set forth in subparagraph 1) of paragraph 2 of Article 51 of this Code.

      8. The provisions of this chapter shall also apply when allowing a deferred payment or payment by installments of penalties.

      9. A ground for changing deadlines for the payment of indirect taxes on imported goods is a declaration of goods placed under the customs procedure for release for home use in accordance with the customs legislation of the Eurasian Economic Union and (or) the customs legislation of the Republic of Kazakhstan to a customs authority.

      Change of deadlines for the payment of indirect taxes on imported goods is made:

      1) upon submission to a customs authority of documents provided for by the customs legislation of the Eurasian Economic Union and (or) customs legislation of the Republic of Kazakhstan, for customs clearance of such imported goods in full;

      2) if persons who, as a result of application of the risk management system set by the authorized body, are not classified as ineligible for the change of deadlines for the payment of indirect taxes provided for in this article.

      Change of deadlines for the payment of indirect taxes on imported goods in accordance with this article is made by entering the calculated amount of tax into personal account by a tax authority on the 20th day of a month following the month in which the imported goods for home use were produced in accordance with the customs legislation of the Eurasian Economic union and (or) the customs legislation of the Republic of Kazakhstan.

      10. Change of deadlines for the payment of VAT on imported goods is made:

      1) upon submission to a customs authority of documents provided for by the customs legislation of the Eurasian Economic Union and (or) customs legislation of the Republic of Kazakhstan, for customs clearance of such imported goods in full;

      2) if a person importing the goods is an authorized economic operator in accordance with the customs legislation of the Eurasian Economic Union and (or) the customs legislation of the Republic of Kazakhstan.

      A ground for changing deadlines for the payment of indirect taxes on imported goods is a declaration of goods placed under the customs procedure for release for home use in accordance with the customs legislation of the Eurasian Economic Union and (or) the customs legislation of the Republic of Kazakhstan to a customs authority.

      Change of deadlines for the payment of indirect taxes on imported goods in accordance with this article is made by entering the calculated amount of tax into personal account by a tax authority on the 20th day of the third month following a month in which the imported goods for home use were produced in accordance with the customs legislation of the Eurasian Economic Union and (or) the customs legislation of the Republic of Kazakhstan.

Article 50. A tax authority entitled to make a decision on changing a deadline for the fulfillment of tax obligations to pay taxes and (or) fees

      1. A decision on changing a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees received by the state budget, and also those distributed between the state and local budgets, shall be made by a tax authority at the location of a taxpayer.

      2. A decision on changing a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees received in full by local budgets shall be made by a tax authority at the place of their payment, specified by the Special Part of this Code.

Article 51. Order and conditions for deferrals or payment by installments of taxes and (or) fees

      1. Deferrals or payment by installments of taxes and (or) fees is changing deadlines for the payment of taxes and (or) fees given the grounds provided for by this article, with one-time or phased payment of taxes and (or) fees, respectively.

      Deferred one-time payment of taxes and (or) fees is allowed for a period not exceeding six months.

      Monthly or quarterly payment of taxes and (or) fees in equal amounts by installments is allowed for a period not exceeding three years.

      Deferrals or payment by installments may be allowed for one or several taxes and (or) fees.

      2. Deferrals or payment by installments of taxes and (or) fees may be allowed to a taxpayer whose financial position does not allow the payment of a tax and (or) fee before the prescribed deadline, but there are reasonable grounds to believe that the possibility of their payment will arise within the time period for which deferrals or payment by installments is allowed, given one of the following grounds:

      1) damage to the taxpayer was caused as a result of force majeure (emergency situations of social, natural, technogenic, ecological nature, military actions and other circumstances of force majeure);

      2) the production and (or) sale of goods, works or services by the taxpayer is seasonal;

      3) the property status of an individual not registered as an individual entrepreneur (without regard to assets which, in accordance with the legislation of the Republic of Kazakhstan, may not be foreclosed on) rules out the possibility of one-time tax payment;

      4) a court declared a decision to apply the procedure for resolving insolvency;

      5) the taxpayer’s basic activity is part of an economic sector of strategic importance according to the laws of the Republic of Kazakhstan;

      6) the taxpayer filed additional tax returns;

      7) the taxpayer accepts the amounts of assessed taxes and (or) fees specified in an audit findings report. The provisions of this subparagraph do not apply to taxpayers operating for at least five years from the date of registration as a taxpayer until that of filing an application for deferrals or payment by installments.

      3. The following documents shall be attached to an application for changing a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees:

      1) a list of counterparties-debtors of a taxpayer with the prices of contracts concluded with relevant counterparties-debtors (the amount of other obligations and grounds for their emergence), and deadlines for their fulfillment, as well as copies of these contracts (documents confirming the existence of other grounds giving rise to an obligation). The provisions of this subparagraph do not apply to an individual not registered as an individual entrepreneur, a private practice owner;

      2) documents confirming the existence of grounds for changing deadlines for the payment of taxes and (or) fees specified in paragraph 4 of this article;

      3) documents on assets that can be a pledged item with an attached report of an appraiser on the market value of assets to be pledged or a bank guarantee agreement concluded between a guarantor bank and a taxpayer, and a bank guarantee. This appraiser’s report on the market value of pledged assets must be drawn up within ten business days prior to the taxpayer’s submission of an application for deferrals or payment by installments.

      4. Documents confirming the existence of grounds for changing a deadline for the payment of taxes and (or) fees on the ground provided for by:

      subparagraph 1) of paragraph 2 of this article areconfirmation by relevant authorized state bodies of the commencement of force majeure in respect of a taxpayer;

      subparagraph 2) of paragraph 2 of this article are a document drawn up by a taxpayer to confirm that the share of his/her/its income from seasonal branches and activities in his/her/its total income from the sale of goods, works, services, is at least 50 percent;

      subparagraph 3) of paragraph 2 of this article are data on the income for a year preceding the date of submission of the application, on movables and real estate of an individual, furnished by a relevant authorized body within ten business days prior tothe application’s submission.

      5. A decision to change a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees or to refuse to change it is made by a body authorized to make such a decision in accordance with Article 50 of this Code, within twenty business days from the receipt of the taxpayer’s application in the form established by the authorized body.

      A decision to change a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees shall take effect on the day of its signing.

      6. A decision to refuse the change of a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees must be well-reasoned.

Article 52. Conditions for concluding an asset pledge agreement

      An asset pledge agreement shall be concluded within ten business days from the taxpayer’s submission of an application for changing a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees, given that:

      1) the content of the pledge agreement meets the requirements established by the legislation of the Republic of Kazakhstan;

      2) an asset to be pledged must be insured against loss or damage, and its market value must at least equal the amount of taxes and (or) fees specified in the application for changing a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees, inclusive of the penalty assessed for the period of deferrals or payment by installments, as well as the expenses associated with its sale in case of the taxpayer’s disruption of the schedule for payment of taxes and (or) fees. The following items may not be pledged:

      life support facilities;

      electric, thermal and other types of energy;

      distrainedassets;

      assets, restrictions on which are imposed by state bodies, including tax authorities;

      assets encumbered with the rights of third parties;

      perishable raw materials, food products;

      3) repledging of assets provided as collateral is not allowed;

      4) where laws of the Republic of Kazakhstan provide for mandatory state registration of an asset pledge agreement, a taxpayer shall, within five business days from the conclusion of a pledge agreement, submit to a tax authority, making a decision to change a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees, a document confirming the registration of the pledge agreement with a relevant registration authority.

Article 53. Bank guarantee

      1. Under a bank guarantee, a bank (guarantor) has a duty to fulfill a taxpayer’s obligation to pay taxes and (or) fees in case of violation by the taxpayer of conditions for allowing deferrals, payment by installments of taxes and (or) fees.

      2. A bank guarantee must meet the following requirements:

      1) the content of a bank guarantee must comply with the requirements established by the legislation of the Republic of Kazakhstan;

      2) a bank guarantee must be irrevocable;

      3) the validity period of a bank guarantee shall expire at least six months after the expiration of a deadline set for a taxpayer to fulfill an obligation to pay taxes and (or) fees secured by a bank guarantee;

      4) the amount, for which a bank guarantee was issued, shall secure the guarantor’s fulfillment of a taxpayer’s obligation to pay taxes and (or) fees in full.

      3. A guarantor shall fulfill a bank guarantee obligation within three business days from the day a claim for the money under the bank guarantee is received.

      4. A guarantor is not entitled to refuse a tax authority to satisfy a claim for the money under a bank guarantee (unless such a claim is presented to a guarantor after the period of validity of a bank guarantee).

Article 54. Termination of deferrals and payment by installments

      1. Deferrals and payment by installments shall terminate upon the expiry of the validity period of a relevant decision.

      2. Deferrals and payment by installments shall terminate, also prior to the scheduled date, in cases of:

      1) payment by a taxpayer of the entire amount of taxes and (or) fees before the expiration of the set deadline;

      2) violation by a taxpayer of conditions allowing deferrals and payment by installments to pay taxes and (or) fees;

      3) lodging a complaint against an audit findings report within the period specified in the decision of a tax authority to change a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees specified in the audit findings report - if deferrals and payment by installments are allowed on the ground set forth in subparagraph 7) of paragraph 2 of Article 51 of this Code. If the case, specified in this subparagraph, occurs, the decision to change a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees terminateson the day the tax authority makes a relevant decision.

      3. A tax authority that made a decision to change a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees may terminate it and send a notice of annulment of the decision to change a deadline for the fulfillment of a tax obligation to pay taxes and (or) fees to the taxpayer within five business days from the date of the decision.

Article 55. Order for the foreclosure and sale of pledged assets, and also for the demand to execute a bank guarantee

      1. In case of disruption of a schedule for the fulfillment of a tax obligation secured by pledged assets of a taxpayer and (or) a third party and (or) a bank guarantee, a tax authority forecloses on the pledged assets of the taxpayer and (or) third party or requires the execution of the bank guarantee.

      2. The sale of assets pledged by a taxpayer and (or) a third party shall be carried out by an authorized legal person through auctions.

      The procedure for the sale of assets pledged by a taxpayer and (or) a third party, as well as the taxpayer’s (tax agent’s) assets on which restrictions are imposed, is determined by the authorized body.

      3. A tax authority, within five business days from expiration of a deadline for the execution of a demand for the payment of taxes and (or) fees, shall submit a request to a guarantor for the payment of the amount of money under a bank guarantee.

Article 56. Termination of tax obligations

      1. A tax obligation of an individual shall be terminated in the event of:

      1) his/her death;

      2) declaring him/her dead by a final and binding court judgment.

      2. A tax obligation of an individual entrepreneur shall be terminated after the individual entrepreneur ceases to operate in accordance with the procedure established by the legislation of the Republic of Kazakhstan.

      3. A tax obligation of a legal entity shall be terminated:

      1) after its liquidation;

      2) after its reorganization through incorporation (in respect of an incorporated legal entity), merger and separation.

Chapter 7. FULFILLMENT OF TAX OBLIGATIONS IN THE EVENT OF LIQUIDATION, REORGANIZATION, TERMINATION OF ACTIVITY OF A TAXPAYER

Article 57. General Provisions

      The provisions of this chapter apply, if a taxpayer adopts a resolution on reorganization through merger, incorporation, separation, liquidation or termination of activity.

Article 58. Fulfillment of tax obligations of a legal entity in liquidation, as well as in the event of termination of activity in the Republic of Kazakhstan of a structural unit, permanent establishment of a non-resident legal entity

      1. A resident legal entity, within three business days from the day of adoption of a resolution on liquidation, shall notify thereof the tax authority at the place of its location in writing.

      2. Within three business days from the day of approval of an interim liquidation balance sheet, a legal entity in liquidation shall submit to the tax authority at the place of its location all of the following documents:

      1) a tax application for a tax audit;

      2) liquidation tax returns.

      3. Liquidation tax returns shall be drawn up by types of taxes, payments to the budget and social welfare payments for which a legal entity in liquidation is a payer and (or) a tax agent, for the period from the beginning of a taxable period, within which a tax application for a tax audit was submitted, until the date of submission of such an application.

      In the event that next scheduled tax returns are due for filing after liquidation tax returns, such next scheduled tax returns shall be filed on or before the date of filing liquidation tax returns.

      4. A legal entity in liquidation shall pay taxes, payments to the budget and social welfare payments entered into liquidation tax returns, within ten calendar days from the day of filing liquidation tax returns witha tax authority.

      In the event that the payment of taxes, payments to the budget and social welfare payments entered into tax returns filed before liquidation tax returns is due after the expiration of the period specified in part one of this paragraph, the payment (transfer) is made within ten calendar days from the date of filing liquidation tax returns with a tax authority.

      5. Tax authorities shall initiate a tax audit within twenty business days from the receipt of a tax application of a legal entity in liquidation by a tax authority.

      6. Tax debt of a legal entity in liquidation arising, among other things, on the grounds specified in paragraphs 4 and 11 of this article, shall be paid at its expense, including proceeds from the sale of its assets, in order of priority established by the laws of the Republic of Kazakhstan. Concurrently, the tax debt of structural units, permanent establishments, structural units of a non-resident legal entity shall be paid in case of joint fulfillment of tax obligations by such a non-resident legal entity with a group of permanent establishments, structural units of legal entities through a permanent establishment, a structural unit terminating activity.

      7. If the assets of a legal entity in liquidation are not sufficient to fully pay its tax debt, the remaining part of the tax debt is paid by the founders (participants) of the legal entity in liquidation in cases established by laws of the Republic of Kazakhstan.

      8. If a legal entity in liquidation has amounts of taxes, payments to the budget and penalties paid in excess, the latter are subject to offset against the tax debt of the legal entity in liquidation in accordance with the procedure set forth in Article 102 of this Code.

      In the event that a legal entity in liquidation has amounts of taxes, payments to the budget and penalties paid erroneously, these amounts are subject to offset in accordance with the procedure set forth in Article 103 of this Code.

      9. If, before the date of its VAT deregistration, a legal entity in liquidation has the amount of VAT to be offset in excess of the amount of assessed tax, which is refundable in accordance with Chapter 49 of this Code, the excess shall be returned to the legal entity in liquidation in accordance with the procedure set forth in Article 104 of this Code.

      10. If a legal entity in liquidation has no tax debts,:

      1) erroneously paid amounts of taxes, payments to the budget and penalties are subject to return to this legal entity in accordance with the procedure set forth in Article 103 of this Code;

      2) amounts of taxes, payments to the budget and penalties paid in excess are subject to return to this legal entity in accordance with the procedure set forth in Article 101 of this Code;

      3) paid amounts of fines are subject to return to this legal entity on the grounds and in accordance with the procedure set forth in Article 106 of this Code;

      4) amounts of customs duties, taxes, customs charges and penalties levied by customs authorities paid to the budget in excess (erroneously) are subject to return to this legal entity in accordance with the procedure established by the customs legislation of the Republic of Kazakhstan.

      11. If an obligation arises to calculate and pay taxes and payments to the budget, social welfare payments for the period fromthe date of filing liquidation tax returns until that of completion of a liquidation tax audit, a legal entity in liquidation is obliged to fulfill such obligations pursuant to the notice of a tax authority specified in subparagraph 3) paragraph 2 of Article 114 of this Code.

      12. In case of generation of income in the form of dividends of individuals and non-residents subject to taxation at the source of payment during the period from the day after the dayon which a liquidation tax audit was completed until that of approval of a liquidation balance sheet, a legal entity in liquidation shall file with the tax authority at its location additional tax returns along with liquidation tax returns on such a tax obligation and fulfill it in full.

      13. After the completion of a tax audit and performance of the provisions specified in paragraph 12 of this article, a legal entity in liquidation shall submit a liquidation balance sheet to the tax authority at its location.

      A legal entity in liquidation submits a liquidation balance sheet within three business days from the completion of a tax audit and performance of the provisions specified in paragraph 12 of this article, provided all of the following requirements are met:

      1) absence of tax debt, arrears in social welfare payments;

      2) absence ofamounts of taxes, payments to the budget, penalties and fines paid in excess (erroneously);

      3) absence of VAT amount to be offset exceeding the assessed tax amount subject to refund in accordance with Chapter 49 of this Code;

      4) absence of unfulfilled tax application for offsetting and (or) refunding amounts of customs duties, taxes, customs charges and penalties levied by customs authorities paid in excess (erroneously).

      In the event of tax debts, arrears in social welfare payments, amounts of taxes, payments to the budget, penalties and fines paid in excess (erroneously) and (or) VAT amount to be offset exceeding the assessed tax amount subject to refund in accordance with Chapter 49 of this Code, a legal entity in liquidation shall submit a liquidation balance sheet within three business days from the date, whichever comes last:

      1) of the payment of tax debt, arrears in social welfare payments;

      2) of refund of amounts of taxes, payments to the budget, penalties and fines paid in excess (erroneously);

      3) of refund of VAT amount to be offset exceeding the assessed tax amount subject to refund in accordance with Chapter 49 of this Code;

      4) of refund of amounts of customs duties, taxes, customs charges and penalties levied by customs authorities paid in excess (erroneously).

      14. A tax obligation of the structural unit of a non-resident legal entity terminating its activity in the Republic of Kazakhstan, as well as the permanent establishment of a non-resident legal entity shall be fulfilled in accordance with the procedure set forth in this article.

      15. The provisions of this article shall not apply to resident legal entities in liquidation in case they choose to comply with special considerations in fulfilling tax obligations set forth inArticles 59 or 60 of this Code.

Article 59. Features of fulfilling tax obligations by certain categories of resident legal entities in liquidation

      1. This article sets forth special considerations in the fulfillment of a tax obligation of a resident legal entity in liquidation meeting all ofthe following requirements:

      1) it is not a VAT payer;

      2) it does not apply a special tax regime to producers of agricultural products, aquaculture products (fish farming) and agricultural cooperatives;

      3) itwas not reorganized or is not the legal successor of a reorganized legal entity.

      The provision of this subparagraph does not apply to legal entities reorganized through transformation;

      4) it is not included in the tax audit plan or in the list of selective tax audits as a result of risk assessment measures;

      5) it is not registered as a taxpayer performing certain types of activities.

      This article applies to resident legal entities meeting the requirements specified in this paragraph during the limitation period established by Article 48 of this Code. The provisions of this paragraph also apply to legal entities, which life span is less than the limitation period set forth by Article 48 of this Code.

      2. In the event of adopting a resolution to liquidate, a legal entity submits to the tax authority at its location all of the following documents:

      1) a tax application for the termination of its activity;

      2) liquidation tax returns;

      3) an interim liquidation balance sheet;

      4) a tax application for deregistering a cash register in accordance with the procedure set forth in Article 169 of this Code.

      A legal entity in liquidation submits the document specified in subparagraph 4) of part one of this paragraph in the event that the cash register is registered with a tax authority.

      3. Liquidation tax returns shall be drawn up by types of taxes, payments to the budget and social welfare payments for which a legal entity in liquidation is a payer and (or) a tax agent, for the period from the beginning of a taxable period, within which a tax application for termination of activity was submitted, until the date of submission of such an application.

      In the event that next scheduled tax returns are due for filing after liquidation tax returns, such next scheduled tax returns shall be filed on or before the date of filing liquidation tax returns.

      4. A legal entity in liquidation shall pay taxes, payments to the budget and social welfare payments entered into liquidation tax returns, within ten calendar days from the day of filing liquidation tax returns with a tax authority.

      In the event that the payment of taxes, payments to the budget and social welfare payments entered into tax returns filed before liquidation tax returns is due after the expiration of the period specified in part one of this paragraph, the payment (transfer) is made within ten calendar days from the day of filing liquidation tax returns with a tax authority.

      5. A tax authority, within three business days from the receipt of a tax application for terminating activity of a legal entity in liquidation, shall submit a request for the period during which no tax audit was conducted with respect to the legal entity, within the limitation period set forth in Article 48 of this Code:

      1) to authorized state bodies - concerning information on transactions with assets subject to state registration, made by a legal entity terminating its activity, as well as its assets as of the date of receipt of the tax authority’s request;

      2) to second-tier banks and (or) organizations carrying out certain types of banking operations - concerning information on balances and movements of money in bank accounts of a legal entity terminating its activity as of the date of receipt of the tax authority’s request.

      Information upon the requests of a tax authority specified in this paragraph shall be submitted within twenty business days from their receipt, unless otherwise specified by subparagraph 13) of part one of Article 24 of this Code.

      6. A tax authority, within ten business days from the day of receipt of all the information provided for in paragraph 5 of this article, shall conduct an in-house audit and draw up an opinion in accordance with the procedure set forth in this Code.

      An opinion reflects results of an in-house audit and a situation with settlements in respect of taxes, payments to the budget and social welfare payments.

      An opinion shall be drawn up at least in two copies and signed by tax officials. One copy of the opinion is delivered, within three business days after its signing, to a legal entity in liquidation against signature or sent to it by registered mail with return receipt.

      In case a postal or any other communication organization returns an opinion sent by a tax authority to a taxpayer (tax agent) in liquidation by registered mail with return receipt, the date of delivery of such an opinion shall be that of the tax audit, involving witnesses on the grounds and in accordance with the procedure set forth in this Code.

      7. In case an in-house audit reveals violations, a legal entity in liquidation, within five business days from the receipt of an opinion, shall be delivered a notice of elimination of violations revealed in the course of the in-house audit in accordance with the procedure set forth inChapter 12 of this Code.

      A legal entity in liquidation executes a notice of the elimination of violations revealed in the course of an in-house audit in accordance with the procedure set forth in Article 96 of this Code.

      In case of a failure to execute a notice and (or) tax authorities’ disagreement with explanations provided by a taxpayer, a tax audit shall be conducted with respect to a legal entity in liquidation. In this case, the tax audit must begin within ten business days after expiration of the deadline set for the execution of such a notice and (or) after obtaining an explanation of disagreement concerning revealed violations.

      8. Tax debt of a legal entity in liquidation arising, among other things, on the grounds specified in paragraph 4 of this article, shall be paid at the expense of this person, including proceeds from the sale of its assets, in order of priority established by the laws of the Republic of Kazakhstan.

      9. If the assets of a legal entity in liquidation are not sufficient to fully pay its tax debt, the remaining part of the tax debt is paid by the founders (participants) of the legal entity in liquidation in cases established by laws of the Republic of Kazakhstan.

      10. If a legal entity in liquidation has no tax debts:

      1) erroneously paid amounts of taxes, payments to the budget and penalties are subject to return to this legal entity in accordance with the procedure set forth in Article 103 of this Code;

      2) amounts of taxes, payments to the budget and penalties paid in excess are subject to return to this legal entity in accordance with the procedure set forth in Article 101 of this Code;

      3) paid amounts of fines are subject to return to this legal entity on the grounds and in accordance with the procedure set forth in Article 106 of this Code;

      4) amounts of customs duties, taxes, customs charges and penalties levied by customs authorities paid to the budget in excess (erroneously) are subject to return to this legal entity in accordance with the procedure established by the customs legislation of the Republic of Kazakhstan.

      11. In case of generation of income in the form of dividends of individuals and non-residents subject to taxation at the source of payment during the period beginning on the day a legal entity person receives an opinion on an in-house audit until that of approval of a liquidation balance sheet, a legal entity in liquidation shall file with the tax authority at its location additional tax returns along with liquidation tax returns on such a tax obligation and fulfill it in full.

      12. A legal entity in liquidation shall submit a liquidation balance sheet to the tax authority at its location.

      A legal entity in liquidation submits a liquidation balance sheet within three business days from the receipt of an opinion on the results of an in-house audit if there is no tax debt, arrears in social welfare payments and provisions specified in paragraph 11 of this article are observed.

      13. In case an in-house audit reveals violations with respect to tax debt, arrears in social welfare payments, a legal entity in liquidation submits a liquidation balance sheet within three business days from the payment of the tax debt, arrears in social welfare payments, provided that the violations revealed in the course of the in-house audit are eliminated, and provisions specified in paragraph 11 of this article are observed.

      14. After submission of a liquidation balance sheet specified in paragraph 12 of this article and observance of provisions specified in paragraph 13 of this article, a tax authority shall send to the state body conducting state registration, reregistration of legal entities, state registration of termination of activities of legal entities, registration, reregistration, deregistration of structural units, information on the absence (existence) of debts, the record of which is kept by tax authorities with regard to a legal entity in liquidation in accordance with the procedure and within the time limits established by Article 100 of this Code.

Article 60. Features of the fulfillment of tax obligations by certain categories of resident legal entities in liquidation and individual entrepreneurs terminating activity pursuant to a tax audit report

      1. This article sets forth special considerations in the fulfillment of a tax obligation by certain categories of resident legal entities in liquidation and individual entrepreneurs terminating their activities,meeting all of the following requirements:

      1) total amount of the total annual income, with account of adjustments, of a legal entity in liquidation and an individual entrepreneur terminating activity, for the limitation period set forth in Article 48 of this Code does not exceed 150000 times the monthly calculated index established by the law on the republican budget and effective as of January 1 of a relevant financial year;

      2) they have a tax audit report on taxes drawn up notearlier than twenty calendar days before the date of submission of a tax application for terminating activity to a tax authority;

      3) they are or were not registered as a taxpayer performing certain types of activities during the limitation period set forth in Article 48 of this Code.

      At the same time, if, pursuant to a tax audit report, obligations arise for calculating and paying taxes and payments to the budget, for calculating, withholding, transferring social welfare payments, such obligations are subject to fulfillment by a legal entity in liquidation or an individual entrepreneur terminating activity within ten calendar days from the day after the day on which the tax audit report in question was delivered to a taxpayer.

      2. A resident legal entity, in the event of a resolution to liquidate, an individual entrepreneur in case of a decision to terminate an activity, submit to the local tax authority, all of the following documents:

      1) a tax application for termination of activities;

      2) liquidation tax returns;

      3) audit opinion on taxes;

      4) a tax application for deregistering a cash register in accordance with the procedure set forth by Article 169 of this Code.

      The document specified in subparagraph 4) of part one of this paragraph shall be submitted by the legal entity in liquidation or individual entrepreneur terminating activity in the event that the cash register is registered with the tax authority.

      3. Liquidation tax returns are drawn up by types of taxes, payments to the budget and social welfare payments for which the legal entity in liquidation or individual entrepreneur terminating activities is a payer and (or) tax agent for the period from the beginning of the taxable period in which the tax application forthe termination of activities is submitted, until the date of submission of such an application.

      In the event that next scheduled tax returns are due for filing after liquidation tax returns, such next scheduled tax returns shall be filed on or before the date of filing liquidation tax returns.

      4. A legal entity in liquidation or individual entrepreneur terminating activity shall pay taxes, payments to the budget and transfer social welfare payments entered into liquidation tax returns within ten calendar days from the day of filing liquidation tax returns witha tax authority.

      If the payment of taxes, payments to the budget and transfer of social welfare payments entered into tax returns filed before liquidation tax returns are due after the expiration of the period specified in part one of this paragraph, the payment (transfer) is made within ten calendar days from the day of filing liquidation tax returns witha tax authority.

      5. If a legal entity in liquidation or an individual entrepreneur terminating activity has no tax debt:

      1) erroneously paid amounts of taxes, payments to the budget and penalties are subject to return to this taxpayer in accordance with the procedure set forth in Article 103 of this Code;

      2) amounts of taxes, payments to the budget and penalties paid in excess are subject to return to this taxpayer in accordance with the procedure set forth in Article 101 of this Code;

      3) paid amounts of fines are subject to return to this taxpayer on the grounds and in accordance with the procedure set forth in Article 106 of this Code;

      4) amounts of customs duties, taxes, customs charges and penalties levied by customs authorities paid to the budget in excess (erroneously) are subject to return to this legal entity in accordance with the procedure established by the customs legislation of the Republic of Kazakhstan.

      6. A tax authority, within ten business days from the day of receipt of all the documents provided for in paragraph 2 of this article, shall conduct an in-house audit in accordance with the procedure set forth in Article 95 of this Code.

      If tax authorities reveal violations in the course of an in-house audit, a legal entity in liquidation or individual entrepreneur terminating activity shall be delivered a notice of the elimination of violations in accordance with the procedure set forth in Chapter 12 of this Code.

      The execution of the notice of the elimination of violations revealed in the course of an in-house audit is carried out by a legal entity in liquidation or an individual entrepreneur terminating activity in accordance with the procedure set forth in Article 96 of this Code.

      Payment (transfer) of tax debts, arrears in social welfare payments is made by the taxpayer within ten calendar days from the execution of the notice of elimination of violations revealed by an in-house audit.

      7. In cases of failure to execute a notice and (or) tax authorities’ disagreement with explanations provided by a taxpayer, a tax authority shall conduct a tax audit in respect of a legal entity in liquidation or an individual entrepreneur terminating its activity with regard to facts and circumstances revealed in respectof such a taxpayer, which served as a ground for scheduling this audit.

      8. In case of generation of income in the form of dividends of individuals and non-residents subject to taxation at the source of payment during the period from the day after the day on which an in-house audit was completed until that of approval of a liquidation balance sheet, a legal entity in liquidation shall file with the tax authority at its location additional tax returns along with liquidation tax returns on such a tax obligation and fulfill it completely.

      9. In cases where the provisions set forth in paragraphs 4, 5, 6 and 8 of this article are observed and there are no tax debts, arrears in social welfare payments, as well as in case of elimination of violations revealed by an in-house audit conducted by a tax authority, a legal entity in liquidation submits a liquidation balance sheet to the tax authority at its location.

      A legal entity in liquidation submits a liquidation balance sheet within fifteen business days from the receipt of documents specified in paragraph 2 of this article by a tax authority, provided that there is no tax debt, arrears in social welfare payments and provisions set forth in paragraph 8 of this article are observed.

      In case an in-house audit reveals violations with respect to tax debt, arrears in social welfare payments, a legal entity in liquidation submits a liquidation balance sheet within three business days from the payment of the tax debt, arrears in social welfare payments, provided that the violations revealed in the course of the in-house audit are eliminated, and provisions specified in paragraph 11 of this article are observed.

      10. After observance of provisions specified in paragraph 9 of this article, a tax authority shall send to the state body conducting state registration, reregistration of legal entities, state registration of termination of activities of legal entities, registration, reregistration, deregistration of structural units (hereinafter referred to as judicial bodies), information on the absence (existence) of debts the record of which is kept by tax authorities with regard to a legal entity in liquidation in accordance with the procedure and within the time limits set forth in Article 100 of this Code.

      11. A tax obligation of an individual entrepreneur that terminated its activity is deemed fulfilled after an in-house audit, given the absence or paymentof tax debt, arrears in social welfare payments, and complete elimination of the violations revealed by the in-house audit.

      12. The date of deregistration of an individual entrepreneur by a tax authority is that of fulfillment of the tax obligation in accordance with paragraph 11 of this article.

      13. A tax authority shall, within three business days from the date specified in paragraph 12 of this article, deregister an individual entrepreneur.

      Information on deregistration of an individual entrepreneur is placed on the website of the authorized body.

      14. A tax authority shall refuse to deregister an individual entrepreneur within three business days after expiration of the deadline set by paragraph 6 of this article for the payment (transfer) of tax debt, arrears in social welfare payments.

      A ground to deregister an individual entrepreneur is also an individual entrepreneur’s failure to observe the provisions set forth in this article.

Article 61. Fulfillment of tax obligations of a resident legal entity’s structural unit terminating its activity

      1. If a resident legal entity resolves to terminate activity of its structural unit, a tax authority at the location of the structural unit of the resident legal entity shall be provided with all of the following documents:

      1) a tax application for terminating activity;

      2) a copy of the resolution of the resident legal entity to terminate the activity of its structural unit;

      3) liquidation tax returns of the structural unit of the legal entity, unless otherwise provided for by this article.

      2. Liquidation tax returns shall be drawn up by types of taxes, payments to the budget and social welfare payments for which a legal entity’s structural unit terminating activity is recognized an independent payer, for the period from the beginning of a taxable period, within which it was resolved to terminate the activity of the structural unit of the legal entity, until the date of submitting a tax application for the termination of its activity.

      In the event that next scheduled tax returns are due for filing after liquidation tax returns, such next scheduled tax returns shall be filed on or before the date of filing liquidation tax returns.

      3. A legal entity’s structural unit terminating its activity shall pay taxes, payments to the budget and social welfare payments entered into liquidation tax returns provided for by paragraph 2 of this article, within ten calendar days from the day of filing liquidation tax returns with a tax authority.

      In the event that the payment of taxes, payments to the budget and social welfare payments entered into tax returns filed before liquidation tax returns is due after the expiration of the period specified in part one of this paragraph, the payment (transfer) is made within ten calendar days from the date of filing liquidation tax returns.

      4. In the event that a legal entity’s structural unit terminating its activity is not recognized an independent payer of taxes, payments to the budget and social welfare payments, liquidation tax returns are not filed.

      5. Tax debt, arrears in social welfare payments of the legal entity’s structural unit terminating its activity are paid at the expense of the legal person that set up this structural unit.

Article 62. Fulfillment of tax obligations in case of reorganization of a legal entity through merger, incorporation, separation

      1. A legal entity shall, within three business days from the adoption of a resolution on reorganization through merger, incorporation, separation, notify thereof the tax authority at its location in writing.

      Within three business days from the approval of a certificate of transfer, a legal entity, reorganized through merger and incorporation, shall submit to the tax authority at its location all of the following documents:

      1) liquidation tax returns;

      2) certificate of transfer.

      Liquidation tax returns are drawn up by types of taxes, payments to the budget and social welfare payments for which a legal entity being reorganized through merger and incorporation, is a payer and (or) tax agent for the period from the beginning of a taxable period, within which a tax obligation for filing such returns arose, until the date of its filing with a tax authority.

      An obligation to file liquidation tax returns in case of reorganization through merger is imposed on each legal entity incorporated by a newly established legal entity, in case of reorganization through incorporation – on an incorporated legal entity.

      In the event that next scheduled tax returns are due for filing after liquidation tax returns, such next scheduled tax returns shall be filed on or before the date of filing liquidation tax returns.

      In case of reorganization of a legal entity through separation, such an entity shall, within three business days from the approval of a separation balance sheet, submit the said balance to the tax authority at its location.

      2. The fulfillment of a tax obligation of the reorganized legal entity is imposed on its successor (successors), except for filing liquidation tax returns.

      3. Identification of a legal successor (successors), as well as participatory interest of the successor (successors) in the payment of the tax debt of a reorganized legal entity is carried out in accordance with the civil legislation of the Republic of Kazakhstan.

      4. Reorganization of a legal entity is not a ground for changing deadlines for the fulfillment of its tax obligation to pay taxes, payments to the budget by the legal successor (successors) of this legal entity.

      5. If a legal entity under reorganization has amounts of taxes, payments to the budget and penalties paid in excess, the said amounts shall be offset against the tax debt of the legal entity under reorganization in accordance with the procedure set forth in Article 102 of this Code.

      In the event that a legal entity under reorganization has erroneously paid amounts of taxes, payments to the budget and penalties, the said amounts shall be offset in favor of the legal entity under reorganization in accordance with the procedure set forth in Article 103 of this Code.

      6. If a legal entity under reorganization has no tax debt:

      1) erroneously paid amounts of taxes, payments to the budget and penalties are subject to return to its successor (successors) in proportion to the share in the assets obtained by it (them) in the course of reorganization, in accordance with the procedure set forth in Article 103 of this Code;

      2) amounts of taxes, payments to the budget and penalties paid in excess are subject to return to its successor (successors) in proportion to the share in the assets obtained by it (them) in the course of reorganization, in accordance with the procedure set forth in Article 101 of this Code.

      7. In case of reorganization of a legal entity through separation in accordance with the decision of the Government of the Republic of Kazakhstan, the excess of VAT that a legal entity under reorganization, which is a VAT payer, has as of the date of reorganization shall be transferred to its successor (successors).

      At the same time, the excess of VAT that is subject to transfer to the successor (successors) under reorganization through separation of a legal entity is determined in proportion to the share of the residual value of fixed assets transferred to the successor (successors).

      The residual value of fixed assets is calculated on the basis of the separation balance sheet of a legal entity under reorganization through separation.

      This paragraph applies in case the controlling stock of a legal entity under reorganization through separation belongs to a national management holding.

      8. A tax authority, within ten business days from the receipt of information from national registers of identification numbers on a legal entity under reorganization through:

      1) merger, submits the balance of business accounts of legal entities incorporated in a newly established legal entity to the tax authority at the location of the newly established legal entity on the basis of the certificate of transfer;

      2) incorporation, submits the balance of business account of the incorporated legal entity to the tax authority at the location of the legal entity that incorporated the said legal entity on the basis of the certificate of transfer;

      3) separation, submits the balance of the business account of the legal entity that separated the newly established legal entity to the tax authority at the location of the newly established legal entity on the basis of the separation balance sheet.

Article 63. Fulfillment of tax obligations of a permanent establishment without setting up a structural unit of a non-resident legal entity transferring rights and obligations owing to the fact that the place of effective management (the location of the actual management body) is in the Republic of Kazakhstan

      1. A non-resident legal entity having a permanent establishment in the Republic of Kazakhstan without setting up a structural unit and resolving to relocate the place of effective management (to change the location of the actual management body) from a foreign state to the Republic of Kazakhstan shall, within three business days after submitting a tax application for registration as a taxpayer in accordance with paragraph 2 of Article 76 of this Code, inform the tax authority at the location of such a permanent establishment in writing of the transfer of rights and obligations by such a permanent establishment to a legal entity, the place of effective management (the location of the actual management body) of which is in the Republic of Kazakhstan.

      Within fifteen calendar days from the day of registration as a taxpayer, a permanent establishment of the said non-resident legal entity is required to submit to the tax authority:

      1) a tax application for deregistration;

      2) liquidation tax returns;

      3) certificate of transfer.

      Liquidation tax returns are drawn up by types of taxes, payments to the budget and social welfare payments for which the permanent establishment transferring rights and obligations is a payer and (or) a tax agent for the period from the beginning of a taxable period, within which an obligation to file such returns arose, until the date of their filing with a tax authority.

      In the event that next scheduled tax returns are due for filing after liquidation tax returns, such next scheduled tax returns shall be filed on or before the date of filing liquidation tax returns.

      2. The fulfillment of the tax obligation of a permanent establishment transferring rights and obligations to a legal entity is imposed on such a legal entity established under the laws of a foreign state, the place of effective management (the location of the actual management body) of which is in the Republic of Kazakhstan (successor).

      3. The transfer of rights and obligations by a permanent establishment to a legal entity is not a ground for changing a deadline for the fulfillment of its tax obligation to pay taxes and payments to the budget by a legal entity established under the laws of a foreign state, the place of effective management (the location of the actual management body) of which is in the Republic Kazakhstan.

      4. If a permanent establishment transferring rights and obligations to a legal entity has no tax debt, amounts of taxes, payments to the budget and penalties paid in excess (erroneously) are subject to return to the legal entity established under the laws of a foreign state, the place of effective management (the location of the actual management body) of which is in the Republic of Kazakhstan.

      5. A tax authority shall, within ten business days from the receipt of documents specified in paragraph 1 of this article, transfer the balance of the business account of a permanent establishment transferring rights and obligations to a legal entity to the tax authority at the location of the legal entity to which the rights and obligations of the permanent establishment are transferred, on the basis of the certificate of transfer.

Article 64. Fulfillment of tax obligations of a legal entity in case of reorganization through separation

      1. A legal entity shall, within three business days from adopting a resolution on reorganization through separation, notify thereof a tax authority at its location in writing.

      A legal entity under reorganization through separation, within three business days from the approval of a separation balance sheet, submits to a tax authority at its location all of the following documents:

      1) a tax application for a tax audit;

      2) liquidation tax returns.

      2. Liquidation tax returns are drawn up by types of taxes, payments to the budget and social welfare payments for which a legal entity under reorganization is a payer and (or) a tax agent, for the period from the beginning of a taxable period, within which a tax application for a tax audit was submitted, until the date of submission of such an application.

      In the event that next scheduled tax returns are due for filing after liquidation tax returns, such next scheduled tax returns shall be filed on or before the date of filing liquidation tax returns.

      3. Payment of taxes, payments to the budget and social welfare payments entered into liquidation tax returns shall be made by a legal entity under reorganization within ten calendar days from the day of filing liquidation tax returns with a tax authority.

      In the event that the payment of taxes, payments to the budget and social welfare payments entered into tax returns filed before liquidation tax returns is due after the expiration of the deadline specified in part one of this paragraph, payment (transfer) is made within ten calendar days from the day of filing liquidation tax returns.

      4. A tax authority must initiate a tax audit within twenty business days after receiving a tax application of a legal entity under reorganization.

      5. After the completion of a tax audit in the course of reorganization by separation, a legal entity under reorganization shall submit a separation balance sheet to a tax authority at its location.

      If a legal entity under reorganization has amounts of taxes, payments to the budget and penalties paid in excess, the said amounts shall be offset against the tax debt of the legal entity under reorganization in accordance with the procedure set forth in Article 102 of this Code.

      In the event that a legal entity under reorganization has amounts of taxes, payments to the budget and penalties paid erroneously, the said amounts are subject to offset in accordance with the procedure set forth in Article 103 of this Code.

      If a legal entity under reorganization has no tax debt:

      1) erroneously paid amounts of taxes, payments to the budget and penalties are subject to return to its successor (successors) in proportion to the share in the assets obtained by it (them) in the course of reorganization in accordance with the procedure set forth in Article 103 of this Code;

      2) amounts of taxes, payments to the budget and penalties paid in excess are subject to return to its successor (successors) in proportion to the share in the assets obtained by it (them) in the course of reorganization in accordance with the procedure set forth in Article 101 of this Code;

      3) amounts of customs duties, taxes, customs charges and penalties levied by the customs authorities paid to the budget in excess (erroneously) are refunded to its successor (successors) in proportion to the share in the assets obtained by it (them) in the course of reorganization in accordance with the procedure established by customs legislation Republic of Kazakhstan;

      4) amounts of fines paid in excess (erroneously) shall be returned to its successor (successors) in proportion to the share in the assets obtained by it (them) in the course of reorganization in accordance with the procedure set forth in Article 106 of this Code.

      A legal entity under reorganization submits the documents specified in this paragraph within three business days from the completion of a tax audit provided all of the following requirements are met:

      1) absence of tax debt, arrears in social welfare payments;

      2) absence of amounts of taxes, payments to the budget, penalties and fines paid in excess (erroneously);

      3) absence of unfulfilled tax application for offsetting and (or) refunding amounts of customs duties, taxes, customs charges and penalties levied by customs authorities paid in excess (erroneously).

      In the event of tax debts, arrears in social welfare payments, amounts of taxes, payments to the budget, penalties and fines paid in excess (erroneously), a legal entity under reorganization shall submit the documents specified in this paragraph within three business days from the date, whichever comes last,:

      1) of the payment of tax debt, arrears in social welfare payments;

      2) of refund of amounts of taxes, payments to the budget, penalties and fines paid in excess (erroneously);

      3) of refund of amounts of customs duties, taxes, customs charges and penalties levied by customs authorities paid in excess (erroneously).

      6. A tax authority shall, within ten business days from the receipt of information from national registers of identification numbers, transfer the balance of business accounts of a separated legal entity to a tax authority at the location of newly established legal entities on the basis of a separation balance sheet.

      7. The fulfillment of a tax obligation of a legal entity under reorganization is imposed on its successor (successors), except for filing liquidation tax returns.

      8. A successor (successors), as well as participatory interest of the successor (successors) with respect to the payment of the tax debt of a reorganized legal entity, is identified in accordance with the civil legislation of the Republic of Kazakhstan.

      4. Reorganization of a legal entity is not a ground for changing deadlines for the fulfillment of its tax obligation to pay taxes, payments to the budget by this legal entity‘s successor (successors).

Article 65. Fulfillment of tax obligations of an individual entrepreneur terminating activity

      1. Within one month from the resolution to terminate his/her activity, an individual entrepreneur shall submit to a tax authority at his/her location:

      1) a tax application for a tax audit;

      2) liquidation tax returns.

      2. Liquidation tax returns are drawn up by types of taxes, payments to the budget and social welfare payments for which an individual entrepreneur terminating his/her activity is a payer and (or) a tax agent, for the period from the beginning of a taxable period, within which a tax application for a tax audit was submitted, until the date of submission of such an application.

      In the event that next scheduled tax returns are due for filing after liquidation tax returns, such next scheduled tax returns shall be filed on or before the date of filing liquidation tax returns.

      3. Payment of taxes, payments to the budget and social welfare payments entered into liquidation tax returns shall be made by an individual entrepreneur terminating his/her activity within ten calendar days from the date of filing liquidation tax returns with a tax authority.

      In the event that the payment of taxes, payments to the budget and social welfare payments entered into tax returns filed before liquidation tax returns is due after the expiration of the period specified in part one of this paragraph, the payment (transfer) is made within ten calendar days from the date of filing liquidation tax returns.

      4. A tax authority must initiate a tax audit within twenty business days after receiving a tax application of an individual entrepreneur terminating his/her activity.

      5. Tax debt of an individual entrepreneur terminating his/her activity is paid at his/her expense, including proceeds from the sale of his/her assets, in order of priority established by the laws of the Republic of Kazakhstan.

      6. If an individual entrepreneur terminating his/her activity has amounts of taxes, payments to the budget and fines paid in excess, the said amounts are to be offset against the tax debt of an individual entrepreneur terminating his/her activity has in accordance with the procedure set forth in Article 102 of this Code.

      In the event that the individual entrepreneur terminating his/her activity has erroneously paid amounts of taxes, payments to the budget and penalties, the said amounts are subject to offset in accordance with the procedure set forth in Article 103 of this Code.

      7. If an individual entrepreneur terminating his/her activity has no tax debt:

      1) erroneously paid amounts of taxes, payments to the budget and penalties are subject to return to the individual entrepreneur terminating his/her activity in accordance with the procedure set forth in Article 103 of this Code;

      2) amounts of taxes, payments to the budget and penalties paid in excess are subject to return to the individual entrepreneur terminating his/her activity in accordance with the procedure set forth in Article 101 of this Code;

      3) paid amounts of fines are subject to return to this individual entrepreneur in accordance with the procedure set forth in Article 106 of this Code;

      4) amounts of customs duties, taxes, customs charges and penalties levied by the customs authorities erroneously paid to the budget are refunded to this individual entrepreneur in accordance with the procedure established by the customs legislation of the Republic of Kazakhstan.

      8. The tax obligation of an individual entrepreneur that terminated his/her activity is deemed fulfilled after the completion of a tax audit and in case of absence or payment of tax debt, arrears in social welfare payments, including those generated through a tax audit, within the time limits set by Article 115 of this Code.

      9. The date of deregistration of an individual entrepreneur by a tax authority is the date of fulfillment of his/her tax obligation in accordance with paragraph 8 of this article.

      10. A tax authority shall, within three business days from the date of fulfillment of a tax obligation in accordance with paragraph 8 of this article, deregister an individual entrepreneur and place information on deregistration of the individual entrepreneur on the website of the authorized body.

      11. A ground for refusing to deregister an individual entrepreneur is the existence of tax debt, arrears in social welfare payments that were not paid within the time limits set forth in Article 115 of this Code.

      12. The provisions of this article do not apply to individual entrepreneurs applying special considerations in the fulfillment of a tax obligation when terminatingtheir activity in accordance with this Code.

Article 66. Features of the fulfillment of tax obligations by certain categories of individual entrepreneurs and private practice owners terminating their activities

      1. This article sets forth special considerations in the fulfillment of a tax obligation by individual entrepreneurs and private practice owners terminating their activities, meeting all of the following requirements:

      they are not VAT payers;

      2) they are not included in the tax audit plan or in the list of selective tax audits as a result of risk assessment measures.

      This article applies to individual entrepreneurs or private practice owners meeting the requirements specified in this paragraph during the limitation period set forth in Article 48 of this Code. The provisions of this paragraph also apply to individual entrepreneurs, whose period of activity from the date of their registration as individual entrepreneurs is less than the limitation period set forth in Article 48 of this Code.

      2. If an individual entrepreneur or a private practice owner resolves to terminate his/her activity, he/she shall submit to a tax authority at his/her location all of the following documents:

      1) a tax application for terminating activity;

      2) notification of the beginning or termination of activities as a taxpayer carrying out certain types of activities in the form approved by the authorized body in the field of permits and notices, given such recording;

      3) liquidation tax returns;

      4) a tax application for deregistration of a cash register in accordance with the procedure set forth in Article 169 of this Code.

      An individual entrepreneur terminating his/her activity submits the document specified in subparagraph 4) of part one of this paragraph in the event that the cash register is registered with a tax authority.

      3. Liquidation tax returns are drawn up by types of taxes, payments to the budget and social welfare payments for which an individual entrepreneur or a private practice owner is a payer and (or) a tax agent, for the period from the beginning of a taxable period, within which a tax application for termination of activity was submitted, until the date of submission of such an application.

      In the event that next scheduled tax returns are due for filing after liquidation tax returns, such next scheduled tax returns shall be filed on or before the date of filing liquidation tax returns.

      4. Payment of taxes, payments to the budget and social welfare payments entered into liquidation tax returns shall be made by an individual entrepreneur or a private practice owner within ten calendar days from the date of filing liquidation tax returns with a tax authority.

      In the event that the payment of taxes, payments to the budget and social welfare payments entered into tax returns filed before liquidation tax returns is due after the expiration of the deadline specified in part one of this paragraph, the payment (transfer) is made within ten calendar days from the date of filing liquidation tax returns with a tax authority.

      5. A tax authority, within three business days from the receipt of a tax application for terminating activity of an individual entrepreneur or a private practice owner, shall submit a request:

      1) to authorized state bodies - concerning information on transactions with assets subject to state registration, made by an individual entrepreneur or a private practice owner terminating activity, as well as their assets as of the date of receipt of their tax application for terminating activity;

      2) to second-tier banks and (or) organizations carrying out certain types of banking operations – concerning information on balances and movements of money in bank accounts of an individual entrepreneur or a private practice owner terminating activity as of the date of receipt of their tax application for terminating activity.

      Information on transactions provided for by subparagraph 1) of part one of this paragraph, as well as on the movement of money in bank accounts, shall be submitted for the period, within which no tax audit was conducted with respect to an individual entrepreneur or a private practice owner terminating activities within the limitation period set forth in Article 48 of this Code, until the day a tax authority receives a tax application for terminating activity.

      6. Information upon the requests of a tax authority specified in paragraph 5 of this article shall be submitted within twenty business days from their receipt, unless otherwise specified by subparagraph 13) of part one of Article 24 of this Code.

      7. A tax authority, within ten business days from the date of receipt of all the information provided for in paragraph 5 of this article, shall conduct an in-house audit and draw up an opinion in accordance with the procedure set forth in this Code.

      An opinion reflects results of an in-house audit and a situation with settlements in respect of taxes, payments to the budget and social welfare payments.

      An opinion shall be drawn up at least in two copies and signed by tax officials. One copy of the opinion is delivered, within three business days after its signing, to an individual entrepreneur or a private practice owner against signature or sent to him/her by registered mail with return receipt.

      In case a postal or any other communications organization returns an opinion sent by a tax authority to an individual entrepreneur or a private practice owner by registered mail with return receipt, the date of delivery of such an opinion shall be that of the tax audit, on the grounds and in accordance with the procedure set forth in this Code.

      8. In case an in-house audit reveals violations, an individual entrepreneur or a private practice owner, within five business days from the receipt of an opinion, shall be delivered a notice of elimination of violations revealed in the course of the in-house audit in accordance with the procedure set forth in Chapter 12 of this Code.

      An individual entrepreneur or a private practice owner executes a notice of the elimination of violations revealed in the course of an in-house audit in accordance with the procedure set forth in Article 96 of this Code.

      In case of a failure to execute a notice and (or) tax authorities’ disagreement with explanations provided by a taxpayer, a tax audit shall be conducted with respect to an individual entrepreneur or a private practice owner. In this case, the tax audit must begin within ten business days after the deadline, set for the execution of such a notice, expires and (or) after obtaining an explanation of disagreement concerning revealed violations.

      9. Tax debt of an individual entrepreneur or a private practice owner terminating activities shall be paid at the expense of the said individual entrepreneur or private practice owner, including proceeds from the sale of his/her assets, in order of priority established by the laws of the Republic of Kazakhstan.

      10. If an individual entrepreneur or a private practice owner terminating activity has amounts of taxes, payments to the budget and penalties paid in excess, the said amounts are to be offset against the payment of tax debts of this individual entrepreneur or private practice owner in accordance with the procedure set forth in Article 102 of this Code.

      If an individual entrepreneur or a private practice owner terminating activity has erroneously paid amounts of taxes, payments to the budget and penalties, the said amounts are to be offset in accordance with the procedure set forth in Article 103 of this Code.

      11. If an individual entrepreneur or a private practice owner terminating activity has no tax debt:

      1) erroneously paid amounts of taxes, payments to the budget and penalties are subject to return to this taxpayer in accordance with the procedure set forth in Article 103 of this Code;

      2) amounts of taxes, payments to the budget and penalties paid in excess are subject to return to this taxpayer in accordance with the procedure set forth in Article 101 of this Code;

      3) paid amounts of fines shall be returned to this taxpayer in accordance with the procedure set forth in Article 106 of this Code;

      4) amounts of customs duties, taxes, customs charges and penalties levied by the customs authorities erroneously paid to the budget are returned to this taxpayer in accordance with the procedure established by customs legislation Republic of Kazakhstan.

      12. Tax debt, arrears in social welfare payments are paid by a taxpayer within ten calendar days from the day an opinion was drawn up or a notice of elimination of violations revealed in the course of the in-house audit was executed.

      13. An individual entrepreneur or a private practice owner shall be deemed deregistered on the day:

      1) an opinion is drawn up, in case there are no violations revealed in the course of an in-house audit and no tax debts, arrears in social payments;

      2) a notice of elimination of violations revealed in the course of an in-house audit, in case such violations exist and there are no tax debts, arrears in social welfare payments;

      3) tax debt, arrears in social welfare payments are paid, in case there are tax debts and violations revealed in the course of an in-house audit are eliminated completely.

      Information on deregistration of an individual entrepreneur or a private practice owner in accordance with the procedure set forth in this paragraph shall be placed on the website of the authorized body within three business days from the day of deregistration of such taxpayers.

      A ground to refuse deregistration of an individual entrepreneur or a private practice owner is the existence of tax debt, arrears in social welfare payments not paid within the time limits setforth in paragraph 12 of this article.

Article 67. Simplified procedure for the termination of activities of certain categories of individual entrepreneurs

      1. A simplified procedure for the termination of activity of certain categories of individual entrepreneurs is undertaken without an in-house audit prescribed by Article 95 of this Code pursuant to one of the following documents:

      1) a taxpayer’s tax application for terminating activity;

      2) written consent in the tax application for suspending (extending, resuming) the filing of tax returns or the calculation of the cost of a patent, in the cases provided for by paragraph 5 of this article.

      2. A simplified procedure for the termination of activity shall apply to individual entrepreneurs who, at the time of filing a tax application for terminating activity, meet all of the following requirements:

      1) they are not registered as VAT payers;

      2) they do not carry out their activity in the form of a joint venture;

      3) they do not carry out certain types of activities specified in paragraph 1 of Article 88 of this Code;

      4) they are not included in the plan of tax audits or in the list of selective tax audits as a result of risk assessment system measures;

      5) they have no tax debts, arrears in social welfare payments;

      6) takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      This article applies to individual entrepreneurs meeting the requirements specified in subparagraphs 1), 2), 3) and 4) of part one of this paragraph, within the limitation period set by Article 48 of this Code until the date of submission of a tax application for terminating activities or the emergence of cases set forth in paragraph 5 of this article.

      3. In case of termination of activities under a simplified procedure on the grounds provided for by subparagraph 1) of paragraph 1 of this article, an individual entrepreneur shall submit to a tax authority at his/her location all of the following documents:

      1) a tax application for terminating activity;

      2) liquidation tax returns;

      3) a tax application for deregistering a cash register in accordance with the procedure set forth in Article 169 of this Code.

      Liquidation tax returns are drawn up by types of taxes, payments to the budget and social welfare payments for which an individual entrepreneur terminating activity is a payer and (or) a tax agent, for the period from the beginning of a taxable period, within which a tax application for terminating activity was submitted, until the date of submission of such an application.

      In the event that next scheduled tax returns are due for filing after liquidation tax returns, such next scheduled tax returns shall be filed on or before the date of filing liquidation tax returns.

      4. In case of termination of activities under a simplified procedure on the grounds provided for by subparagraph 1) of paragraph 1 of this article, payment of taxes, payments to the budget and social welfare payments entered into liquidation tax returns shall be made within ten calendar days from the date of filing liquidation tax returns.

      In the event that the payment of taxes, payments to the budget and social welfare payments entered into tax returns filed before liquidation tax returns is due after the expiration of the deadline specified in part one of this paragraph, the payment (transfer) is made within ten calendar days from the date of filing liquidation tax returns.

      A tax authority shall, within three business days from the date of fulfillment of a tax obligation in accordance with this paragraph, deregisteran individual entrepreneur and place information on the deregistration of the individual entrepreneur on the website of the authorized body.

      A tax authority refuses to deregister an individual entrepreneur and places information on the website of the authorized body, in case of:

      1) a failure to observe conditions provided for by paragraph 2 of this article and (or) failure to meet the requirements of paragraph 3 of this article within three business days from the date of submitting a tax application for terminating activity;

      2) a failure to meet the requirements provided for by this paragraph within three business days from a deadline set for the payment of taxes, payments to the budget and social welfare payments.

      5. Termination of activities under a simplified procedure on the grounds provided for by subparagraph 2) of paragraph 1 of this article shall apply to individual entrepreneurs who:

      1) apply a patent-based special tax regime and failed to submit next scheduled calculation of the cost of a patent within sixty calendar days from the expiration of the patent validity or the end of the period of suspension of activity;

      2) suspended the filing of tax returns and failed to file tax returns after the end of the period of suspension of activity within sixty calendar days from the deadline for filing tax returns established by this Code.

      A tax authority at the location of an individual entrepreneur deregisters him/her as an individual entrepreneur in the cases specified in this paragraph,:

      if conditions provided for by paragraph 2 of this article are observed;

      if there is no cash register registered with a tax authority;

      within three business days from the expiration of one of the deadlines set forthin subparagraphs 1) and 2) of part one of this paragraph.

      Information on deregistration of an individual entrepreneur in accordance with the procedure specified in this paragraph shall be placed on the website of the authorized body within three business days from the date of expiration of one of the deadlines set forth in subparagraphs 1) and 2) of part one of this paragraph.

      6. A taxpayer shall be deemed deregistered as an individual entrepreneur from the day following the day:

      of payment of taxes, payments to the budget and social welfare payments upon termination of activity under a simplified procedure on the grounds provided for by subparagraph 1) of paragraph 1 of this article;

      of expiration of the most recent patent (except for cases of suspension of activity), in case of termination of activity under a simplified procedure on the grounds provided for by subparagraph 2) of paragraph 1 of this article;

      of the end of the period of suspension of activity specified in a tax application for suspension (extension, resumption) of tax returns’ filing, in case of termination of activity under a simplified procedure on the grounds provided for by subparagraph 2) of paragraph 1 of this article.

      7. If a tax authority reveals violations within the limitation period after the termination of activity of an individual entrepreneur in accordance with this article, the calculation of tax obligations for taxes, payments to the budget and social welfare payments on the activity, carried out during the period of registration as an individual entrepreneur, shall be made by an individual in accordance with the tax legislation of the Republic of Kazakhstan effective as of the dayon which obligations for their payment arose.

SECTION 3. TAX CONTROL AND OTHER FORMS OF TAX ADMINISTRATION Chapter 8. GENERAL PROVISIONS

Article 68. Tax administration

      1. Tax administration is a system (set) of measures and methods carried out by tax authorities and other authorized state bodies to collect taxes and payments to the budget, among other things involving implementation of tax control, application of methods to ensure the fulfillment of an overdue tax obligation and enforced tax debt collection actions, as well as provision of public services and other forms of tax administration stipulated by this Code.

      2. Tax administration relies on the principles of:

      1) lawfulness;

      2) improvement of effectiveness of interaction between the taxpayer and tax authorities;

      3) differentiated approach to implementing tax administration based on risk assessment.

Article 69. Tax control

      1. Tax control is state control exercised by tax authorities over the execution of rules of the tax legislation of the Republic of Kazakhstan, other legislation of the Republic of Kazakhstan, control over the execution of which is assigned to tax authorities.

      2. Tax control is carried out in:

      1) the form of a tax audit;

      2) other forms of state control.

      3. These forms of tax control include:

      1) recording of fulfillment of a tax obligation, duty to calculate, withhold and transfer social welfare payments;

      2) monitoring of compliance with the procedure for the use of cash registers;

      3) control over excisable goods, and alsoover aviation fuel, biofuel and fuel oil;

      4) control in the course of transfer pricing;

      5) control over observance of the procedure for accounting, storage, evaluation, further use and sale of property transferred (received) into state ownership;

      6) control over activities of authorized state and local executive bodies in terms of performance of tasks to carry out functions aimed at executing the tax legislation of the Republic of Kazakhstan;

      7) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      4. Other forms of state control also include:

      1) registration of taxpayers with tax authorities;

      2) acceptance of tax forms;

      3) in-house audit;

      4) tax monitoring;

      5) tax inspection;

      6) control over the accounting of ethyl alcohol by organizations producing ethyl alcohol;

      Note of the RCLI!
      Subparagraph 7) is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      7) ascertainment of compliance of an applicant with qualification requirements to the activity on production of ethyl alcohol and alcohol products, as well as tobacco products.

      5. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      6. Common procedure for a tax audit shall be determined in keeping with the Entrepreneurial Code of the Republic of Kazakhstan.

      7. Special considerations concerning the procedure and time limits for a tax audit shall be determined by this Code.

      8. Customs authorities perform tax control within their competence, apply methods of securing the fulfillment of an overdue tax obligation and take actions of enforced collection of taxes payable in connection with the movement of goods across the customs border of the Eurasian Economic Union in accordance with this Code, customs legislation of the Eurasian Economic Union and (or) the customs legislation of the Republic of Kazakhstan.

Article 70. Tax inspection

      1. A tax inspection is another form of state control exercised by tax authorities in order to confirm the actual presence or absence of a taxpayer (tax agent).

      A tax inspection is conducted during business hours at the location specified in the registration data of a taxpayer (tax agent).

      The conduct of a tax inspection requires the involvement of witnesses in accordance with the procedure set forth in this Code.

      2. A ground for conducting a tax inspection is:

      1) impossibility to deliver a notice of a selective tax audit, an improvement notice, an opinion pursuant to an in-house audit, a preliminary tax audit report, a tax audit report, a decision on restricted disposal of property and (or) an inventory of restricted property to a taxpayer (tax agent);

      2) the return by a postal or other communications organization of the notice provided for by subparagraphs 2), 3) and 7) of paragraph 2 of Article 114 of this Code, sent by a tax authority by registered mail with return receipt, due to the absence of a taxpayer (tax agent) at his/her/its location.

      A tax inspection on the ground provided for by this subparagraph with respect to a taxpayer (tax agent) shall be conducted after the day on whichsuch a letter was returned by a postal or other communications organization.

      The provisions of this subparagraph do not apply in the case provided for by paragraph 3 of Article 115 of this Code;

      3) the need to confirm actual presence or absence of a taxpayer who is a VAT payer, in accordance with subparagraph 1) of paragraph 1 of Article 367 of this Code, at the location specified in the registration data.

      The ground for conducting a tax inspection provided for by this subparagraph does not apply to taxpayers that suspended the filing of tax returns in accordance with the procedure set forthinArticles 213 and 214 of this Code, as well as taxpayers with respect to whom the bankruptcy procedure was applied;

      4) the need to confirm actual presence or absence of a taxpayer that failed to comply with the notice provided for by subparagraph 10) of paragraph 2 of Article 114 of this Code, as well as a taxpayer recognized inactive in accordance with Article 91 of this Code.

      3. Pursuant to a tax inspection, a tax inspection act is drawn up, which specifies:

      the place, date and time of its drawing up;

      the position, last name, first name and patronymic (if it is indicated in an identity document) of a tax authority official that issued the act;

      the name of the tax authority;

      the last name, first name and patronymic (if it is indicated in an identity document), the name and number of the identity document, the residential address of a witness;

      thelast name, first name and patronymic (if it is indicated in an identity document) and (or) the name of the taxpayer, his/her/its identification number;

      information on the results of the tax inspection.

      A tax authority shall, within the day following that of drawing up a tax inspection act, which ascertains the absence of a taxpayer at the location specified in his/her/its registration data, place on the website of the authorized body information on such a taxpayer indicating his/her/its identification number, name or last name, first name, patronymic (if it is indicated in an identity document), the date of the tax inspection act.

      4. In the event that a tax inspection conducted on the grounds specified in subparagraph 3) of paragraph 2 of this article ascertains actual absence of a taxpayer at the location specified in the registration data, a tax authority shall send a notification confirming the location (absence) of the taxpayer to such a taxpayer.

      5. Within twenty business days from a tax authority’s sending the notification specified in paragraph 4 of this article, a taxpayer, without prior arrangement, is obliged to submit to the tax authority a written explanation of reasons of absence at the time of the tax inspection enclosing notarized copies of documents confirming the taxpayer’s location.

      A document confirming the location of a taxpayer may be one of the following:

      the one confirming the title to real estate (the right to use it);

      written consent of a natural person owning real estate that was stated as the location of a taxpayer.

      A time period between the dates of notarial certification of a copy of the document confirming the taxpayer’s location and its submission to a tax authority shall not exceed ten business days.

      If a taxpayer fails to comply with the requirements specified in part one of this paragraph, a tax authority shall take one of the following actions:

      1) suspend debit transactions in bank accounts of such a taxpayer in accordance with subparagraph 6) of paragraph 1 of Article 118 of this Code;

      2) deregister forVAT in accordance with the procedure set forth in paragraph 4 of Article 85 of this Code, if such a taxpayer has no open bank accounts as of the deadline set forth in this paragraph for submitting a written explanation.

      6. In the case specified in subparagraph 1) of part four of paragraph 5 of this article, a taxpayer, without prior arrangement, is obliged to submit to a tax authority a written explanation of reasons of absence at the place of location at the time of tax inspection, within five business days from the day of suspension of debit transactions in his/her/its bank accounts.

      If a taxpayer fails to comply with the requirements set in part one of this paragraph, a tax authority shall deregister such a taxpayer forVAT in accordance with the procedure set forth in paragraph 4 of Article 85 of this Code.

Article 71.Participation of witnesses

      1. The following actions of officials of tax authorities, at their request or that of a taxpayer (tax agent), may be carried out with the participation of witnesses:

      1) the delivery by an official of tax authorities of a notice of the fulfillment of a tax obligation, an order to suspend debit transactions in cash, a decision on restricted disposal of property, an inventory of property, a notice of a tax audit, an improvement notice, a tax audit act and other documents of tax authorities provided for by this Code;

      2) restriction on the disposal of the property of the taxpayer (tax agent);

      3) inspection of property that is a taxable and (or) tax-related item, regardless of its location, conducted on the basis of an improvement notice;

      4) pursuant to an improvement notice, taking an inventory of assets (except for residential premises) of the taxpayer (tax agent), also using special devices (photo, audio, video equipment), in accordance with the procedure set forth in this Code;

      5) tax inspection.

      2. At least two legally competent adult citizens who are not interested in the outcome of actions of an official of tax authorities and a taxpayer (tax agent) may be involved as witnesses.

      3. Officials of state bodies and employees, founders of a taxpayer (tax agent) with respect to whom/which an action is carried out are not allowed to be involved as witnesses.

      4. Witnesses testify the fact, content and results of actions of officials of tax authorities and a taxpayer (tax agent) which they witnessed and which are entered in the minutes (act) drawn up by an official of tax authorities.

      5. A witness has the right to make remarks concerning the committed actions. Remarks of the witness shall be entered in the minutes (act) drawn up by an official of tax authorities.

      6. The minutes (act) drawn up by an official of tax authorities with the participation of witnesses, specify (specifies):

      1) the position, last name, first name, patronymic (if it is indicated in an identity document) of the official of tax authorities who drew up the minutes (act);

      2) the name of the tax authority;

      3) the place and date of the action;

      4) last name, first name, patronymic (if it is indicated in an identity document), date of birth, place of residence, name and number of the identity document of each person who as involved in the action or witnessed it;

      5) the action’s content and sequence;

      6) the time the action began and ended;

      7) facts and circumstances revealed in the course of the action.

      7. An official of tax authorities is obliged to familiarize all persons, who participated in the action or witnessed it, with the minutes (act). After familiarization with the minutes (act), the tax official as well as all persons, who participated in the action or witnessed it, shall sign the minutes (act).

      8. Photographs and negatives, videotapes or other materials made in the course of the action (if any) are attached to the minutes (act).

      9. The minutes (act) drawn up by an official of tax authorities in accordance with the procedure set forth in this article shall record and confirm the fact of conducting the actions specified in paragraph 1 of this article.

      Note of the RCLI!
      Article 72 takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

Article 72. Determination of the income of an individual subject to taxation in some cases, also by an indirect method

Article 73. Assistance to taxpayers

      1. Tax authorities assist taxpayers (tax agents) by:

      1) clarifying the tax legislation of the Republic of Kazakhstan;

      2) providing information on the procedure for making settlements with the budget for the fulfillment of a tax obligation;

      3) providing software for filing tax returns, other returns set forthin this Code, in electronic form with the creation of an electronic document for the payment of taxes and payments to the budget;

      4) providing information on the existence of tax obligations for vehicle tax, land tax and personal property tax;

      5) maintaining the functioning of websites of tax authorities;

      6) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      7) taking measures aimed at the improvement of tax culture;

      8) taking measures to eliminate causes and conditions that contribute to the violation of the tax legislation of the Republic of Kazakhstan.

      2. Outreach activities on the tax legislation of the Republic of Kazakhstan are aimed at increasing the awareness of taxpayers (tax agents) on tax issues, also by bringing to their notice the provisions of the tax legislation of the Republic of Kazakhstan and amendments and additions introduced to it, as well as information on issues related to the fulfillment of a tax obligation.

      Tax authorities conduct outreach activities on the tax legislation of the Republic of Kazakhstan by holding workshops, sessions, meetings with taxpayers (tax agents), placing information using mass media, information stands, booklets and other printed materials, as well as video, audio and other technical devices for the dissemination of information, telephone and cellular communications.

      3. Tax authorities shall provide taxpayers (tax agents) with information on the procedure for making settlements with the budget for the fulfillment of a tax obligation, including information on the procedure for filling out a payment document, on details required to fill out a payment document.

      4. The software is provided along with instructions for its installation, which makes it possible to create an electronic document for the payment of taxes and payments to the budget.

      5. Tax authorities shall provide individuals with information on the amounts of tax obligations for property tax, land tax and tax on vehicles of individuals and (or) on the amount of tax debt calculated by tax authorities by:

      1) placingit on the website of tax authorities;

      2) indicating in documents used for payments by a utility provider;

      3) sendingit to e-mail addresses of a taxpayer;

      4) sending a short text message to the cell phone number given by a taxpayer.

      To receive these services, a taxpayer provides e-mail addresses and cell phone numbers to a local tax authority at the place of residence.

      6. Tax authorities assist taxpayers (tax agents) in obtaining free information through Internet resources.

Chapter 9. REGISTRATION OF A TAXPAYER WITH TAX AUTHORITIES

Article 74. General Provisions

      1. The authorized body keeps record of taxpayers by forming a state database of taxpayers.

      2. The state database of taxpayers is an information system designed for recording taxpayers.

      3. The formation of the state database of taxpayers includes:

      1) the registration of an individual, a legal entity, structural unit of a legal entity as a taxpayer with tax authorities;

      2) registration of a taxpayer:

      as an individual entrepreneur and a private practice owner;

      for VAT;

      Note of the RCLI!
      Item four ofsubparagraph 2) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      as an electronic taxpayer;

      as a taxpayer carrying out certain types of activities.

      4. Registration of an individual, a legal entity, structural units of a legal entity as a taxpayer includes:

      1) entering information on these persons into the state database of taxpayers;

      2) alteration and (or) addition of registration data to the state database of taxpayers;

      3) removal of information on a taxpayer from the state database of taxpayers.

      5. Registration of a taxpayer includes the registration of a taxpayer as specified in subparagraph 2) of paragraph 3 of this article, alterations and (or) additions to the registration data of a taxpayer, deregistration of a taxpayer.

      6. The registration data of a taxpayer are information on a taxpayer submitted to or filed with tax authorities:

      1) by authorized state bodies;

      2) by second-tier banks or organizations carrying out certain types of banking operations in accordance with subparagraphs 1) and 7) of Article 24 of this Code;

      3) by a taxpayer.

      7. For the purposes of this Code, it is recognized that:

      1) the place of residence of an individual is the place of registration of a citizen in accordance with the legislation of the Republic of Kazakhstan in the field of population migration;

      2) the place of residence of a citizen of the Republic of Kazakhstan residing outside the Republic of Kazakhstan and having no place of registration in the Republic of Kazakhstan is the place of the last registration of a citizen in the Republic of Kazakhstan in accordance with the legislation of the Republic of Kazakhstan in the field of population migration;

      3) the location of an individual entrepreneur and private practice owner is the principal place of business of an individual entrepreneur and a private practice owner that was stated at the time of registration as an individual entrepreneur and a private practice owner with a tax authority;

      4) the location of a resident legal entity, its structural unit, structural unit of a non-resident legal entity is the location of its permanent body entered into the National Register of Business Identification Numbers;

      5) the location of a non-resident legal entity that carries out activity through a permanent establishment without setting up a branch or a representative office is the place of its economic activity in the Republic of Kazakhstan declared at the time of registration as a taxpayer with a tax authority;

      6) the location of a legal entity set up in accordance with the legislation of a foreign country, the place of effective management of which is in the Republic of Kazakhstan, is that of the actual management body in the Republic of Kazakhstan determined by a meeting of the board of directors or a similar management body stated at the time of registration as a taxpayer with a tax authority and specified in the relevant minutes of the management body;

      7) the place of stay of a foreigner or a stateless person is that of temporary stay of a foreigner or a stateless person in the Republic of Kazakhstan indicated in a migration card. If, in accordance with provisions of an international treaty, no migration card is required, the place of stay is that of principal residence in the Republic of Kazakhstan, declared by the foreigner or stateless person to a tax authority.

      At the same time,the place of stay of a foreigner or a stateless person not residing in the Republic of Kazakhstan, for whom a tax obligation arises in accordance with Article 658 of this Code, shall be the place of residence of a person paying such a foreigner or a stateless person income from sources in the Republic Kazakhstan.

Clause 1. Registration as a taxpayer

Article 75. Entering information on individuals, legal entities, structural unit of a legal entity into the state database of taxpayers

      1. Unless otherwise provided for by paragraph 12 of Article 76 of this Code, information is entered into the state database of taxpayers by a tax authority after the assignment of an identification number to an individual, a legal entity, structural unit of a legal entity on the basis of information from national registers of identification numbers.

      2. Tax authorities shall enter information into the state database of taxpayers on:

      1) an individual, including a foreigner or a stateless person, - at the place of residence or stay;

      2) a resident legal entity and its structural unit, a structural unit of a non-resident legal entity, a legal entity established in accordance with the legislation of a foreign state, the place of effective management (the location of the actual management body) of which is in the Republic of Kazakhstan, - at its location;

      3) a non-resident legal entity operating in the Republic of Kazakhstan through a permanent establishment without setting up a branch or a representative office,- at the location of the permanent establishment;

      4) a non-resident who is a tax agent in accordance with paragraph 8 of Article 650 of this Code or calculates income tax in accordance with paragraph 11 of Article 650 of this Code acquiring (selling) shares, participatory interests indicated in subparagraphs 3), 4) and 5) of paragraph 1 of Article 650 of this Code - at the location of a legal entity that is a subsoil user specified in subparagraphs 3), 4) and 5) of paragraph 1 of Article 650 of this Code. The provisions of this subparagraph do not apply if a non-resident, who is a tax agent in accordance with paragraph 8 of Article 650 of this Code or calculates income tax in accordance with paragraph 11 of Article 650 of this Code, carries out activity in the Republic of Kazakhstan through a permanent establishment registered as a taxpayer with tax authorities.

      If such a non-resident acquires (sells) securities, participatory interests in a legal entity, 50 or more per cent of the value of assets of which is the assets of two or more persons that are subsurface users, information on the non-resident into the state database of taxpayers shall be entered by a tax authority at the place of location of the authorized body;

      5) a non-resident acquiring securities, participatory interests, in case of a failure to observe the provisions stipulated in subparagraph 8) of paragraph 9 of Article 645, subparagraph 7) of Article 654 of this Code - at the location of the legal entity which securities or participatory interests are acquired;

      6) a non-resident, who is a tax agent in accordance with paragraph 8 of Article 650 of this Code or calculates income tax in accordance with paragraph 11 of Article 650 of this Code that acquires (sells) assets, except for those specified in subparagraph 4) of this paragraph, in the Republic Kazakhstan - at the location of the assets. The provisions of this subparagraph do not apply if a non-resident who is a tax agent in accordance with paragraph 8 of Article 650 of this Code or calculates income tax in accordance with paragraph 11 of Article 650 of this Code, carries out activity in the Republic of Kazakhstan through a permanent establishment registered as a taxpayer with tax authorities;

      7) diplomatic mission and equivalent representative office of a foreign country accredited in the Republic of Kazakhstan - at the location of the diplomatic mission and equivalent representative office;

      8) a non-resident operating through a dependent agent who is considered to be a permanent establishment of a non-resident in accordance with paragraph 3 of Article 220 of this Code - at the location (place of residence, stay) of the dependent agent;

      9) a non-resident operating through an insurance organization or an insurance broker who is considered to be a permanent establishment of a non-resident in accordance with paragraph 1 of Article 220 of this Code - at the location of the insurance organization or insurance broker;

      10) a non-resident operating under a joint activity agreement that is considered to be a permanent establishment of a non-resident in accordance with paragraph 1 of Article 220 of this Code - at the location (place of residence, stay) of the resident party to the joint activity agreement;

      11) a non-resident opening current accounts with second-tier resident banks - at the location of such a resident bank.

      3. Information is entered into the state database of taxpayers by tax authorities within three business days from the day it is received from national registers of identification numbers.

      Information on the legal entity specified in subparagraphs 3), 4) and 5) of paragraph 1 of Article 650 of this Code that is a subsoil user is entered into the state database of taxpayers by a tax authority at the place of its location within three business days from the receipt of information from the authorized body on the acquisition by a non-resident of shares, participatory interests specified in subparagraphs 3), 4) and 5) of paragraph 1 of Article 650 of this Code.

Article 76. Features of the registration of a non-resident as a taxpayer

      1. To register as a taxpayer subject to the provisions of Article 220 of this Code, a non-resident legal entity that carries out activity through a permanent establishment without opening a branch or a representative office shall, within thirty calendar days from the date of commencement of activity in the Republic of Kazakhstan through a permanent establishment, submit a tax application for registration to a tax authority body at the location of a permanent establishment, and attach notarized copies of:

      1) constituent documents;

      2) documents confirming state registration in the country of incorporation of a non-resident, indicating the state registration number (or its equivalent);

      3) documents confirming tax registration in the country of incorporation of a non-resident, indicating the tax registration number (or its equivalent) given of such a document.

      2. A legal entity established in accordance with the legislation of a foreign state, the place of effective management (the location of the actual management body) of which is in the Republic of Kazakhstan, is obliged, within thirty calendar days from the day of a resolution to recognize the Republic of Kazakhstan as the place of effective management (the location of the actual management body), to submit a tax application toa tax authority at the place of its location for registration as a taxpayer and attach notarized copies of:

      1) constituent documents;

      2) document confirming state registration in the country of incorporation of a non-resident, indicating the state registration number (or its equivalent);

      3) documents confirming tax registration, if any, in the country of incorporation or the country of residence of a non-resident, indicating the tax registration number (or its equivalent) given such a document;

      4) minutes of a meeting of board of directors or similar management body.

      3. In case a legal entity established in accordance with the legislation of a foreign state, the place of effective management (the location of the actual management body) of which is in the Republic of Kazakhstan, submits a tax application for registration at the location and presence of a permanent establishment in Kazakhstan without setting up a branch (representative office), such a permanent establishment is obliged to transfer its rights and obligations to this legal entity in accordance with the procedure set forth in Article 63 of this Code.

      If a legal entity resolves to transfer the place of effective management (the location of the actual management body) to the Republic of Kazakhstan and given the presence in Kazakhstan of a branch (representative office) registered as a permanent establishment, the registration data of such a branch (representative office) shall be altered in accordance with the procedure set forth in Article 77 of this Code.

      4. A non-resident who is a tax agent in accordance with paragraph 8 of Article 650 of this Code or calculates income tax in accordance with paragraph 11 of Article 650 of this Code, acquiring (selling) assets in the Republic of Kazakhstan, prior to the acquisition (sale) of assets for the registration as a taxpayer is obliged to submit to a tax authority at the location of the property a tax application for registration and attach notarized copies of:

      1) an identity document of a non-resident natural person or constituent documents of a non-resident legal entity;

      2) adocument confirming state registration in the country of incorporation of a non-resident, indicating the state registration number (or its equivalent) of a non-resident legal entity;

      3) adocument confirming tax registration in the country of incorporation (citizenship) of a non-resident, indicating the tax registration number (or its equivalent) given such a document.

      5. An insurance organization (insurance broker) or a dependent agent whose activities are considered as a permanent establishment of a non-resident,in accordance with paragraphs 1 and 3 of Article 220 of this Code,are required to register such a non-resident as a taxpayer within thirty calendar days from the date of commencement of activity, determined in accordance with paragraph 10 of Article 220 of this Code, to submit a tax application for registration to a tax authority at the location (place of residence, stay) and attach notarized copies of:

      1) a contract (agreement, deed or other document), if any, to authorize the conduct of entrepreneurial activity on behalf of a non-resident, the signing of contracts or for other purposes;

      2) a document certifying the identity of a non-resident individual or constituent documents of a non-resident legal entity, which permanent establishment he/she is;

      3) a document confirming state registration in the country of incorporation of a non-resident, which permanent establishment he/she is, indicating the state registration number (or its equivalent) of a non-resident legal entity;

      4) a document confirming tax registration in the country of incorporation (citizenship) of a non-resident, which permanent establishment he/she is, indicating the tax registration number (or its equivalent), provided that a non-resident has it.

      6. A non-resident party to a joint activity agreement concluded with a resident whose activity leads to the creation of a permanent establishment shall be required to register as a taxpayer within thirty calendar days from the date of the commencement of activity determined in accordance with paragraph 10 of Article 220 of this Code, submit a tax application for registration to a tax authority at the location (place of residence, stay) of the resident party to the joint activity agreement and attach notarized copies of:

      1) a joint activity agreement;

      2) a document certifying the identity of a non-resident individual or constituent documents of a non-resident legal entity;

      3) a document confirming state registration in the country of incorporation of a non-resident, indicating the state registration number (or its equivalent);

      4) a document confirming tax registration in the country of incorporation of a non-resident, indicating the tax registration number (or its equivalent), if any.

      7. A non-resident opening current accounts with resident banks must register as a taxpayer before opening an account. In order to register as a taxpayer, such a non-resident shall submit a tax application for registration to a tax authority at the location of the bank and attach notarized copies of the documents specified in paragraph 2 of this article.

      8. Foreigners and stateless persons who receive income from sources in the Republic of Kazakhstan, who are not subject to taxation at the source of payment in accordance with the provisions of this Code are obliged within thirty calendar days from the date of the commencement of activities determined in accordance with paragraph 10 of Article 220 of this Code, submit a tax application for registration to a tax authority at the place of their stay (residence) and attach notarized copies of:

      1) anidentity document of a foreigner or a stateless person;

      2) a document confirming tax registration in the country of citizenship (residence), indicating the number of tax registration (or its equivalent) given such a document;

      3) a document confirming the amount of income from sources in the Republic of Kazakhstan, given such a document.

      9. Unless otherwise established by this article, a non-resident individual is required to register as a taxpayer within thirty calendar days from the date of his/her recognition as a resident of the Republic of Kazakhstan in accordance with Article 217 of this Code.

      10. To register as a taxpayer, foreigners or stateless persons acquiring assets in the Republic of Kazakhstan which are taxable items subject to tax on property, vehicles or land, must submit a tax application for registration to a tax authority at the location of such property and attach notarized copies of:

      1) anidentity document of a foreigner or stateless person;

      2) a document confirming tax registration in the country of citizenship (residence), indicating the tax registration number (or its equivalent) given such a document.

      11. Foreigners or stateless persons who are chief executive officers of resident legal entities and non-resident legal entities operating in the Republic of Kazakhstan through a branch or a representative office are required to submit a tax application for registration to a tax authority at the place of their stay (residence) and attach notarized copies of documents:

      1) certifying the identity of a foreigner or stateless person;

      2) confirming tax registration in the country of citizenship (residence), indicating the tax registration number (or its equivalent) given such a document.

      12. A non-resident specified in subparagraph 4) of paragraph 2 of Article 75 of this Code shall be registered as a taxpayer on the basis of information of authorized state and local executive bodies exercising state regulation within their competence in the field of subsoil use in accordance with the legislation of the Republic of Kazakhstan on subsoil and subsoil use, on acquisition by a non-resident of shares, participatory interests specified in subparagraphs 3), 4) and 5) of paragraph 1 of Article 650 of this Code, or a tax application for registration submitted by such a non-resident along with notarized copies of the documents specified in paragraph 4 of this article.

      13. A non-resident specified in subparagraph 5) of paragraph 2 of Article 75 of this Code shall be required to submit a tax application for registration to a tax authority at the location of the issuing legal entity or resident legal entity specified in subparagraph 8) of paragraph 9 of Article 645, subparagraph 7) of Article 654 of this Code, and attach notarized copies of the documents specified in paragraph 4 of this article.

      14. A diplomatic mission and equivalent representative office of a foreign state, a consular office of a foreign state accredited in the Republic of Kazakhstan, shall be registered as a taxpayer. To register as a taxpayer, such a representative office or institution shall submit a tax application to a tax authority at its location for registration along with a notarized copy of the document confirming accreditation in the Republic of Kazakhstan.

      15. In order to create an identification number and a registration certificate for the persons specified in paragraphs 1-14 of this article, a tax authority sends an electronic notice to judicial bodies within one business day from the day of receipt of a tax application for registration or information from authorized state bodies.

      16. An electronic notice of the assignment of an identification number to non-residents specified in paragraphs 1-14 of this article shall be sent by judicial bodies to tax authorities within one business day from the date of receipt of the electronic notice of tax authorities.

      17. A tax authority registers non-residents specified in paragraphs 1-14 of this article as taxpayers with concurrent issuance of a registration certificate in the form approved by the authorized body within the time limit set forth in paragraph 3 of Article 75 of this Code.

      18. The registration certificate of a non-resident specified in subparagraph 4) of paragraph 2 of Article 75 of this Code acquiring securities, participatory interests related to subsoil use in the Republic of Kazakhstan shall be kept at a tax authority at the location of the resident or consortium having the subsoil use right in the Republic of Kazakhstan, specified in subparagraphs 2) - 4) of paragraph 1 of Article 650 of this Code, until it is claimed by the non-resident.

      19. In case of receiving information from an authorized state body, a tax application for registration of non-residents specified in paragraphs 1-14 of this article, having identification numbers, a tax authority does not send an electronic notice to create an identification number and registration certificate to judicial bodies. In this case, the registration of persons specified in subparagraph 8) of paragraph 2 of Article 75 of this Code is carried out at the location of their dependent agents.

Article 77. Update of registration data in the state database of taxpayers

      1. Tax authorities shall update registration data submitted at the registration as a taxpayer of:

      1) an individual - on the basis of information from the National Register of Individual Identification Numbers;

      2) a resident legal entity and its structural unit, a structural unit of a non-resident legal entity - on the basis of information from the National Register of Business Identification Numbers or a tax application for registering as a legal entity established in accordance with the legislation of a foreign state, the place of effective management (the location of the actual management body) of which is in the Republic of Kazakhstan;

      3) a non-resident legal entity operating in the Republic of Kazakhstan through a permanent establishment without setting up a branch or a representative office - on the basis of a tax application for registration;

      4) a non-resident who is a tax agent in accordance with paragraph 8 of Article 650 of this Code, provided that a person, having the right to subsoil use in the Republic of Kazakhstan specified in subparagraphs 3), 4) and 5) of paragraph 1 of Article 650 of this Code, relocates - on the basis of this non-resident’s tax application for registration as a taxpayer or information of authorized state and local executive bodies, exercising state regulation within their competence in the sphere of subsoil use in accordance with the legislation of the Republic of Kazakhstan on subsoil and subsoil use, on the acquisition by a non-resident of shares, participatory interests specified in subparagraphs 3), 4) and 5) of paragraph 1 of Article 650 of this Code;

      5) a non-resident specified in subparagraph 5) of paragraph 2 of Article 75, provided that a resident legal entity relocates- on the basis of information on such a resident from the National Register of Business Identification Numbers;

      6) diplomatic mission and equivalent representative office of a foreign state, a consular establishment of a foreign state accredited in the Republic of Kazakhstan - on the basis of a tax application for registration;

      7) a non-resident operating through a dependent agent who is considered to be a permanent establishment of a non-resident in accordance with paragraph 3 of Article 220 of this Code - on the basis of a tax application submitted to a tax authority by a dependent agent;

      8) a non-resident individual and legal entity having a current account with a resident bank - on the basis of a bank notification.

      2. Information on a senior officer with regard to his/her settlements with the budget, the phone number, e-mail address of a legal entity, its structural unit is updated on the basis of a tax application for registration.

      3. Information on bank accounts of taxpayers is updated on the basis of information provided by banks or organizations carrying out certain types of banking operations submitted in accordance with the procedure and within the time limits established by Article 24 of this Code.

      4. A tax application for altering the registration data of a taxpayer shall be submitted to a tax authority at the location of the taxpayer (tax agent) within ten business days from the occurrence of changes.

      5. Tax authorities shall update the registration data of a taxpayer within three business days from the day of obtaining information from the national registers of identification numbers, authorized state bodies, banks or organizations carrying out certain types of banking operations, a tax application for registration.

Article 78. Removal of a taxpayer from the state database of taxpayers

      1. Tax authorities remove a taxpayer from the state database of taxpayers on the basis of information from national registers of identification numbers, authorized state bodies or pursuant to a tax application due to:

      1) the death of an individual or declaring him/her dead;

      2) relocation of an individual for permanent residence from the Republic of Kazakhstan and termination of citizenship, provided he/she has no unfulfilled tax obligations or taxable and (or) tax-related items in the territory of the Republic of Kazakhstan;

      3) termination of rights to taxable items of a foreigner, a stateless person specified in paragraph 10 of Article 76 of this Code;

      4) removal of legal entities, their structural units from the National Register of Business Identification Numbers or deregistration of structural units of legal entities;

      5) change of the place of effective management (the location of the actual management body) in the Republic of Kazakhstan of a legal entity established in accordance with the legislation of a foreign state;

      6) termination of a non-resident’s activity through a permanent establishment;

      7) termination of activity in the Republic of Kazakhstan by a foreigner or a stateless person;

      8) termination of rights to the assets, shares and (or) participatory interests of a non-resident specified in subparagraphs 4), 5) and 6) of paragraph 2 of Article 75 of this Code, provided that such a non-resident has no other taxable item in the Republic of Kazakhstan;

      9) termination of activity of a diplomatic mission and equivalent representative office of a foreign state, a consular establishment of a foreign state accredited in the Republic of Kazakhstan;

      10) termination of a non-resident’s activity through a dependent agent in the Republic of Kazakhstan, who is considered to be a permanent establishment of this non-resident in accordance with paragraph 3 of Article 220 of this Code;

      11) closing of a non-resident’s current account with a resident bank specified in subparagraph 11) of paragraph 2 of Article 75 of this Code, provided that such a non-resident has no current accounts with resident banks, and also because of lack of information on the opening of current accounts within six months from the day of a bank notification.

      2. To remove persons specified in subparagraphs 3) - 11) of paragraph 2 of Article 75 of this Code from the state database of taxpayers, a tax authority shall send to judicial and internal affairs bodies an electronic notification of deregistration of:

      1) a non-resident operating in the Republic of Kazakhstan through a permanent establishment without opening a branch or a representative office - on the basis of a tax application for deregistration;

      2) a non-resident specified in subparagraph 4) of paragraph 2 of Article 75 of this Code - on the basis of information on the sale of securities or participatory interests specified in subparagraphs 3), 4) and 5) of paragraph 1 of Article 650 of this Code furnished by authorized state and local executive bodies exercising state regulation within their competence in the field of subsoil use in accordance with the legislation of the Republic of Kazakhstan on subsoil and subsoil use;

      3) a foreigner or a stateless person - on the basis of a tax application for deregistration;

      4) a diplomatic mission and equivalent representative office of a foreign state, a consular establishment of a foreign state accredited in the Republic of Kazakhstan - on the basis of information on the termination of activities of a diplomatic mission and equivalent representative office of a foreign state, a consular establishment of a foreign state accredited in the Republic of Kazakhstan, furnished by the authorized state body conducting foreign policy activity;

      5) a non-resident specified in subparagraph 8) of paragraph 2 of Article 75 of this Code - on the basis of a tax agent’s application for deregistration;

      6) a non-resident having a current account with a resident bank - on the basis of a bank notification of closing the non-resident’s current account.

      3. An electronic notification indicating information on non-residents specified in paragraph 2 of this article shall be submitted by tax authorities to judicial bodies within one business day from the date of obtaining information from authorized state bodies, a bank notification, a tax application for deregistration.

      4. Removal of a taxpayer from the state database of taxpayers shall be made by a tax authority on the basis of information from national registers of identification numbers provided that the taxpayer has no unfulfilled tax obligations.

Clause 2. Registration of an individual entrepreneur and a private practice owner

Article 79. Registration as an individual entrepreneur and a private practice owner

      1. To register as an individual entrepreneur, an individual sends a notification to a tax authority in accordance with the procedure established by the legislation of the Republic of Kazakhstan on permits and notifications.

      2. Tax authorities shall not register as an individual entrepreneur an individual prohibited from creating an individual enterprise by the legislation of the Republic of Kazakhstan.

      3. The registration of an individual as a private practice owner is made on the basis of a tax application of an individual for registering a private practice owner that is submitted in electronic form through the e-government web portal prior to the commencement of notarial activity, activity on the execution of enforcement documents, practice of law, dispute resolution activity through mediation.

      4. Tax authorities shall, within one business day from the date of receipt of a tax application, register an individual as a private practice owner, or refuse to do so.

      A tax authority refuses to register an individual as a private practice owner in cases when:

      1) identity document details specified in a tax application do not coincide with information in national registers of identification numbers;

      2) details of licenses for notarial activity, activity on the execution of enforcement documents, practice law specified in the tax application do not coincide with information in the state electronic register of licenses;

      3) the location indicated in a tax application is not available in the "Address register” information system.

Article 80. Update of registration data of an individual entrepreneur and a private practice owner

      1. A tax authority shall update registration data on the basis of:

      1) a notification submitted by an individual entrepreneur in accordance with the procedure established by the legislation of the Republic of Kazakhstan on permits and notifications;

      2) a tax application for the registration of a private practice owner.

      2. An individual entrepreneur is obliged to submit the notification specified in paragraph 1 of this article to a tax authority at his/her location within ten business days from the day of change in his/her registration data and (or) data on participants (members) of a joint venture.

      3. A private practice owner is obliged to submit electronic tax declaration specified in paragraph 1 of this article through the e-government web portal within ten business days from the day of change of his/her location.

      4. A tax authority shall update registration data within one business day following the day of receipt of the notification submitted for the update of registration data.

      5. A tax authority shall update data on the location of a private practice owner within one business day following the day of receipt of the tax application submitted for the update of registration data.

      Tax authorities refuse to update information on the location of a private practice owner, in the event that the location indicated in the tax application is not available in the "Address register” information system.

Article 81. Deregistration as an individual entrepreneur and a private practice owner

      1. Deregistration as an individual entrepreneur shall be carried out by a tax authority in accordance with the procedure established by this Code and (or) in accordance with the legislation of the Republic of Kazakhstan in the field of entrepreneurship.

      2. Deregistration as a private practice owner shall be carried out by a tax authority in accordance with the procedure set forth in Article 66 of this Code.

      3. A tax authority deregisters an individual as an individual entrepreneur and a private practice owner provided that they have no unfulfilled tax obligations, except for cases stipulated by the legislation of the Republic of Kazakhstan in the field of entrepreneurship.

      4. A taxpayer has the right to receive a written confirmation of his/her deregistration (refusal to deregister him/her) as an individual entrepreneur and a private practice owner from a tax authority at his/her location.

Clause 3. Registration of VAT payers

Article 82. Compulsory registration for VAT

      1. Resident legal entities, non-residents who carry out activities in the Republic of Kazakhstan through a branch, a representative office, individual entrepreneurs are subject to compulsory VAT registration in accordance with the procedure set forth in this article, except for:

      1) state institutions;

      2) structural units of resident legal entities;

      Note of the RCLI!
      Subparagraph 3) is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      3) persons specified in article 534 of this Code in respect of gambling activity subject to taxation;

      4) taxpayers who apply a special tax regime to peasant or farmer households, in respect of activity subject to such a special tax regime.

      2. In the event that the amount of turnover for the purposes of VAT registration exceeds the minimum turnover during a calendar year, persons subject to VAT registration specified in paragraph 1 of this article are required to submit a tax application for VAT registration to a tax authority at their location.

      A tax application shall be submitted within ten business days after the month in which the amount of turnover exceeded the minimum turnover, in one of the following ways:

      1) in hard copy without prior arrangement;

      2) in electronic form.

      Note of the RCLI!
      Part three of paragraph 2 takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (text deleted).

      The amount of turnover is defined by the cumulative total:

      1) by newly established resident legal entities, branches, representative offices through which a non-resident operates in the Republic of Kazakhstan - from the date of state (record) registration with judicial bodies;

      2) by individuals newly registered with tax authorities as individual entrepreneurs - from the date of registration with tax authorities;

      3) by taxpayers deregistered for VATin a current calendar year pursuant to the decision of a tax authority - from the date following the date of deregistration for VATpursuant to the decision of a tax authority;

      4) by other taxpayers - from January 1 of a current calendar year.

      3. For the purposes of VAT registration, the amount of turnover is defined as the sum of turnovers specified in subparagraphs 1), 2) and 3) of paragraph 1 of Article 369 of this Code.

      For the purposes of VAT registration, a taxpayer, performing settlements with the budget and applying a special tax regime to peasant or farmer households, does not include the sales turnover from carrying out activity subject to this special tax regime when calculating the turnover.

      4. The minimum turnover is 30 000 times the monthly calculation index established by the law on the republican budget and effective as of January 1 of a relevant financial year.

      5. A trust manager is obliged to submit a tax application for VAT registration to a tax authority at the location within five business days from the conclusion of a trust management agreement or another document giving rise to the emergence of trust management, if a founder under a trust management agreement or a beneficiary, in other cases giving rise tothe emergence of trust management, is a VAT payer. In other cases, compulsory registration of such a founder or a beneficiary, as well as a trust manager is carried out in accordance with paragraph 2 of this article.

      6. A tax application for VAT registration shall be submitted in accordance with the procedure set forth in paragraph 2 of this article, by the chief executive officer of a legal entity that is a resident of the Republic of Kazakhstan, a non-resident operating in the Republic of Kazakhstan through a branch, a representative office, by an individual entrepreneur to the local tax authority.

      The persons specified in paragraph 1 of this article become VATpayers from the date of submitting a tax application for VAT registration.

      A tax authority within one business day from the date of submitting a tax application shall register a taxpayer for VAT.

      7. In case of detecting a person specified in paragraph 1 of this article that failed to submit a tax application for VAT registration in accordance with the procedure set forth in in paragraph 2 of this article, a tax authority shall, within five business days from the detection of such a taxpayer, send him/her a notice of elimination of violations of the tax legislation of the Republic of Kazakhstan in accordance with the procedure set forth in Article 115 of this Code.

      8. In the event that a taxpayer fails to submit a tax application for registration pursuant to the notice of a tax authority sent in accordance with paragraph 7 of this article, upon expiration of the deadline set in paragraph 5 of Article 115 of this Code, the tax authority shall issue an order to suspend debit transactions in bank accounts of the taxpayer in accordance with the procedure set forth in Article 118 of this Code.

Article 83. Voluntary VAT registration

      1. Unless otherwise provided for by this paragraph, persons who are not subject to compulsory VAT registration in accordance with paragraph 1 of Article 82 of this Code may register for VAT by submitting a tax application for VAT registration in one of the following ways:

      1) in hard copy without prior arrangement;

      2) in electronic form;

      3) during state registration of a resident legal entity with the National Register of Business Identification Numbers.

      Note of the RCLI!
      Part two of paragraph 1 takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (text deleted).

      The following persons are not eligible for voluntary VAT registration:

      individuals that are not individual entrepreneurs;

      state bodies;

      non-residents not operating in the Republic of Kazakhstan through a branch or a representative office;

      structural units of resident legal entities;

      persons specified in Article 534 of this Code for gambling activity subject to taxation.

      2. A tax authority, within one business day from the submission of a tax application for VAT registration, shall register a taxpayer for VAT and issue a certificate of VAT registration.

      The persons specified in paragraph 1 of this article become VAT payers:

      1) from the date of submission of a tax application for VAT registration –with respect to persons specified in subparagraphs 1) and 2) of part one of paragraph 1 of this article;

      2) from the date of state registration with the National Register of Business Identification Numbers – with respect to persons specified in subparagraph 3) of part one of paragraph 1 of this article.

Article 84.VAT registration certificate

      1. A VAT registration certificate ascertains the fact of a taxpayer’s VAT registration, it is permanent and issued in the form of an electronic document certified by electronic digital signature of a registration authority’s official. The form of the certificate is established by the authorized body.

      2. A VAT registration certificate contains the following mandatory details:

      1) thename and (or) last name, first name, patronymic (if it is indicated in an identity document) of a taxpayer;

      2) identification number;

      3) the date of VAT registration of a taxpayer;

      4) the name of the tax authority that issued the certificate.

      3. If a taxpayer is deregistered for VAT, the VAT registration certificate is deemed invalid.

      4. A tax authority shall replace aVAT registration certificate within three business days in case of the change of the last name, first name, patronymic (if it is indicated in an identity document) or the name of aVAT payer - on the basis of information from national registers of identification numbers on the change of the last name, first name, patronymic (if it is indicated in an identity document) or the name of the taxpayer.

Article 85. Deregistration for VAT

      1. To deregister for VAT, a VAT payer may submit a tax application for VAT registration toatax authority at his/her/its location provided all of the following requirements are met:

      1) if the amount of taxable turnover for a calendar year preceding the year of submission of the tax application did not exceed the minimum sales turnover set forth in paragraph 4 of Article 82 of this Code;

      2) if the amount of taxable turnover from the beginning of a current calendar year in which such a tax application was submitted did not exceed the minimum sales turnover set forth in Article 82 of this Code.

      The provision of this paragraph does not apply to taxpayers in respect of whom the bankruptcy procedure was applied.

      2. A VAT liquidation declaration shall be attached to the tax application specified in part one of paragraph 1 of this article.

      3. Unless otherwise provided for by this paragraph, tax authorities are obliged to deregister a taxpayer for VAT within five business days from the submission of a tax application by the taxpayer, provided that the requirement set forth in paragraph 2 of this article is met. The date of deregistration for VAT is that of submitting a tax application to a tax authority by such a taxpayer.

      Tax authorities refuse to deregister a taxpayer for VAT within five business days from the taxpayer’s submission of atax application if:

      1) the amount of the taxable turnover of the taxpayer for a calendar year preceding the year of submission of the tax application exceeded the minimum sales turnover set forth in paragraph 4 of Article 82 of this Code;

      2) the amount of the taxable turnover of the taxpayer for the period from January 1 of a current calendar year in which such a tax application was submitted exceeded the minimum sales turnover set forth in paragraph 4 of Article 82 of this Code.

      The provisions of this paragraph shall not apply to taxpayers who submitted a tax application for VAT registration with a view to deregistering in accordance with the procedure set forth in paragraph 1 of Article 213 of this Code.

      A decision to refuse deregistration for VAT with the indication of a reason for such a refusal in the form established by the authorized body shall be delivered to a taxpayer by hand against signature or in any other way confirming the fact of dispatch.

      4. A taxpayer may be deregistered for VAT pursuant to the decision of a tax authority in the form established by the authorized body without being notified, in cases of:

      1) a VAT payer’s failure to fileVAT returns within six months from the deadline set for their filing by this Code;

      2) a taxpayer’s failure to meet the requirement set forth in part one of paragraph 5 of Article 70 of this Code if such a taxpayer has no open bank accounts as of the deadline for submitting a written explanation specified in part one of paragraph 5 of Article 70 of this Code;

      3) a taxpayer’s failure to meet the requirement set forth in part one of paragraph 6 of Article 70 of this Code;

      4) invalidation of the registration of an individual entrepreneur or legal entity pursuant to a final and binding court judgment;

      5) invalidation of the reregistration of a legal entity pursuant to a final and binding court judgment;

      6) the chief executive office or sole founder (participant) of a legal entity, or an individual entrepreneur being:

      an incompetent or partially incompetent and (or) missing person;

      dead (declared dead) upon expiration of six months from the death (declaration of dead);

      an individual with an outstanding or unexpunged conviction under Articles 192-1, 216, 217 and 222 of the Penal Code of the Republic of Kazakhstan as of July 16, 1997;

      an individual with an outstanding or unexpunged conviction under Articles 216, 238, 240 and 245 of the Penal Code of the Republic of Kazakhstan as of July 3, 2014;

      a wanted individual;

      an individual who is a foreigner or a stateless person whose purpose of stay is not connected with the performance of labor activity in the Republic of Kazakhstan or whose authorized period of stay in the territory of the Republic of Kazakhstan expired;

      a dormant individual entrepreneur or legal entity;

      the chief executive officer or sole founder (participant) of a dormant legal entity;

      7) recognition of a taxpayer as inactive in accordance with the procedure set forth in Article 91 of this Code.

      5. Atax authority at the location of a taxpayer makes a decision to deregister him/her/it for VAT within five business days:

      1) from the establishment of events specified in subparagraphs 1), 6) and 7) of paragraph 4 of this article, unless otherwise provided for by this subparagraph.

      A tax authority shall make a decision to deregister forVAT in the cases specified in item 9 of subparagraph 6) of paragraph 4 of this article within three business days from the date of VAT registration;

      2) from the deadline set forth in part one of paragraph 5 of Article 70 of this Code, in the case provided for by subparagraph 2) of paragraph 4 of this article;

      3) from the deadline set forth in part one of paragraph 6 of Article 70 of this Code, in the case provided for by subparagraph 3) of paragraph 4 of this article;

      4) from the day the tax authority receives a final and binding court judgment on invalidation of the registration of an individual entrepreneur or a legal entity;

      5) from the day the tax authority receives a final and binding court judgment on invalidation of the reregistration of a legal entity.

      6. AVAT payer is deemed deregistered as a VAT payer by the decision of a tax authority:

      1) from the date of this decision - for persons specified in subparagraphs 1), 2), 3) and 7) of paragraph 4 of this article;

      2) from the date of VAT registration - for persons specified in subparagraph 4) of paragraph 4 of this article;

      3) from the date of reregistration with a registration authority maintaining the National Register of Business Identification Numbers that was declared invalid by a final and binding court judgment - for the person specified in subparagraph 5) of paragraph 4 of this article;

      4) from the date of emergence of events specified in subparagraph 6) of paragraph 4 of this article, unless otherwise provided for by this subparagraph.

      A VAT payer, in the cases specified in item nine of subparagraph 6) of paragraph 4 of this article, shall be deemed deregistered as a VAT payer by the decision of a tax authority from the date of VAT registration.

      7. Deregistration for VAT is made:

      1) in case of termination of activity of a person who is a VAT payer, unless otherwise provided for by this paragraph, from the date of submitting a tax application for a tax audit or that for termination of activity specified in Articles 58, 60, 65 and 66 of this Code;

      2) in cases of reorganization of legal entities through merger, incorporation - from the date of filing liquidation tax returns and submitting a certificate of transfer;

      3) in case of reorganization of a legal entity through separation - from the date of submitting a tax application for a tax audit specified in Article 64 of this Code;

      4) in case of the death of an individual registered as an individual entrepreneur and a VAT payer - from the date of removal from the state database of taxpayers in accordance with the procedure set forth in paragraph 1 of Article 78 of this Code.

      8. In the event of liquidation of aVAT payer due to bankruptcy, his/her/its deregistration for VAT shall be effected from the date of removal from the National Register of Business Identification Numbers or deregistration as an individual entrepreneur.

      9. Information on a VAT payer’s deregistration for VAT by the decision of a tax authority is placed on the website of the authorized body within one business day following the day of the decision to deregister for VAT.

      Note of the RCLI!
      Clause 4 of Chapter 9 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

Clause 4. Registration as an electronic taxpayer

Article 86. Registration of an electronic taxpayer

      1. An individual, a legal entity, its structural units register as electronic taxpayers voluntarily and after having registered as taxpayers with a tax authority.

      2. To register, a taxpayer shall submit a tax application for registration as an electronic taxpayer to a tax authority at his/her/its location or place of residence in hard copy in person without prior arrangement or in electronic form.

      Submitting such a tax application for registration as an electronic taxpayer, a taxpayer consents to exchange electronic documents by transmitting them via a telecommunications network ensuring guaranteed delivery of messages, and also to receive tax authorities’ notices provided for by this Code, as well as other documents provided for by laws of the Republic of Kazakhstan.

      3. A tax authority shall give an electronic digital signature to a taxpayer against his/her signature in a register for document receipt within one business day from the receipt of a tax application for registration as an electronic taxpayer.

Article 87. Change and cancellation of electronic digital signature

      1. A taxpayer has the right to submit a tax application for registration as an electronic taxpayer to a tax authority at his/her/its location or place of residence to cancel his/her/its electronic digital signature or change it in case of:

      1) a decision to refuse to use the electronic digital signature;

      2) expiration of the validity of a registration certificate;

      3) loss of an electronic data carrier with a key container for an electronic digital signature;

      4) damages that disabled an electronic data carrier with a key container.

      2. The cancellation of an electronic digital signature terminates a taxpayer’s right to exchange electronic documents with a tax authority by transmitting them via a telecommunications network ensuring guaranteed delivery of messages in the cases specified in this article.

      3. A tax authority shall cancel or change an electronic digital signature within one business day from the submission of a tax application for registration as an electronic taxpayer in order to refuse a key container with an electronic digital signature or to change it.

      4. A tax authority shall cancel an electronic digital signature without a taxpayer’s tax application within one business day from his/her/its removal from the state database of taxpayers.

      5. A tax authority cancels a taxpayer’s electronic digital signature within one business day in case of:

      1) invalidation of state registration of a taxpayer pursuant to a final and binding court judgment - from the date of receipt of a court decision by the tax authority;

      2) deregistration of a taxpayer for VAT by the decision of the tax authority in accordance with subparagraphs 1), 2), 3), 5), 6) and 7) of paragraph 4 of Article 85 of this Code - from the date of the decision to deregister for VAT;

      3) declaring bankrupt - from the date of entry into legal force of a court decision on declaring the taxpayer bankrupt.

Clause 5. Registration of a taxpayer carrying out certain types of activities

Article 88. Registration as a taxpayer carrying out certain types of activities

      1. Taxpayers are subject to registration as a taxpayer carrying out certain types of activities if they carry out such activities as:

      1) production of gasoline (except for aviation one), diesel fuel;

      2) wholesale and (or) retail sale of gasoline (except for aviation one), diesel fuel;

      3) production of ethyl alcohol and (or) alcohol products;

      4) wholesale and (or) retail sale of alcohol products;

      5) production and (or) wholesale sale of tobacco products;

      6) gambling business;

      Note of the RCLI!
      Subparagraph 7) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      7) services using slot machines without winnings, personal computers for games, game tracks, go-karts, billiard tables;

      8) production, assembly (pre-assembly) of excisable goods provided for by subparagraph 6) of part one of Article 462 of this Code;

      Note of the RCLI!
      Subparagraph 9) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      9) organization of exchange transactions with foreign currency in cash carried out by authorized organizations specified in subparagraph 5) of Article 543 of this Code;

      10) e-commerce.

      2. The registration as a taxpayer carrying out certain types of activities shall be performed by tax authorities at the location of taxable and (or) tax-related items used in the performance of certain types of activities specified in paragraph 1 of this article.

      3. The registration as a taxpayer carrying out certain types of activities subject to licensing is performed for a time period not exceeding that of license validity, given an appropriate license.

      4. Unless otherwise provided for by this paragraph, the registration as a taxpayer carrying out certain types of activities subject to licensing for types of activity specified in subparagraphs 3), 4) and 5) (except for the wholesale of tobacco products) of paragraph 1 of this article is performed given an appropriate license based on the data from the state electronic register of permits and notifications.

      The registration as a taxpayer carrying out certain types of activities specified in subparagraphs 1), 2), 5) (except for the production of tobacco products), 6) - 10) of paragraph 1 of this article is performed on the basis of a notification of commencement or termination of the activity as a taxpayer carrying out certain types of activities in accordance with the procedure established by the Law of the Republic of Kazakhstan “On Permits and Notifications”.

      5. The notification specified in part two of paragraph 4 of this article is submitted to a tax authority within three business days prior to the commencement of a certain activity. Copies of the following documents shall be attached to the notification:

      those confirming the right to own or lease an oil producer’s production facility - when carrying out the activity specified in subparagraph 1) of paragraph 1 of this article;

      those confirming the right to own or lease an oil depot (tank), a filling station or an agency agreement with the owner of a filling station under which the owner of the filling station (agent) carries out retail trade in gasoline (except for aviation one) and (or) diesel fuel on behalf and instructions of the appointor (principal), or an oil processing agreement of an oil supplier with an oil producer - when carrying out the activity specified in subparagraph 2) of paragraph 1 of this article;

      those confirming the right to own or lease a storage facility for the wholesale of tobacco products - when carrying out the activity specified in subparagraph 5) of paragraph 1 of this article.

      The period of validity of agreements must be at least one year, except for an agency agreement and an oil processing agreement of an oil supplier with an oil producer.

      In case of failure to submit original agreements for verification, copies of agreements must be notarized.

      6. A tax authority shall register a taxpayer as a taxpayer carrying out certain types of activities within three business days:

      1) from the date of a notification;

      2) from the date of receipt of information on types of activities subject to licensing from the state electronic register of permits and notifications.

      7. If a taxpayer has several gambling establishments (fixed places), each gambling establishment (fixed place) is registered separately.

      A fixed place is a site of entrepreneurial activity on providing services using slot machines without winnings, personal computers for games, game tracks, go-karts, billiard tables.

      8. The use and presence of taxable and (or) tax-related items not registered with tax authorities is not allowed in the premises of a gambling establishment (fixed place).

      9. If a taxpayer has several taxable and (or) tax-related items used for carrying out the types of activity specified in subparagraphs 1) - 5) of paragraph 1 of this article, each taxable and (or) tax-related item is registered separately.

      10. For the purposes of subparagraphs 1) - 5) of paragraph 1 of this article, tax-related items shall be understood to mean an oil producer’s production facility, an oil depot, a tank, a filling station, volumes of oil and (or) gas condensate and the yield of petroleum products specified in an oil and (or) gas condensate processing agreement or an annex (specifications) to an agreement with an oil producer (for oil suppliers), fixed and (or) storage facilities used for carrying out activities specified in subparagraphs 1) - 5) of paragraph 1 of this article.

Article 89. Update of registration data of a taxpayer carrying out certain types of activities

      1. In case of changes in the information on taxable and (or) tax-related items indicated in the registration data, a taxpayer must submit a notification specified in paragraph 4 of Article 88 of this Code to a tax authority at the place of registration of taxable and (or) tax-related items within three business days from the occurrence of changes.

      2. In case of changes in the information on taxable and (or) tax-related items, a tax authority shall update the taxpayer’s registration data within three business days from the receipt of the notification specified in part two of paragraph 4 of Article 88 of this Code.

      A taxpayer carrying out certain types of activities indicated in subparagraphs 1) and 2) of paragraph 1 of Article 88 of this Code shall attach a document specified in paragraph 5 of Article 88 of this Code, confirming the change in the information on taxable and (or) tax-related items, to the notification.

      In case of failure to submit an original agreement for verification, copies of agreements and (or) annexes thereto must be notarized.

Article 90. Deregistration as a taxpayer carrying out certain types of activities

      1. A taxpayer shall be deregistered by a tax authority as a taxpayer carrying out certain types of activities not subject to licensing pursuant to the notification specified in part two of paragraph 4 of Article 88 of this Code, in case of:

      1) termination of the types of activities specified in paragraph 1 of Article 88 of this Code;

      2) deregistration of all taxable and (or) tax-related items indicated in the registration data.

      2. A tax authority deregisters a taxpayer as a taxpayer carrying out certain types of activities subject to licensing on the basis of information on the termination of license from the state electronic register of permits and notifications.

      3. A notification of deregistration as a taxpayer carrying out certain types of activities is submitted to a tax authority at the place of registration of taxable and (or) tax-related items within three business days from the termination of activities specified in paragraph 1 of Article 88 of this Code or deregistration of all taxable and (or) tax-related items indicated in the registration data.

      4. A taxpayer shall be deregistered as a taxpayer carrying out certain types of activities pursuant to a decision of a tax authority in case of:

      1) termination of the agreement of a taxpayer carrying out certain types of activities specified in subparagraphs 1), 2) and 5) of paragraph 1 of Article 88 of this Code, such as:

      on the lease of an oil producer’s production facility;

      on the lease of an oil depot (a tank), a filling station;

      an agency agreement with the owner of a filling station under which the owner of the filling station (agent) carries out retail trade in gasoline (except for aviation one) and (or) diesel fuel on behalf and instructions of the appointor (principal);

      on the processing of oil of an oil supplier made with an oil producer;

      on the lease of a storage facility for the wholesale of tobacco products;

      2) absence of a taxpayer carrying out types of activities specified in subparagraph 4) of paragraph 1 of Article 88 of this Code from the address indicated in the license;

      3) failure to submit a declaration and (or) calculation of an excise by a taxpayer carrying out types of activities specified in subparagraphs 1) and 2), 3), 5) and 8) of paragraph 1 of Article 88 of the Code, within a three-month period after the deadline for their submission established by this Code.

      5. A decision to deregister as a taxpayer carrying out certain types of activities is made by a tax authority at the place of registration of taxable and (or) tax-related items in the form established by the authorized body, within five business days from the occurrence of cases specified in paragraph 4 of this article.

      6. Information on a taxpayer deregistered as a taxpayer carrying out certain types of activities shall be placed on the website of the authorized body within three business days from the date of deregistration.

Clause 6. Recognition of a taxpayer as inactive, being in liquidation, involuntarily terminating activity

Article 91. Inactive taxpayer

      1. Inactive taxpayers are dormant legal entities and individual entrepreneurs.

      2. A dormant legal entity is a resident legal entity, a non-resident legal entity operating in the Republic of Kazakhstan through a permanent establishment, as well as a structural unit of a non-resident legal entity that failed to submit, within one year after the deadline established by this Code, for a taxable period:

      1) a corporate income tax declaration;

      2) a declaration on a gambling tax, on a fixed tax, if no such declaration has been submitted for three taxable periods following the specified taxable period;

      3) a simplified declaration, if no such declaration has been submitted for two taxable periods following the specified taxable period.

      3. A dormant individual entrepreneur is an individual entrepreneur who failed to submit, within one year after the deadline established by this Code, for a taxable period:

      1) an individual income tax declaration;

      2) a declaration on a gambling tax, on a fixed tax, if no such declaration has been submitted for three taxable periods following the specified taxable period;

      3) a simplified declaration, if no such declaration has been submitted for two taxable periods following the specified taxable period.

      4) the calculation of a patent value within two years from the expiration date of the most recent patent.

      4. Paragraphs 2 and 3 of this article shall not apply to resident legal entities, non-resident legal entities operating in the Republic of Kazakhstan through a permanent establishment, structural units of a non-resident legal entity and individual entrepreneurs, who suspended activities, during the period of suspension.

      5. Annually, on or before April 30, tax authorities issue an order on recognizing taxpayers as inactive, information on them is published on the website of the authorized body on the date of such an order.

      6. Information on taxpayers recognized as inactive is removed from the website of the authorized body in accordance with the tax authority’s order issued within five business days after:

      1) the taxpayer’s fulfillment of a tax obligation for filing tax returns;

      2) the payment of fines for failure to file tax returns within the time limit established by this Code, if they are applied to the taxpayer in accordance with the legislation of the Republic of Kazakhstan.

      7. Information on taxpayers recognized as inactive shall be removed from the website of the authorized body within one business day following the day of the tax authority’s relevant order.

      8. If a taxpayer is removed from the State Register of Legal Persons or deregistered as an individual entrepreneur, such taxpayers are concurrently removed from the list of inactive taxpayers.

Article 92. A taxpayer in liquidation (terminating activity)

      1. A taxpayer in liquidation (terminating activity) is a person who submitted a tax application for a tax audit in connection with liquidation (termination of activity) or a tax application for terminating activity. In this case, information on such a taxpayer is placed on the website of the authorized body within three business days from the submission of a relevant application.

      2. Tax authorities remove a person being in liquidation (terminating activity) from the list of taxpayers in case of:

      1) his/her/its removal from the National Register of Business Identification Numbers - within three business days from the receipt of such information;

      2) his/her deregistration as an individual entrepreneur and a private practice owner - within three business days from the date of deregistration.

Article 93. Features of involuntary termination of taxpayers’ activities

      1. Resident legal entities, their structural units, structural units of a non-resident legal entity, non-resident legal entities operating through a permanent establishment without setting up a structural unit, individual entrepreneurs are subject to involuntary termination of activities, if they meet all of the following requirements at the same time:

      1) before January 1 of a calendar year, but not less than the limitation period established by Article 48 of this Code, they:

      haven’t filed tax returns;

      haven’t performed export-import transactions;

      have made no payments and (or) money transfers in bank accounts, except for cases when the amount of payment and (or) transfer of money for a calendar year does not exceed 12 times the minimum wage established by the law on the republican budget and effective as of January 1 of a relevant financial year, and also cases of receiving pension and/or welfare benefits;

      haven’t been registered as VAT payers;

      2) as of January 1 of a calendar year, they:

      are not registered as VAT payers;

      haven’t suspended the filing of tax returns as prescribed by Articles 213 and 214 of this Code;

      don’t own items subject to taxation on property, vehicles, land, by uniform land tax, except for items subject to taxation by specified taxes imposed on individuals;

      have no arrears in social welfare payments;

      have no tax arrears in taxes and payments to the budget, customs payments and taxes in the amount exceeding 6 times the monthly calculated index established by the law on the republican budget and effective as of January 1 of a relevant financial year.

      The provisions of this paragraph shall not apply to taxpayers:

      1) subject to tax monitoring in accordance with this Code;

      2) carrying out activities under a subsoil use contract.

      2. Tax authorities annually:

      1) on or before March 1, draw up a preliminary list of entities that meet the conditions of paragraph 1 of this article;

      2) on or before April 1, place this list of entities subject to compulsory liquidation in the mass media, indicating the following details:

      the identification number (if any);

      the registration number of a taxpayer;

      the last name, first name, patronymic (if it is indicated in an identity document) of an individual or the name of an entity;

      the name of a tax authority at the location of the entity;

      the address of a tax authority for accepting applications (claims) of creditors and (or) other persons whose rights and legitimate interests are affected in the event of compulsory liquidation (deregistration, termination of activities) of the entity;

      3) on or before May 1, after the placement of this list of entities in the mass media, send requests to:

      second-tier banks and organizations carrying out certain types of banking operations - concerning payments and (or) transfers of money specified in subparagraph 1) of part one of paragraph 1 of this article;

      authorized state bodies – concerning the existence of property, vehicles, land plots;

      judicial bodies - concerning the existence (absence) of information in the National Register of Identification Numbers.

      3. Tax authorities accept applications (claims) of creditors or other persons along with documents confirming the legitimacy of claims, before June 1 of a calendar year.

      4. The final list of entities subject to involuntary liquidation (deregistration, termination of activities) shall be drawn up on or before July 1 of a calendar year, given the receipt of information specified in subparagraph 3) of paragraph 2 of this article and absence of applications (claims) from creditors or other persons.

      5. Claims for involuntary liquidation (deregistration, termination of activities) in respect of entities included in the list specified in paragraph 4 of this article shall be forwarded by tax authorities to a court on or before September 1 of a calendar year.

Chapter 10. IN-HOUSE AUDIT

Article 94. In-house audit

      1. An in-house audit is tax authorities’ control based on the examination and analysis of tax returns submitted by a taxpayer (tax agent), information provided by authorized state bodies, as well as other documents and information on the taxpayer’s activity.

      An in-house audit is an integral part of a risk management system.

      2. An in-house audit aims to give a taxpayer the right to independently eliminate violations detected by tax authorities based on the results of an in-house audit, by registering with tax authorities and/or filing tax returns in accordance with Article 96 of this Code and/or paying taxes and payments to the budget.

Article 95. Procedure and time limits for an in-house audit

      1. An in-house audit is conducted by comparing the following data available to tax authorities:

      1) tax returns;

      2) information from other state bodies on taxable and (or) tax-related items;

      3) information obtained from various sources of information on a taxpayer’s activity;

      4) other reporting established by this Code.

      2. An in-house audit is conducted for a relevant taxable period after the expiration of a deadline established by this Code for the filing of tax returns for such a period.

      3. An in-house audit is conducted within the limitation period with due regard to the provisions set forth in Article 48 of this Code.

Article 96. Results of an in-house audit

      1. In case of revealing violations in the course of an in-house audit, the following documents shall be drawn up:

      for high-risk violations – a notice of elimination of violations revealed by tax authorities based on the results of in-house audit, with attached description of the violations found;

      for medium-risk violations – a notification of violations revealed by tax authorities based on the results of an in-house audit, with attached description of the violations found;

      A notification of violations revealed by an in-house audit is sent to a taxpayer (tax agent) within ten business days from the date of detection of violations in tax returns, for information purposes.

      The form of a notification of violations found by an in-house audit is established by the authorized body.

      The provisions of this paragraph are not applied to low-risk violations detected based on the results of an in-house audit and are taken into account by a risk management system.

      2. A taxpayer (tax agent) shall execute a notice of elimination of violations revealed by tax authorities based on the results of an in-house audit within thirty business days from the day following the day of its delivery (receipt).

      A notice of elimination of violations revealed by tax authorities based on the results of an in-house audit is recognized as executed by a taxpayer (tax agent):

      1) in case of acknowledgement of violations indicated in the notice – by eliminating the revealed violations by a taxpayer (tax agent) by:

      registering with tax authorities;

      filing tax returns, following the notice, for a taxable period, within which the violations occurred;

      paying to the budget of VAT amount earlier returned to the taxpayer from the budget upon his/her/its request for VAT refund, and also by paying a penalty in the amount specified in paragraph 4 of Article 104 of this Code for each day of the time period from the date of transfer of such amounts to the taxpayer;

      2) in case of disagreement with violations indicated in the notice – by the taxpayer’s (tax agent’s) submission of an explanation of the revealed violations in hard or soft copy to the tax authority that sent a notice of elimination of violations revealed by tax authorities based on the results of an in-house audit, except for cases stipulated in paragraph 3 of this article.

      The explanation shall indicate:

      the date of signing of the explanation by a taxpayer (tax agent);

      the last name, first name and patronymic (if it is indicated in an identity document) or the full name of a person that provided the explanation, his/her/its place of residence (location);

      the identification number of the taxpayer (tax agent);

      the name of the tax authority that sent a notice of elimination of violations revealed by tax authorities based on the results of an in-house audit;

      the number and date of a notice that caused the explanation’s submission;

      circumstances being reasons for and evidence of the objection of the person that provided the explanation.

      If an explanation specifies documents being reasons for the objection of the person that provided the explanation, being proof of evidence, copies of the documents indicated in the explanation, except for tax returns, shall be attached to the explanation.

      It is not required to submit other documents for the execution of a notice by way of giving an explanation.

      3. A taxpayer is not entitled to provide the explanation, specified in subparagraph 2) of paragraph 2 of this article, of the following violations revealed by tax authorities based on the results of an in-house audit:

      1) when calculating corporate income tax, expenses are included into deductibles and VAT on purchased goods, works, services is offset:

      on the basis of an invoice and (or) another document, an action (actions) on the issuance of which is (are) recognized, by a final and binding court judgment, as committed by a private business entity without actual performance of works, rendering of services, shipment of goods;

      for transactions invalidated by a final and binding court judgment;

      2) when calculating corporate income tax, expenses are included into deductibles for transactions committed without actual performance of works, rendering of services, shipment of goods with a taxpayer, the head and (or) a founder (participant) of which are (is) not involved in registration (reregistration) and (or) conduct of financial and economic activity of such a legal entity, as established by a final and binding court judgment;

      3) when VAT on purchased goods, works, services is applied against:

      transactions (operations) with legal entities and (or) individual entrepreneurs, whose registration was invalidated by a final and binding court judgment;

      transactions (operations) with legal entities whose reregistration was invalidated by a final and binding court judgment.

      4. If a notice is recognized to be unexecuted, a tax authority shall render a written decision and send it to a taxpayer in one of the following ways:

      1) by registered mail with return receipt;

      2) by handing it to the taxpayer against signature;

      3) by electronic means, in the web application or in the user’s personal account on the “e-government” website.

      5. When submitting a complaint about a notice of elimination of violations revealed by tax authorities based on the results of an in-house audit to a higher-level tax authority and (or) the authorized body or court, the running of a time period for the execution of the notice of elimination of violations revealed by tax authorities based on the results of an in-house audit is suspended:

      1) from the day the complaint is accepted by a higher-level tax authority and (or) the authorized body - until the higher-level tax authority and (or) the authorized body renders a written decision;

      2) from the day the court initiates proceedings in the complaint (application) – until a court judgment becomes final and binding.

      At the same time, in cases of filing a complaint with a court against actions (inaction) of tax officials on sending a notice of elimination of violations, specified in subparagraphs 2) and 3) of paragraph 3 of this article, revealed by tax authorities based on the results of an in-house audit, a taxpayer has the right to prove the actual receipt of goods, works, services from a legal person and (or) an individual entrepreneur, whose registration (reregistration) was invalidated by a final and binding court judgment.

      6. Failure to execute a notice of elimination of violations revealed by tax authorities based on the results of an in-house audit in due time entails the suspension of debit transactions in bank accounts of a taxpayer in accordance with Article 118 of this Code.

      7. Based on the results of an in-house audit conducted in accordance with paragraph 6 of Article 59 and paragraph 7 of Article 66 of this Code, a tax authority shall draw up an opinion in the form established by the authorized body.

      In this case, the date of completion of an in-house audit is that of the opinion specified in this paragraph.

Chapter 11. RECORDKEEPING OF THE FULFILLMENT OF TAX OBLIGATIONS, A DUTY TO TRANSFER SOCIAL WELFARE PAYMENTS, FINES AND PENALTIES

Article 97. General provisions

      1. Tax authorities keep the record of calculated, assessed, paid amounts of taxes and payments to the budget, social welfare payments, fines and penalties by maintaining a taxpayer’s personal account.

      2. The procedure for maintaining a taxpayer’s personal account is determined by the authorized body.

      3. A taxpayer’s personal account is maintained in the national currency.

      4. The calculated amount of taxes, payments to the budget, social welfare payments is an amount (also an amount subject to increase or reduction) determined by:

      the taxpayer in tax returns;

      tax authorities - on the basis of information from authorized state bodies in the cases established by Articles 493, 514 and 532 of this Code;

      authorized state bodies on the grounds stipulated by this Code.

      5. The assessed amount of taxes, payments to the budget and social welfare payments is an amount of taxes, payments to the budget and social welfare payments (also an amount subject to increase or decrease) determined by a tax authority:

      pursuant to the results of a tax audit;

      pursuant to the results of consideration of a taxpayer’s (tax agent’s) complaint against an audit findings report;

      Note of the RCLI!
      Item four of paragraph 5 takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (text deleted).

      on the basis of information provided by the authorized state body in the field of environmental protection and its territorial bodies pursuant to the findings of their inspections for the compliance with environmental legislation of the Republic of Kazakhstan (state environmental control) in accordance with paragraph 3 of Article 573 of this Code.

      6. For the purposes of application of paragraphs 4 and 5 of this article, the reduction of VAT amount is also excess VAT applied against the assessed tax amount.

      7. The balance of payments in a taxpayer’s personal account for taxes, payments to the budget, social welfare payments, fines, penalties is calculated in accordance with the procedure established by the authorized body.

      8. Tax authorities issue a statement of the taxpayer’s personal account concerning the status of settlements with the budget in respect of all or certain types of taxes, payments to the budget, social welfare payments, fines, penalties pursuant to a taxpayer’s tax application within one business day of the filing of such an application with a tax authority.

Article 98. Reconciliation of settlements in respect of taxes and payments to the budget, social welfare payments

      1. At the request of a taxpayer (tax agent), a tax authority carries out reconciliation of settlements in respect of taxes and payments to the budget, social welfare payments within one business day.

      2. In case of discrepancies between the data of a taxpayer (tax agent) and those of a tax authority, both take measures to eliminate the discrepancies within three business days from their detection. If necessary, the taxpayer’s (tax agent’s) personal account may be adjusted.

Article 99. Termination of obligations for the payment of a fine as a result of expiration of the statute of limitations

      The amount of a fine under the statute of an administrative sanction for violations in the field of taxation, as well as the legislation of the Republic of Kazakhstan on pensions, on compulsory social insurance, on compulsory social health insurance, the execution of which is impossible as a result of expiration of the statute of limitations established by the legislation of the Republic of Kazakhstan, is to be written off by a tax authority from a taxpayer’s (tax agent’s) personal account by the tax authority’s decision within five business days from the date of such a decision.

Article 100. Order of providing information on the absence (existence) of debts, the record of which is kept by a tax authority

      1. A tax authority, in response to a request for information on the absence (existence) of debts, the record of which is kept by the tax authority, provides such information:

      1) to judicial bodies - within five business days from the day of the request;

      2) to other state bodies and (or) persons entitled to receive it by the legislation of the Republic of Kazakhstan, to a taxpayer - within one business day from the day of the request.

      A request for and provision of information on the absence (existence) of debts, the record of which is kept by a tax authority, to the persons indicated in subparagraphs 1) and 2) of part one of this paragraph, is made in electronic form.

      2. Information on the absence (existence) of debts, the record of which is kept by a tax authority, shall be compiled in accordance with the procedure established by the authorized body.

      3. In case of liquidation of a legal entity or termination of activity of a branch or representative office of a foreign legal entity, information on the absence (existence) of debts of such persons, the record of which is kept by a tax authority, is provided if the conditions established by Articles 58, 59 and 60 of this Code are observed.

      4. If an individual, registered as an individual entrepreneur or a private practice owner, leaves the Republic of Kazakhstan for permanent residence, information on the absence (existence) of debts of such persons, the record of which is kept by a tax authority, is provided in case of their deregistration as an individual entrepreneur or a private practice owner.

Clause 1. Offset and refund of taxes, payments to the budget, penalties and fines

Article 101. General provisions

      1. An amount of tax (except for VAT), payment to the budget, penalty paid (collected) in excess is a positive difference between an amount paid (collected) to the budget (less the offset and refunded one) and a calculated, assessed (less the reduced one) amount for a given type of tax (except for VAT), payment to the budget, penalty as of the date of the offset and (or) refund.

      A VAT amount paid (collected) in excess is a positive difference between an amount paid (collected) to the budget (less the offset and refunded one) and a calculated, assessed (less the reduced one) amount of VAT for a taxable period with account of VAT settlements over previous taxable periods.

      Amounts of registration fees, of fees for the issuance of licenses for certain types of activities, for permits for the use of radio frequency spectrum, for certificates in the field of civil aviation, fees for the placement of outdoor (visual) advertising, a state fee are recognized as paid in excess provided that a relevant authorized state body confirms its non-performance of actions (also because of a taxpayer’s refusal of these actions before the submission of relevant documents), which require the payment of such fees.

      Paid amounts of a fee for forest uses are recognized as payments paid in excess, if a logging permit for forest use has not been used.

      2. An amount of income tax to be returned to a non-resident taxpayer in accordance with Article 672 of this Code is also an amount of income tax paid in excess.

      3. A tax authority offsets and refunds an amount of tax, payment to the budget (except for charges and fees not subject to refund), penalties paid (collected) in excess in the national currency as outlined below:

      at the place of maintenance of personal accounts for a relevant tax, payment to the budget, penalty – based on the data of such personal accounts;

      at the place of payments to the budget for which personal accounts are not maintained – based on documents submitted by a taxpayer, issued by a relevant authorized state body confirming its non-performance of actions requiring a payment to the budget.

      4. A tax authority offsets and refunds an amount of tax, payment to the budget, penalty paid (collected) in excess within ten business days, calculated as follows:

      1) in case of an offset and refund pursuant to a tax application - from the date of registration of such an application by tax authorities;

      2) in case of an offset without an application - from the date an excess amount appeared in the taxpayer’s personal account.

      A tax authority refunds an amount of tax, payment to the budget, penalty paid (collected) in excess to a bank account of a taxpayer pursuant to his/her/its tax application provided that he/she/it has no tax debts to the budget.

      Given tax debts, a tax authority shall apply an amount of tax, payment to the budget, penalty paid in excess against current tax debts, which requires no tax application for offset.

      If a taxpayer is a legal entity, an amount of tax, payment to the budget, penalty paid in excess applies against current tax debts of the legal entity and its structural units, which requires no tax application for offset.

      The remaining amount of tax, payment to the budget, penalty paid in excess shall be refunded after the offset specified in this paragraph.

      5. Not subject to:

      1) offset is:

      an amount of tax, payment to the budget, penalty paid (collected) in excess applied against tax debts of another taxpayer, except for an offset between a legal entity and its structural unit;

      a paid state fee;

      2) offset and refund is:

      paid amount of a fee for vehicle transportation in the territory of the Republic of Kazakhstan, consular fees, fees for:

      the use of land plots, the provision of a subsoil site by the state in accordance with the legislation of the Republic of Kazakhstan on subsoil and subsoil use on the basis of a license for exploration or extraction of solid minerals, the use of wildlife, the use of specially protected natural areas, except for cases of erroneous payment of such amounts;

      an overpaid amount of excises for excisable goods subject to marking with excise stamps, except for cases of taxpayer’s termination of activity on the production of such goods and return of earlier received excise stamps to a tax authority under an acceptance certificate;

      an amount of tax, fees for the use of land, the use of surface water sources, emissions into the environment paid (collected) in excess - in case of extending a deadline for filing tax returns on such taxes and fees until the date of their filing.

      6. If a tax authority violates a deadline set for the offset and (or) refund pursuant to a taxpayer’s tax application for an amount of tax, payment to the budget paid (collected) in excess, which were offset and (or) refunded after the deadline, the tax authority accrues a penalty in favor of the taxpayer for each day of delay. The penalty is accrued in the amount equal to 1.25 times the official refinancing rate of the National Bank of the Republic of Kazakhstan, effective as of each day of delay from the day following the expiration of the deadline for offset and (or) refund, including the day of such offset and (or) refund.

      The accrued penalty amount is to be transferred to the taxpayer’s bank account indicated in the tax application, on the day of the offset and (or) refund of the amount of tax, payment to the budget, penalty paid (collected) in excess from budget revenues according to a corresponding budget classification code.

      7. The procedure for the offset and (or) refund of an amount of tax, payment to the budget, penalty paid (collected) in excess is determined by the authorized body.

Article 102. Offset of taxes, payments to the budget, penalties

      1. An amount of tax, payment to the budget, penalty paid (collected) in excess shall be offset:

      1) without a taxpayer’s application - in accordance with paragraphs 2 and 3 of this article;

      2) pursuant to a taxpayer’s tax application - in accordance with paragraph 4 of this article.

      2. An amount of tax, payment to the budget paid (collected) in excess is applied without a taxpayer’s application in the following sequence:

      1) against a tax obligation to pay calculated, assessed amounts of taxes and payments to the budget, which matured for a certain type of tax, fee for: the use of land, the use of surface water sources, emissions into the environment, the use of radio frequency spectrum, provision of long-distance and (or) international telephone communication, as well as cellular communication (hereinafter, for the purposes of this article, a fee) – with regard to those that were overpaid;

      2) against arrears in other types of taxes and (or) payments to the budget;

      3) against a penalty for a certain type of tax, fee - with regard to those that were overpaid;

      4) against a penalty for other types of taxes and (or) payments to the budget;

      5) against a penalty for a certain type of tax, fee, with regard to those that were overpaid, and for other types of taxes and (or) payments to the budget.

      3. An amount of penalty paid (collected) in excess is applied without a taxpayer’s application in the following sequence:

      1) against a tax obligation to pay accrued penalties for a certain type of tax, fee - with regard to those that were overpaid;

      2) against arrears in a certain type of tax, fee - with regard to those that were overpaid;

      3) against arrears in other types of taxes and (or) payments to the budget;

      4) against a penalty for other types of taxes and (or) payments to the budget;

      5) against a penalty for a certain type of tax, fee, with regard to those that were overpaid, and for other types of taxes and (or) payments to the budget.

      4. An amount of tax, payment to the budget, penalty paid (collected) in excess is applied, pursuant to a tax application of a taxpayer:

      1) against future payments for a relevant type of tax and (or) payment to the budget specified in such an application, provided that there are no tax debts to the budget;

      2) that is a legal entity with a structural unit (structural units) - against tax debts of the structural unit (structural units) of such a legal entity for a relevant type of tax and (or) payment to the budget specified in such an application;

      3) that is a structural unit of a legal entity – against tax debts of the legal entity for a relevant type of tax and (or) payment to the budget specified in such an application.

Article 103. Offset, refund of erroneously paid amount of tax, payment to budget, penalty

      1. An erroneously paid amount of tax, payment to the budget, penalty is an amount transferred with any of such errors as:

      1) that in a payment document, where:

      the taxpayer identification number is incorrect:

      instead of the identification number of a tax authority at the location of which a tax and payment to the budget, penalty shall be paid, the identification number of another tax authority is indicated;

      the payment purpose description does not correspond to the payment purpose code and (or) the budget revenue classification code;

      2) there is erroneous execution of a taxpayer’s payment document by a second-tier bank or an organization carrying out certain types of banking operations;

      3) payment is made to a tax authority with which a taxpayer, the sender of money, is not registered;

      4) a taxpayer, the sender of money, is not a payer of the given type of tax or payment to the budget, penalty.

      2. An erroneously paid amount of tax, payment to the budget, penalty is offset, refunded:

      1) pursuant to a taxpayer’s tax application;

      2) pursuant to an application of a second-tier bank or an organization carrying out certain types of banking operations (hereinafter, for the purposes of this article, an application of a second-tier bank);

      3) pursuant to a tax authority’s record of reasons for the erroneously paid amount of tax, payment to the budget, penalty, in case an error has been found.

      3. An erroneously paid amount of tax, payment to the budget, penalty is offset, refunded within ten business days from:

      the submission of a taxpayer’s tax application, an application of a second-tier bank;

      the receipt of erroneously paid amount of tax, payment to the budget, penalty.

      4. A tax application of a taxpayer, an application of a second-tier bank shall be submitted to a tax authority that keeps record of the erroneously paid amount of tax, payment to the budget, penalty.

      5. If a tax authority confirms one of the errors specified in paragraph 1 of this article, such a tax authority:

      1) applies the erroneously paid amount against an appropriate budget classification code and (or) an appropriate tax authority;

      2) refunds it to the taxpayer’s bank account.

      6. In case of erroneous execution of a taxpayer’s payment document by a second-tier bank or an organization carrying out certain types of banking operations, which leads to repeat transfer of the amount of tax, payment to the budget, penalty using the same payment document, a tax authority, at the request of the second-tier bank, upon confirmation of an error, refunds the erroneously paid amount:

      to the taxpayer’s bank account - in case of money write-off from the bank account or making a payment through ATMs;

      to the bank account of a second-tier bank - in case of paying money to the second-tier bank in cash or making a payment through point-of-sale terminals.

      7. If tax authorities do not confirm errors specified in paragraph 1 of this article, such a tax authority shall send a written notification of non-confirmation of the error to a taxpayer on the grounds provided for in subparagraphs 1) and 2) of paragraph 2 of this article.

Article 104. Refund of excess VAT

      Note of the RCLI!
      This wording of paragraph 1 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      1. An excess VAT amount is refunded at a VAT payer’s request for the return of the excess VAT amount specified in VAT declaration in accordance with Articles 431, 432 and 434 of this Code pursuant to a submitted tax application by conducting an offset provided for by Article 102 of this Code and (or) transferring it to the taxpayer’s bank account.

      Note of the RCLI!
      This wording of paragraph 2 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      2. An excess VAT amount subject to refund in accordance with Articles 429, 431, 432 and 434 of this Code shall not exceed excess VAT amount available in a VAT personal account as of the date of drawing up a payment document on excess VAT refund by a tax authority.

      3. An excess VAT amount shall be refunded at the location of a taxpayer to his/her/its bank account within the time period specified in this Code for the return of excess VAT amount if he/she/it has no tax debts.

      If there are tax debts, the tax authority applies excess VAT against current tax debts, including those of structural units of legal entities, which requires no tax application for offset.

      Subject to refund is excess VAT amount remaining after the offset stipulated in this paragraph.

      4. If a tax authority violates the deadline for the refund of excess VAT amount, the tax authority accrues a penalty in favor of the taxpayer for such excess amount, which was refunded after the deadline, for each day of delay. A penalty is accrued in the amount equal to 1.25 times the official refinancing rate of the National Bank of the Republic of Kazakhstan, effective as of each day of delay from the day following the expiration of the deadline for refund, including the day of such refund.

      5. An accrued penalty amount shall be transferred to a taxpayer’s bank account on the day of refund of excess VAT amount from budget revenues according to a corresponding budget classification code.

Article 105. VAT refund on other grounds

      1. Subject to refund from the budget, on the grounds provided for in the Special Part of this Code, is VAT amount:

      1) paid for goods, works, services that were purchased using grant money;

      2) paid by a diplomatic mission and equivalent representative office accredited in the Republic of Kazakhstan.

      2. VAT to be returned to a grantee shall be refunded by a tax authority at the location of the grantee to his/her/its bank account after offsetting, in accordance with Article 102 of this Code during the period of refund set forth in Article 435 of this Code.

      3. A tax authority shall refund VAT to diplomatic missions and equivalent representative offices of foreign states, to consular offices of a foreign state accredited in the Republic of Kazakhstan and persons that are members of diplomatic, administrative and technical staff of these missions, including their family members living with them, consular officials, consular employees, including their family members living with them, to their bank account in accordance with the procedure and within the time limits set forth in Article 436 of the Code.

Article 106. Refund of an amount of wrongfully imposed fine for violations in the field of taxation, of the legislation of the Republic of Kazakhstan on pensions, compulsory social insurance, compulsory social health insurance, and also of an amount paid in excess

      1. An amount of wrongfully imposed fine for violations in the field of taxation, of the legislation of the Republic of Kazakhstan on pensions, compulsory social insurance, compulsory social health insurance to be returned due to the cancellation of a fine or reduction in its amount, is refunded pursuant to a taxpayer’s tax application (hereinafter, for the purposes of this article, an application for the refund of a fine).

      An application for the refund of a fine must be submitted together with a final and binding court judgment or a decision of a higher-level tax authority (official) providing for the cancellation or reduction of the fine due to its wrongful imposition.

      2. A taxpayer submits an application for the refund of a fine to a tax authority maintaining a personal account in which there is an amount of the fine to be refunded.

      3. A tax authority shall refund the paid amount of fine in accordance with paragraph 1 of this article to a taxpayer’s bank account within ten business days from the submission of an application for the refund of a fine.

      4. For the purposes of executing an order for the imposition of an administrative sanction, an amount of fine paid in excess shall be refunded in accordance with the procedure and within the time limits set forth in paragraph 3 of this article.

Article 107. Refund of paid amount of tax, payment to the budget, penalty and fine due to cancellation of internet auction results by a court order

      1. In case of cancellation of the results of an internet auction conducted by an authorized legal entity by a final and binding court judgment, the paid amount of tax, payment to the budget, penalty and fine shall be refunded pursuant to a tax application of the authorized legal entity in the form approved by the authorized body (hereinafter, for the purposes of this article, an application for refund).

      An application for refund shall be submitted together with:

      1) a copy of the final and binding court judgment;

      2) a copy of the payment document of the authorized legal entity on the payment of tax, payment to the budget, penalty and fine.

      2. The paid amount of tax, payment to the budget, penalty, fine shall be refunded in the national currency to the bank account of the authorized legal entity by a tax authority at the place of payment within ten business days from the submission of the application for refund.

Article 108. Features of the refund of paid state fees

      1. The overpaid amount of a state fee shall be refunded in whole or in part if:

      1) a state fee was paid in an amount greater than required by this Code, except for cases when a plaintiff reduces his/her/its claims when filing lawsuits and other applications (complaints) with court;

      2) a dispute was referred to arbitration;

      3) parties concluded a settlement agreement, agreed to settle the dispute (conflict) by way of mediation or through a participative procedure in courts of first and appellate instances - in full, in a court of cassation – equal to 50 percent of the amount paid when filing an application for cassational review of a judicial act;

      4) a statement of claim or another application (complaint) was returned or rejected, and also if notaries or persons authorized to perform notarial actions refused to perform them;

      5) proceedings were terminated or a claim was declined consideration if a case is not justiciable, and also if a plaintiff failed to observe the procedure for preliminary settlement of the dispute established for this category of cases or a suit was filed by a legally incompetent person;

      6) persons, who paid a state fee, refuse to take a legally significant action or obtain a document before applying to the body committing this legally significant action;

      7) an application for cassational review of a judicial act was returned;

      8) in other cases established by the laws of the Republic of Kazakhstan.

      2. A state fee shall not be refunded if:

      1) a plaintiff abandons a claim;

      2) a plaintiff reduces claims;

      3) a court order was vacated.

      3. A tax authority refunds the overpaid amount of a state fee pursuant to the taxpayer’s submission of a tax application and a relevant state body’s document confirming the legality of the refund.

      4. A tax authority refunds the overpaid amount of a state fee to a taxpayer, in whose favor the court rendered a decision to collect the state fee from the state institution that is a litigating party, pursuant to a tax application and a final and binding court judgment submitted by the taxpayer.

      5. The overpaid amount of a state fee is refunded by a tax authority at the place of payment to the taxpayer’s bank account from the corresponding budget classification code, to which the state fee was credited, within ten business days from the submission of a tax application for refund.

      6. Documents for refund of the overpaid amount of a state fee provided for in this article shall be submitted to a tax authority within a three-year period from the payment of such a state fee to the budget.

      Note of the RCLI!
      Paragraph 2 of Article 11 takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

Clause 2. Offset and (or) refund of excess amount of individual income tax Chapter 12. NOTICE OF FULFILLMENT OF TAX OBLIGATIONS, OBLIGATIONS FOR CALCULATION, WITHHOLDING AND TRANSFER OF SOCIAL WELFARE PAYMENTS

Article 114. General provisions

      1. A notice is a tax authority’s notification to a taxpayer (tax agent) of the requirement to fulfill a tax obligation by the latter, which is sent in hard or soft copy, and also to fully calculate and timely pay social welfare payments, the control of which is assigned to tax authorities. The forms of notices are approved by the authorized body.

      2. The types of notices and time frames for their sending to a taxpayer (tax agent) are as follows:

      1) of an amount of taxes calculated by a tax authority in accordance with paragraph 2 of Article 37 of this Code – within ten business days from the day of calculation;

      2) of the results of an audit - within five business days from the day a taxpayer (tax agent) is delivered a tax audit report, except for the case set forth in paragraph 4 of Article 159 of this Code;

      3) of assessed amounts of taxes, payments to the budget and social welfare payments for the period from the date of filing liquidation tax returns until the date of completion of a liquidation tax audit - within five business days from the day a taxpayer (tax agent) is delivered a liquidation tax audit report;

      4) of assessed amount of payment for emissions into the environment on the basis of information of the authorized body in the field of environmental protection - within ten business days from the receipt of information specified in paragraph 3 of Article 573 of this Code;

      5) of failure to file tax returns within the time frame established by the tax legislation of the Republic of Kazakhstan - from the day of the violation’s detection, except for tax returns on corporate income tax and VAT, a notice of which shall be sent within ten business days from the deadline established by this Code for their filing.

      In case of violation of a deadline for the notice indicated in this subparagraph due to technical errors in the software confirmed by the authorized body, this notice is considered to be sent on time. In this case, a tax obligation and (or) an obligation to calculate, withhold and transfer social welfare payments upon such a notice shall be fulfilled by a taxpayer within the time limits set forth in paragraph 5 of Article 115 of this Code;

      6) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;
      Note of the RCLI!
      This wording of subparagraph 7) is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      7) of tax debts’ payment - within five business days from the tax debts’ emergence;

      8) of individuals’ tax debts - within twenty business days from the tax debts’ emergence;

      9) of foreclosing on debtors’ bank accounts – at least twenty business days prior to the foreclosure;

      10) of elimination of violations revealed by tax authorities pursuant to an in-house audit - within ten business days from the discovery of violations in tax returns, except for the cases set forth in paragraph 7 of Article 59 and paragraph 8 of Article 66 of this Code;

      11) of the results of consideration of a taxpayer’s (tax agent’s) complaint about an audit findings report – within five business days from the date of a decision on the complaint;

      12) of elimination of violations of the tax legislation of the Republic of Kazakhstan – within five business days from their detection;

      13) of confirmation of the location (absence) of a taxpayer - within three business days from the day of a tax inspection report of tax authorities’ officials;

      14) takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      3. A notice shall include:

      1) the identification number of a taxpayer (tax agent);

      2) the last name, first name, patronymic (if it is indicated in an identity document) or full name of the taxpayer;

      3) the name of a tax authority;

      4) the date of the notice;

      5) an amount of a tax obligation and (or) obligations for the calculation, withholding and transfer of social welfare payments - in the cases established by this Code and (or) the laws of the Republic of Kazakhstan;

      6) bank details required for the payment of tax debts in respect of property tax, land tax and tax on vehicles of individuals;

      7) the requirement to fulfill the tax obligation and (or) obligations to calculate, withhold and transfer social welfare payments;

      8) a ground for sending the notice;

      9) a procedure for appeal.

      4. In the case specified in subparagraph 1) of paragraph 2 of paragraph 1 of Article 115 of this Code, tax authorities shall send a taxpayer (tax agent) copies of notices specified in subparagraphs 4), 7) and 8) of paragraph 2 of this article.

      A taxpayer (tax agent) has the right to apply to tax authorities to receive original notices specified in subparagraphs 4), 7) and 8) of paragraph 2 of this article.

Article 115. Procedure for the delivery and execution of a notice

      1. A notice shall be delivered to a taxpayer (tax agent) by hand against signature or in any other way confirming its dispatch and receipt, unless otherwise specified by this article.

      In this case, a notice sent using one of the following methods is deemed to be delivered to a taxpayer (tax agent) if it is sent:

      1) by registered mail with return receipt – on the date a taxpayer (tax agent) signs in the notification of a postal or other communications organization;

      In this case, such a notification must be delivered by a postal or other communications organization within ten business days from the date of receipt by the postal or other communications organization;

      2) electronically:

      from the date of the notice’s delivery to the web application by a tax authority.

      Note of the RCLI!
      This wording of item three of subparagraph 2) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      This method applies to a taxpayer registered as an electronic taxpayer in accordance with the procedure set forth in Article 86 of this Code;

      from the date of the notice’s delivery to the user’s personal account on the “e-government” website.

      This method applies to a taxpayer registered on the “electronic government” website;

      3) via the “Government for Citizens” State Corporation - on the date it was received in person without prior arrangement. At the same time, a notice of the amount of taxes calculated for the tax accounting period specified in subparagraph 1) of paragraph 2 of Article 114 of this Code shall be received by an individual from July 15 of a year following the tax accounting period.

      2. Unless otherwise provided for in paragraphs 3 and 4 of this article, in case of return by a postal or other communications organization of notices specified by subparagraphs 2), 3), 7) and 10) of paragraph 2 of Article 114 of this Code that were sent by tax authorities to a taxpayer (tax agent) by registered mail with return receipt, the date of delivery of such notices is that of a tax inspection with the involvement of witnesses on the grounds and according to the procedure established by this Code.

      3. In case of completion of a tax audit pursuant to a tax inspection report in accordance with paragraph 3 of Article 158 of this Code and return by a postal or other communications organization of notices specified in subparagraphs 2) and 3) of paragraph 2 of Article 114 of this Code that were sent by tax authorities to a taxpayer (tax agent) by registered mail with return receipt, the date of delivery of such notices is that of return of such a notice by a postal or other communications organization.

      4. In case of return by a postal or other communications organization of notices specified in subparagraphs 5) to 12) of paragraph 2 of Article 114 of this Code that were sent by tax authorities to a taxpayer (tax agent) by registered mail with return receipt, a tax authority, on or before the day following that of return of such a notice, places information on the taxpayer indicating its identification number, name or his/her last name, first name, patronymic (if it is indicated in an identity document), the date of return of the notice on the website of the authorized body.

      5. Unless otherwise provided for in paragraph 6 of this article, if a tax authority sends notices specified in subparagraphs 2) - 5), 10), 11), 12) and 14) of paragraph 2 of Article 114 of this Code, a tax obligation and (or) obligations for calculating, withholding and transfer of social welfare payments shall be performed within thirty business days from the day following the delivery of the notice to the taxpayer (tax agent).

      6. If a taxpayer completely agrees with notices of the results of a liquidation tax audit indicated in subparagraphs 2) and 3) of paragraph 2 of Article 114 of this Code, the taxpayer shall submit a statement of agreement together with documents confirming the fulfillment of tax obligations for the payment of taxes and payments to the budget specified in the notices, and also of obligations to transfer social welfare payments.

      In this case, the statement of agreement with the notice of the results of the liquidation tax audit is submitted by the taxpayer to the tax authority within twenty-five business days from the day following the delivery of the notice.

      7. The procedure for delivery and execution of notices set forth in paragraphs 1 and 2 of this article, shall also apply to copies of notices specified in subparagraphs 5), 7) and 8) of paragraph 2 of Article 114 of this Code.

      8. Tax authorities, within three business days from the taxpayer’s application in the case specified in paragraph 4 of Article 114 of this Code, shall issue to this taxpayer original notices specified in subparagraphs 5), 7) and 8) of paragraph 2 of Article 114 of this Code.

      9. The notice specified in subparagraph 13) of paragraph 2 of Article 114 of this Code shall be sent by a tax authority electronically or by registered mail with return receipt and executed by the taxpayer (tax agent) within twenty business days from the day of its sending.

Chapter 13. METHODS FOR SECURING THE FULFILLMENT OF OVERDUE TAX OBLIGATIONS

Article 116. Methods for securing the fulfillment of overdue tax obligations

      1. The fulfillment of an overdue tax obligation of a taxpayer (tax agent) can be secured by:

      1) charging penalty for unpaid amount of taxes and payments to the budget, including advance payments and (or) current payments of them;

      2) suspending debit transactions in bank accounts (except for correspondent accounts) of a taxpayer (tax agent) that is a legal entity, a structural unit of a legal entity, a non-resident operating in the Republic of Kazakhstan through a permanent establishment, an individual entrepreneur, a private practice owner;

      3) suspending debit transactions with the cash of a taxpayer (tax agent) that is a legal entity, a structural unit of a legal entity, a non-resident operating in the Republic of Kazakhstan through a permanent establishment, an individual entrepreneur, a private practice owner;

      4) restricting the disposal of property of a taxpayer (tax agent) that is a legal entity, a structural unit of a legal entity, a non-resident operating in the Republic of Kazakhstan through a permanent establishment, an individual entrepreneur, a private practice owner.

      If the fulfillment of tax obligations in accordance with subparagraph 2) of paragraph 3 of Article 722 of this Code is imposed on an operator, methods for securing the fulfillment of an overdue tax obligation:

      specified in subparagraph 1) of part one of this paragraph are applied to the operator;

      specified in subparagraphs 2), 3) and 4) of part one of this paragraph are applied both to the operator and each participant of a simple partnership (consortium).

      2. Methods for securing the fulfillment of an overdue tax obligation, specified in subparagraphs 2), 3) and 4) of part one of paragraph 1 of this article, shall be applied within the time limits specified in Articles 118, 119 and 120 of this Code.

      Note of the RCLI!
      This wording of part two of subparagraph 2 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      Before applying methods for securing the fulfillment of the overdue tax obligation specified in subparagraphs 2), 3) and 4) of part one of paragraph 1 of this article, a notice of the payment of tax debts, specified in subparagraph 7) of paragraph 2 of Article 114 of this Code, shall be sent to a taxpayer (tax agent), except for cases specified in paragraph 3 of this article.

      Note of the RCLI!
      Part three of paragraph 2 takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (text deleted).

      3. In case a structural unit of a legal entity fails to pay its tax debts within thirty business days from the receipt of a notice of the payment of tax debts, a tax authority applies methods for securing the fulfillment of an overdue tax obligation, specified in subparagraphs 2), 3) and 4) of paragraph 1 of this Article, to a taxpayer (tax agent) that is a legal entity that set up this structural unit.

      In case of failure to pay tax debts by a structural unit of a legal entity after application of methods for securing the fulfillment of an overdue tax obligation to it in accordance with the procedure set forth in part one of this paragraph, and provided that the legal entity has more than one structural unit, a tax authority shall apply methods for securing the fulfillment of an overdue tax obligation specified in subparagraphs 2) and 3) of paragraph 1 of this article, simultaneously to all structural units of this legal entity.

      In case a legal entity fails to pay its tax debts within thirty business days from the receipt of a notice of the payment of tax debts, a tax authority applies methods for securing the fulfillment of an overdue tax obligation, specified in subparagraphs 2), 3) and 4) of paragraph 1 of this article, to taxpayers that are structural units of this legal entity.

      4. Methods for securing the fulfillment of an overdue tax obligation specified in subparagraphs 2), 3) and 4) of paragraph 1 of this article are subject to cancellation in case of:

      1) declaring bankrupt - from the date of a final and binding court judgment on declaring a taxpayer bankrupt;

      2) rehabilitation procedure - from the date of a final and binding court judgment on approval of a rehabilitation plan;

      3) approval by court of an insolvency resolution agreement - from the date of a final and binding court judgment on approval of such an agreement;

      4) involuntary liquidation of second-tier banks, insurance (reinsurance) organizations - from the date of a final and binding court judgment on involuntary liquidation.

      In addition to the above, in the cases specified in subparagraphs 1), 2) and 3) of part one of this paragraph, methods for securing the fulfillment of an overdue tax obligation are applied to a taxpayer in accordance with the provisions of this chapter with respect to the amount of a tax obligation that is not included in the register of creditors’ claims as prescribed by the legislation of the Republic of Kazakhstan on rehabilitation and bankruptcy, and (or) tax obligation of a taxpayer not included in the insolvency resolution agreement approved by court.

      Note of the RCLI!
      This wording of paragraph 5 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      5. In case of an appeal against an audit findings report, the application of methods for securing the fulfillment of an overdue tax obligation, except for the method specified in subparagraph 4) of part one of paragraph 1 of this article, shall be suspended pending a decision on the results of the complaint’s consideration.

      6. If a taxpayer (tax agent) appeals against notices of the payment of tax debts, the application of methods for securing the fulfillment of an overdue tax obligation pending a decision on the results of the complaint’s consideration is not suspended.

      7. For the purposes of this chapter, the accounts of state institutions opened with the central authorized body for budget execution are equated to bank accounts, and the central authorized body for budget execution is equated to an organization carrying out certain types of banking operations.

      Note of the RCLI!
      Paragraph 8 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      8. Methods for securing the fulfillment of an overdue tax obligation, except for penalty accrual, are not applied to taxpayers (tax agents) whose tax debts’ amount is less than 6 times the monthly calculated index established by the law on the national budget and effective as of January 1 of a relevant financial year.

Article 117. Penalties for overdue taxes and payments to the budget

      1. A penalty is an amount specified in paragraph 2 of this article, which is accrued on the amount of overdue taxes and payments to the budget, including advance and (or) current payments of them.

      2. A penalty is charged:

      1) regardless of the application of other methods for securing the fulfillment of an overdue tax obligation to pay taxes, payments to the budget, enforced collection measures and other sanctions for violation of the tax legislation of the Republic of Kazakhstan;

      2) for each day of delay in the fulfillment of a tax obligation for the payment of taxes and payments to the budget, beginning from the day following the deadline for the payment of a tax and payment to the budget, including advance and (or) current payment of them, including the day of payment to the budget, in the amount of 1.25 times the official refinancing rate established by the National Bank of the Republic of Kazakhstan, for each day of delay;

      3) if the deadline is changed for a tax obligation for the payment of taxes and (or) fees, if the deadline is extended for filing tax returns, additional tax returns;

      4) when paying the amounts of taxes and payments to the budget, including advance and (or) current payments of them, including the day of:

      the write-off of money from a taxpayer’s bank account by second-tier banks or organizations carrying out certain types of banking operations;

      payment by a taxpayer through ATMs or point-of-sale terminals;

      payment by a taxpayer, the authorized state body of the said amounts to second-tier banks or organizations carrying out certain types of banking operations;

      the offset of an overpaid amount of tax, payment to the budget;

      execution of a collection order;

      5) when conducting tax and (or) customs audit - until the day of completion of such an audit.

      After assessed (calculated) amounts indicated in an audit findings report are entered into the taxpayer’s personal account - from the date of completion of the tax and (or) customs audit, including the day of payment;

      6) to second-tier banks or organizations carrying out certain types of banking operations for:

      non-observance of the order of priority in writing off amounts from bank accounts;

      failure to transfer (credit) them to the budget;

      untimely transfer to the budget of:

      amounts written off from bank accounts of taxpayers,

      cash paid at cash departments of second-tier banks or organizations carrying out certain types of banking operations for the payment of taxes and payments to the budget, including advance and (or) current payments of them, penalties, fines,

      accrued bank fees.

      3. No penalty is charged:

      to creditors of second-tier banks being in involuntary liquidation if the sole reason for non-payment of taxes and payments to the budget was the liquidation of the second-tier bank servicing them - from the date of a final and binding court judgment on involuntary liquidation of the second-tier bank;

      in case of a final and binding court judgment on compulsory issue - from the day of filing a statement of claim for compulsory issue of authorized shares with court and until their placement;

      in case of a final and binding court judgment on recognizing an individual as missing from the effective date of the court judgment until its reversal;

      on excess profits tax for a period preceding five taxable periods before the calendar year in which a violation of the tax legislation of the Republic of Kazakhstan was revealed;

      when tax authorities revise calculated amounts of property taxes, land tax and tax on vehicles of individuals after the due date for payment of these taxes for a relevant taxable period;

      when the deadline for a tax obligation for the payment of taxes and (or) fees is changed in case of application of an insolvency resolution procedure with respect to a taxpayer in accordance with the Law of the Republic of Kazakhstan “On Rehabilitation and Bankruptcy”;

      when a court passes a ruling on initiating proceedings in a bankruptcy case - from the date of such a ruling;

      when applying a rehabilitation procedure - from the effective date of the court judgment on application of such a procedure;

      when applying an insolvency resolution procedure - from the effective date of the court judgment on t application of such a procedure;

      on an amount of calculated (assessed) taxes and payments to the budget that emerged as a result of violation of the tax legislation of the Republic of Kazakhstan by a taxpayer (tax agent) when fulfilling tax obligations in accordance with the received preliminary explanation, except for the establishment of previously unknown facts.

      For the purposes of this article, previously unknown facts are those affecting the opinion of a tax authority stated in the provided preliminary explanation, which were not earlier reported:

      to tax authorities in the request of a taxpayer (tax agent) for preliminary explanation;

      in written representations pursuant to requests of a tax authority or its officials within the process of consideration of the taxpayer’s (tax agent’s) request for preliminary explanation.

      4. The charge of a penalty is reinstated in case of:

      1) a final and binding court judgment on the refusal to declare a taxpayer bankrupt - from the date of the court’s ruling on the initiation of proceedings in the bankruptcy case;

      2) a final and binding court judgment on the refusal to approve the rehabilitation plan - from the effective date of the court decision on application of the rehabilitation procedure;

      3) the taxpayer’s failure to conclude an insolvency resolution agreement within the period established by the Law of the Republic of Kazakhstan “On Rehabilitation and Bankruptcy” or the court’s ruling on the refusal to approve such an agreement - from the day of the court’s decision on application of the insolvency procedure.

Article 118. Suspension of debit transactions in bank accounts of a taxpayer (tax agent)

      1. Debit transactions in bank accounts (except for correspondent accounts) of a taxpayer (tax agent) that is a legal entity, a structural unit of a legal entity, a non-resident operating in the Republic of Kazakhstan through a permanent establishment, an individual registered as an individual entrepreneur, a private practice owner shall be suspended in accordance with the procedure established by the laws of the Republic of Kazakhstan in case of:

      1) failure of a taxpayer (tax agent) to file tax returns within the time limits established by this Code - upon expiration of thirty business days from the day following the delivery of the notice provided for in subparagraph 5) of paragraph 2 of Article 114 of this Code;

      2) a taxpayer’s failure to submit a tax application for VAT registration - upon expiration of thirty business days from the day of delivery of the notice provided for in subparagraph 12) of paragraph 2 of Article 114 of this Code;

      Note of the RCLI!
      This wording of subparagraph 3) is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      3) failure to pay tax debts - upon expiration of ten business days from the delivery of the notice provided for in subparagraph 7) of paragraph 2 of Article 114 of this Code;

      4) denial of access to tax officials for conducting a tax audit and inspection of taxable and (or) tax-related items, except for cases of their violation of a tax audit procedure established by this Code - within five business days from the day of denial;

      5) return by a postal or other communications organization of a notice due to the absence of a taxpayer (tax agent) from the location, except for the notice provided for in subparagraphs 7) and 13) of paragraph 2 of Article 114 of this Code - within five business days from the date of return;

      6) a taxpayer’s failure to meet the requirement set forth in part one of paragraph 5 of Article 70 of this Code - within three business days from the deadline specified in part one of paragraph 5 of Article 70 of this Code;

      7) failure to execute the notice of elimination of violations revealed by tax authorities pursuant to an in-house audit - after five business days from the deadline specified in part one of paragraph 2 of Article 96 of this Code.

      2. Suspension of debit transactions in bank accounts applies to all debit transactions of a taxpayer (tax agent), except for:

      1) transactions for the payment of taxes and payments to the budget provided for in Article 189 of this Code, customs payments provided for by the legislation of the Republic of Kazakhstan, social welfare payments, penalties accrued for their late payment, and fines to be paid to the budget;

      2) withdrawal of money:

      under writs of execution providing for the satisfaction of claims for damages caused to life and health, as well as claims for recovery of alimony;

      under writs of execution providing for the withdrawal of money for settlements with persons working under an employment agreement for the payment of severance pay and wages, remuneration under an author contract, obligations of a client for the transfer of social welfare payments, as well as under writs of execution for collection to state revenue;

      to pay tax debts, arrears in social welfare payments.

      Debit transactions in bank accounts of a taxpayer (tax agent) in the case provided for in subparagraph 3) of paragraph 1 of this article shall be suspended up the amount of the tax debts indicated in a tax authority’s order to suspend debit transactions in bank accounts of the taxpayer (tax agent).

      3. A tax authority shall issue an order to suspend debit transactions in bank accounts of a taxpayer (tax agent) in accordance with the form established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan, which shall come into force on the day of its receipt by a second-tier bank or an organization carrying out certain types of banking operations.

      A tax authority sends such an order to second-tier banks or organizations carrying out certain types of banking operations in hard copy or electronically by transmitting via a telecommunications network. When a tax authority sends an order to suspend debit transactions in bank accounts of a taxpayer (tax agent) in electronic form, such an order is created in accordance with the formats established by the authorized body jointly with the National Bank of the Republic of Kazakhstan.

      4. A tax authority’s order to suspend debit transactions in bank accounts of a taxpayer (tax agent) is subject to unconditional execution by second-tier banks or organizations carrying out certain types of banking operations and is executed in the order of priority established by the Civil Code of the Republic of Kazakhstan.

      5. An order to suspend debit transactions in bank accounts is canceled by the tax authority that issued the order to suspend debit transactions within one business day following the elimination of causes for the suspension of debit transactions in bank accounts.

      In addition to the above, an order to suspend debit transactions in bank accounts made in the case provided for in subparagraph 7) of paragraph 1 of this article shall be canceled within one business day following the delivery of a notice of an unscheduled tax audit to be conducted in case of the taxpayer’s (tax agent’s) failure to execute the notice of elimination of violations revealed by tax authorities pursuant to the results of an in-house audit, in accordance with the procedure specified in Article 96 of this Code, or a tax audit with respect to the issues and taxable periods specified in the notice of elimination of violations revealed by tax authorities pursuant to the results of an in-house audit.

      6. If a bank account of a taxpayer (tax agent) is closed in accordance with the legislation of the Republic of Kazakhstan, a second-tier bank or an organization carrying out certain types of banking operations shall return an order to suspend debit transactions in the account to a relevant tax authority together with a notification of the closure of the bank account of a taxpayer (tax agent).

      If an order to suspend debit transactions indicates more than one bank account, a second-tier bank or an organization carrying out certain types of banking operations shall return such an order to a relevant tax authority within one business day following the day of closing the last bank account specified in the order for suspension of debit transactions in bank accounts.

Article 119. Suspension of debit transactions with the cash of a taxpayer (tax agent)

      Note of the RCLI!
      This wording of part one of paragraph 1 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      1. In case of failure to pay tax arrears within ten business days from the receipt of a notice of the payment of tax debts, a tax authority, to secure the payment of tax debts, shall suspend debit transactions with the cash of a taxpayer (tax agent) that is a legal entity, a structural unit of a legal entity, a non-resident operating in the Republic of Kazakhstan through a permanent establishment, an individual entrepreneur, a private practice owner.

      Suspension of debit transactions with the cash of a taxpayer (tax agent) extends to all cash debit transactions performed at the cash desk, except for those on:

      depositing money into accounts of banks or organizations carrying out certain types of banking operations for its subsequent transfer in settlement of taxes and payments to the budget provided for in Article 189 of this Code, customs payments provided for by the legislation of the Republic of Kazakhstan, social contributions, penalties accrued for their late payment, as well as fines to be paid to the budget;

      withdrawing clients’ cash from accounts of a second-tier bank or an organization carrying out certain types of banking operations, in the event that an order to suspend debit transactions with cash is issued with respect to the second-tier bank or the organization carrying out certain types of banking operations.

      An order to suspend debit transactions with the cash of a taxpayer (tax agent) is issued in the form approved by the authorized body in two copies, one of which is delivered to the taxpayer by hand against signature or in any other way confirming its dispatch and receipt.

      2. A tax authority’s order for suspension of debit transactions with cash is subject to unconditional execution by a taxpayer (tax agent) by transferring cash inflows to the budget within one business day after their receipt.

      3. A taxpayer (tax agent) is liable for violating the requirements of this article in accordance with the laws of the Republic of Kazakhstan.

      4. A tax authority’s order for suspension of debit transactions with cash shall be canceled by the tax authority within one business day after the debtor’s payment of debts to the budget.

Article 120. Restrictions on the disposal of property of a taxpayer (tax agent)

      1. A tax authority imposes restrictions on the disposal of property of a taxpayer (tax agent) pursuant to the decision specified in paragraph 4 of this article, in case of:

      Note of the RCLI!
      This wording of subparagraph 1) is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      1) failure to pay tax debts upon expiration of fifteen business days from the receipt of a notice of the payment of tax debts;

      2) an appeal of a taxpayer (tax agent), except for a large taxpayer subject to monitoring, against an audit findings report, which contains information on the amount of assessed taxes and payments to the budget, and penalties, as well as on excess VAT amount that was returned from the budget although not approved for refund.

      In addition to the above, in the case specified in this subparagraph, a tax authority imposes restrictions without sending a notice of the payment of tax debts upon expiration of three business days:

      from the submission of a complaint by a taxpayer (tax agent) in accordance with the procedure set forth in Chapter 21 of this Code;

      Note of the RCLI!
      This wording of item three of part two of subparagraph 2) is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      from the removal of a taxpayer (tax agent) from the list of taxpayers, of large taxpayers subject to monitoring.

      2. A tax authority imposes restrictions on the disposal of a taxpayer’s (tax agent’s) property that:

      1) belongs to him/her/it on the basis of the right of ownership or the right of economic management and (or) is held in the inventory of this taxpayer (tax agent) - in the case specified in subparagraph 1) of part one of paragraph 1 of this article;

      2) in accordance with international standards of financial reporting and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, is a fixed asset, investment in real estate and (or) a biological asset, in the case specified in subparagraph 2) of part one of paragraph 1 of this article.

      3. Not subject to restrictions on disposal are:

      life support facilities;

      electric, thermal and other types of energy;

      food products or raw materials, the shelf life and (or) storage period of which is less than one year.

      A tax authority is not allowed to seize a taxpayer’s (tax agent’s) restricted property that was transferred (received) into financial leasing or provided as collateral, before the termination of a lease and (or) a pledge agreement.

      A taxpayer (tax agent) is not allowed to change the terms of the agreement (to extend the agreement, sublease and (or) repledge) from the day of imposition of restrictions on the disposal of property by a tax authority and until their removal.

      4. A decision to impose restrictions on the disposal of property of a taxpayer (tax agent) is drawn up in the form established by the authorized body and is made by a tax authority in the amount of:

      1) tax debts according to the taxpayer’s (tax agent’s) personal account data as of the date of such a decision - in the case specified in subparagraph 1) of part one of paragraph 1 of this article;

      2) taxes, payments to the budget and penalties appealed by the taxpayer (tax agent) in accordance with the procedure set forth in Chapter 21 of this Code - in the case specified in subparagraph 2) of part one of paragraph 1 of this article.

      5. A decision to impose restrictions on the disposal of property shall be delivered to a taxpayer (tax agent) by hand against signature or in any other way confirming its dispatch and receipt. In this case, a decision is considered to be handed to the taxpayer (tax agent) if it is sent using one of the methods mentioned below:

      1) by registered mail with return receipt - on the date a taxpayer (tax agent) signs in the notification of a postal or other communications organization;

      Note of the RCLI!
      This wording of subparagraph 2) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      2) electronically - on the date of delivery of the tax authority’s decision to the web application. This method applies to a taxpayer registered as an electronic taxpayer in accordance with the procedure set forth in Article 86 of this Code;

      3) if delivery is impossible due to the refusal to put a signature confirming the receipt of such a decision, or absence from the location - on the date of a tax inspection to be conducted in accordance with the procedure specified in Article 70 of this Code.

      6. Within five business days from the receipt by a taxpayer (tax agent) of a decision to impose restrictions on the disposal of property, a tax authority forwards a copy of such a decision to authorized state bodies for registering the encumbrance of title to property, the title to which or transactions with respect to which are subject to state registration, or property subject to state registration.

      7. After the expiration of ten business days from the delivery of a decision to impose restrictions on the disposal of the property of a taxpayer (tax agent) to the taxpayer (tax agent), a tax authority takes an inventory of the restricted property in the presence of the taxpayer (tax agent) by drawing up a property inventory act in the form established by the authorized body.

      If a taxpayer (tax agent) owns the property, the title to

      which or transactions with respect to which are subject to state registration, or property subject to state registration, such property shall be entered into the inventory list in the first place.

      When taking an inventory of the restricted property, it is necessary to indicate the book value, which is determined on the basis of the taxpayer’s (tax agent’s) accounting data, or market value in the property inventory act. Market value is a value stated in an appraisal report conducted in accordance with the legislation of the Republic of Kazakhstan on appraisal activity.

      8. In the course of drawing up an act of inventory of restricted property, a taxpayer (tax agent) must produce original balance sheet, documents confirming the right of ownership of such property and (or) the right of its economic management or their notarized copies for the review of tax authority officials. Copies of the documents specified in this paragraph are attached to a restricted property inventory act.

      A restricted property inventory act is drawn up in two copies and signed by a person who compiled it, and also by a taxpayer (tax agent) and (or) his/her/its official.

      A taxpayer (tax agent) is obliged to keep the restricted property safe and intact, except for changes due to natural wear and tear and (or) natural loss under normal storage conditions, until restrictions are removed in accordance with the legislation of the Republic of Kazakhstan. In addition to the above, a taxpayer (tax agent) is liable for unlawful actions with respect to the said property in accordance with the laws of the Republic of Kazakhstan.

      In case of failure to pay tax debts and sell restricted property through two auctions, a tax authority has the right to take an inventory of other property of a taxpayer (tax agent) by voiding the first inventory act and drawing up a new property inventory act taking into consideration the taxpayer’s (tax agent’s) personal account data on the amount of tax debts as of the date of the new inventory act.

      9. A tax authority revokes a decision to impose restrictions on the disposal of property and voids a property inventory act drawn up pursuant to such a decision in the form established by the authorized body, in case of:

      1) payment of tax debts by a taxpayer (tax agent) – within one business day from the payment of such debts;

      2) issuance of a decision of the authorized body or a final and binding court judgment vacating an audit findings report in the part complained of - within one business day from the issuance of such a decision or a final and binding court judgment;

      3) withdrawal by a taxpayer (tax agent) of his/her/its complaint about an audit findings report - within one business day from the withdrawal of such a complaint.

      10. A tax authority sends to authorized state bodies a notification of termination of encumbrance of rights to property:

      1) not indicated in an inventory act - within five business days from the property inventory act, attaching a copy of such an act;

      2) with respect to which a decision to impose restrictions on the disposal was canceled in the cases provided for in paragraph 9 of this article - within five business days from the decision to cancel the decision to impose restrictions on the disposal of property, attaching a copy of such a decision;

      3) sold by an authorized legal entity, also in settlement of arrears in customs payments, taxes and penalties – within five business days from the date of signing a purchase and sale agreement, attaching a copy of such an agreement.

      11. In the cases specified in paragraphs 6 and 10 of this article, a tax authority shall forward relevant notifications to authorized state bodies in hard copy or in electronic form via a telecommunications network.

Chapter 14. ENFORCED TAX DEBT COLLECTION ACTIONS

Article 121. Enforced tax debt collection actions

      Note of the RCLI!
      This wording of part one of paragraph 1 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      1. Tax authorities take actions on enforced collection of tax debts of a taxpayer that is a legal entity, a structural unit of a legal entity, a non-resident operating in the Republic of Kazakhstan through a permanent establishment, an individual entrepreneur, a private practice owner, except for cases of an appeal against an audit findings report, a higher-level tax authority’s decision issued after consideration of a complaint about the report.

      When collecting tax debts of a taxpayer operating under a production sharing agreement as part of a simple partnership (consortium) in cases where the fulfillment of tax obligations is imposed on an operator in accordance with subparagraph 2) of paragraph 3 of Article 722 of this Code, enforced collection actions, provided for by this chapter, apply to the taxpayer and (or) the operator.

      2. Takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      3. The order of priority for enforced tax debt collection is as follows:

      1) from bank accounts of a taxpayer;

      2) from accounts of debtors of a taxpayer;

      3) from the sale of restricted property;

      4) in the form of compulsory issue of authorized shares.

      4. In case a structural unit of a legal entity fails to pay its tax debts within forty business days after the receipt of a notice of the payment of tax debts, a tax authority takes actions on enforced collection of tax debts from the taxpayer that is a legal entity that set up this structural unit.

      In case a structural unit of a legal entity fails to pay its tax debts after enforced collection actions on it in accordance with the procedure specified in part one of this paragraph and if the legal entity has more than one structural unit, a tax authority applies enforced collection actions with respect to the money in bank accounts of all structural units of such a legal entity at the same time.

      In case a legal entity fails to pay tax debts within forty business days after the receipt of a notice of the payment of tax debts, a tax authority collects the amount of tax debts by taking enforced collection actions with respect to taxpayers that are structural units of this legal entity.

      5. Enforced tax debt collection actions shall be stopped in case of:

      1) initiation of proceedings in a bankruptcy case – on the day of a court’s ruling on the initiation of proceedings in the bankruptcy case;

      2) application of a rehabilitation procedure in respect of a taxpayer - on the day of a court’s ruling on the initiation of proceedings in the rehabilitation case;

      3) approval by court of an insolvency resolution agreement on – on the effective day of a court’s ruling on the approval of such an agreement;

      4) involuntary liquidation of second-tier banks, insurance (reinsurance) organizations - on the effective date of a court’s decision on involuntary liquidation.

      In addition to the above, in the cases specified in subparagraphs 1), 2) and 3) of part one of this paragraph, a tax authority takes enforced collection actions in accordance with the provisions of this chapter with respect to the amount of a tax obligation that is not included in the register of creditors’ claims in the manner prescribed by the legislation of the Republic of Kazakhstan on rehabilitation and bankruptcy, and (or) tax obligation of a taxpayer not included in the insolvency resolution agreement approved by court.

      6. In case a taxpayer (tax agent) appeals against notices of the payment of tax debts, enforced tax debt collection actions are not stopped until a decision is rendered on the results of consideration of a complaint.

      7. For the purposes of this chapter, accounts of state institutions opened with the central authorized body for budget execution are equated to bank accounts, and the central authorized body for budget execution is equated to an organization carrying out certain types of banking operations.

      Note of the RCLI!
      Paragraph 8 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      8. Enforced collection actions are not taken if the amount of tax debts of a taxpayer (tax agent) is less than 6 times the monthly calculated index established by the law on the republican budget and effective as of January 1 of a relevant financial year.

Article 122. Collection of debts to the state budget from money held in bank accounts

      Note of the RCLI!
      This wording of part one of paragraph 1 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      1. In cases of non-payment or incomplete payment of tax debts after the expiration of twenty business days from the delivery of a notice of the payment of tax debts, a tax authority takes actions of enforced collection of the amount of tax debts from bank accounts of a taxpayer that is a legal entity, a structural unit of a legal entity, a non-resident operating in the Republic of Kazakhstan through a permanent establishment, an individual entrepreneur, a private practice owner.

      The provisions of this paragraph shall not apply to bank accounts not subject to foreclosure, in accordance with the Civil Code of the Republic of Kazakhstan.

      2. Collection of an amount of tax debts from bank accounts of a taxpayer (tax agent) opened with a second-tier bank or an organization carrying out certain types of banking operations shall be effected on the basis of a collection order of a tax authority, except for the amount of money that is security for loans granted by such a second-tier bank or organization carrying out certain types of banking operations, which is equal to outstanding principal debt of this loan.

      3. A tax authority issues a collection order on the basis of data on the amount of tax debts as of the date of the order.

      4. In case a second-tier bank or an organization carrying out certain types of banking operations executes collection orders from one bank account of a taxpayer (tax agent), collection orders, issued in respect of other bank accounts of the taxpayer (tax agent) opened by him/her/it with this second-tier bank or organization carrying out certain types of banking operations, shall be returned unexecuted to a tax authority if such collection orders are issued on the same date, for the same amount, for the same type of debt.

      5. If a second-tier bank or an organization carrying out certain types of banking operations fully executes a collection order by writing off the total amount, specified in such a collection order, from several bank accounts of a taxpayer (tax agent), collection orders, issued in respect of other bank accounts of the taxpayer (tax agent) opened by him/her/it with this second-tier bank or organization carrying out certain types of banking operations on the same date, for the same amount, for the same type of debt shall be returned unexecuted.

      6. A collection order is issued in accordance with the form approved by the National Bank of the Republic of Kazakhstan and contains an indication of the bank account of a taxpayer (tax agent) from which tax debts are collected.

      A tax authority sends a collection order to second-tier banks or organizations carrying out certain types of banking operations in hard copy or in electronic form via a telecommunications network. An electronic collection order is created in accordance with the formats established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan

      7. If there is no money in a taxpayer’s (tax agent’s) national currency bank account, tax debts are collected from foreign currency bank accounts in the national currency pursuant to collection orders issued by tax authorities.

      8. If there is sufficient money in a client’s account with a second-tier bank or an organization carrying out certain types of banking operations to satisfy all the claims made to the client, a collection order for tax debt collection is executed by a second-tier bank or an organization carrying out certain types of banking operations as a matter of priority and within one business day after the receipt of the said order, within the amount available in the bank account.

      9. In case several claims are made to a client that is a taxpayer (tax agent) having no or insufficient money in bank accounts, a second-tier bank or an organization carrying out certain types of banking operations, as soon as money becomes available in such accounts, shall withdraw it to pay off the client’s tax debts in the order of priority established by the Civil Code of the Republic of Kazakhstan.

      10. When closing a bank account of a taxpayer (tax agent), a second-tier bank or an organization carrying out certain types of banking operations, in accordance with the legislation of the Republic of Kazakhstan, returns the above said collection order to a relevant tax authority together with a notification of the closure of the bank account of the taxpayer (tax agent).

      11. Collection orders shall be revoked by a tax authority within one business day after the payment of tax debts.

      A tax authority sends a notification of revocation of a collection order to second-tier banks or organizations carrying out certain types of banking operations in hard copy or in electronic form via a telecommunications network. An electronic collection order is revoked in accordance with the formats established by the authorized body in coordination with the National Bank of the Republic of Kazakhstan.

Article 123. Collection of tax debts of taxpayers (tax agents) from their debtors’ accounts

      Note of the RCLI!
      This wording of paragraph 1 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      1. If a taxpayer (tax agent) that is a legal entity, a structural unit of a legal entity, a non-resident operating in the Republic of Kazakhstan through a permanent establishment, an individual entrepreneur, a private practice owner has no or insufficient money in bank accounts or has no bank accounts, a tax authority forecloses on money in bank accounts of third parties indebted to the taxpayer (tax agent) (hereinafter referred to as debtors) up to the amount of his/her/its current tax debts.

      2. A taxpayer (tax agent) is obliged to submit a list of debtors, indicating the amount of receivables, to a tax authority that sent a notice of the payment of tax debt, within ten business days from the receipt of such a notice.

      In cases of failure to submit a list of debtors within the time limits specified in part one of this paragraph, the tax authority has the right to use information from tax authorities’ information systems to identify the taxpayer’s (tax agent’s) debtors and to audit the taxpayer (tax agent) with respect to mutual settlements between the taxpayer (tax agent) and his/her/its debtors. At the same time, the tax authority has no right to confirm the amounts of receivables disputed in court.

      A list of debtors or a settlement reconciliation statement is not submitted if a taxpayer (tax agent) pays off tax debts.

      3. Based on a list of debtors and (or) information on debtors received from information systems of tax authorities and (or) a report on a taxpayer’s (tax agent’s) tax audit confirming the amount of receivables, a tax authority sends to the debtors notices of foreclosure on money from their bank accounts up to the amount of receivables in order to pay tax debts of the taxpayer (tax agent).

      Within twenty business days from the receipt of a notice, debtors are required to submit a reconciliation statement drawn up together with a taxpayer (tax agent) as of the date of the notice, in hard or soft copy, to a tax authority that sent the notice.

      The settlement reconciliation statement of the taxpayer and his/her/its debtor must contain the following information:

      1) the name of the taxpayer (tax agent) and his/her/its debtor, their identification numbers;

      2) the amount of the debtor’s debt to the taxpayer (tax agent);

      3) legal details, seal (if any) and the signatures of the taxpayer (tax agent) and his/her/its debtor or electronic digital signatures of the taxpayer and his/her/its debtor;

      4) the date of the reconciliation statement, which shall not be earlier than the date of receipt of the notice of payment of the debt to the budget.

      4. If debtors fail to produce a settlement reconciliation statement within the time period stipulated in part 2 of paragraph 3 of this article, a tax authority shall conduct a tax audit of the said debtors. In this case, the tax authority has no right to confirm the amounts of receivables disputed in court.

      5. Based on a settlement reconciliation statement or report of a debtor’s tax audit confirming the amount of receivables, a tax authority issues collection orders for collecting the amount of tax debts of a taxpayer (tax agent) from his/her/its debtor’s bank accounts.

      If receivables indicated in the reconciliation statement of settlements between the debtor and the taxpayer (tax agent) are paid, collection orders for collecting the amount of tax debts of the taxpayer (tax agent) from his/her/its debtor’s bank accounts are subject to revocation within one business day following the submission of the settlement reconciliation statement together with documents confirming the payment of such debt by the debtor or the taxpayer (tax agent) to the tax authority.

      6. A second-tier bank or an organization carrying out certain types of banking operations of a debtor-taxpayer is required to execute a collection order for collecting tax debts of a taxpayer (tax agent) issued by a tax authority in accordance with the requirements established by Article 122 of this Code.

      In addition to the above, in case of debiting money in excess of the amount indicated in the collection order from bank accounts of a debtor opened with several second-tier banks or organizations carrying out certain types of banking operations, the amount debited in excess is returned to the debtor by the tax authority on the basis of his/her/its application.

      7. Takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

Article 124. Collection from the sale of restricted property of a taxpayer (tax agent) to pay debts to the state budget

      Note of the RCLI!
      This wording of paragraph 1 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      1. If there is no or insufficient money in bank accounts of a taxpayer specified in paragraph 1 of Article 121 of this Code, or in bank accounts of his/her/its debtors or if a taxpayer or his/her/its debtors have no bank accounts, a tax authority, without the taxpayer’s consent, shall issue an order for foreclosure on the taxpayer’s restricted property.

      The order for foreclosure on the taxpayer’s restricted property is issued in the form approved by the authorized body in two copies, one of which is sent to an authorized legal entity together with a copy of a decision to impose restrictions on the disposal of property and a copy of an inventory report.

      2. An authorized legal entity sells restricted property of a taxpayer (tax agent) to pay his/her/its tax debts through auctions.

      The procedure for the sale of property pledged by a taxpayer and/or a third party, as well as of the taxpayer’s (tax agent’s) restricted property, is approved by the authorized body.

      3. In case of the authorized legal entity’s sale of restricted property seized by a law enforcement officer, the amount of money from the sale of such property is distributed in accordance with the priority of claims to be satisfied using the debtor’s property provided for by the Civil Code of the Republic of Kazakhstan.

Article 125. Compulsory issue of authorized shares of a taxpayer (tax agent) that is a joint-stock company partially owned by the state

      In case of failure to pay tax debts by a taxpayer (tax agent) that is a joint-stock company partially owned by the state, after all the measures stipulated in subparagraphs 1), 2) and 3) of paragraph 3 of Article 121 of this Code have been taken, the authorized body applies to court with a statement of claim for compulsory issue of authorized shares in accordance with the procedure established by the legislation of the Republic of Kazakhstan.

      Deadlines for the fulfillment of tax obligations for the payment of taxes, payments to the budget, as well as obligations to pay penalties and fines to be satisfied by compulsory issuance of authorized shares under a court decision, are suspended from the date of entry into legal force of a court decision on compulsory issue of authorized shares and until their placement.

Article 126. Declaring a taxpayer (tax agent) bankrupt

      1. If a taxpayer (tax agent) fails to pay debts to the budget after all the measures stipulated in Article 121 of this Code have been taken, a tax authority has the right to take measures to declare him/her/it bankrupt in accordance with the legislation of the Republic of Kazakhstan on rehabilitation and bankruptcy.

      2. The procedure for liquidation of a taxpayer (tax agent) declared bankrupt is carried out in accordance with the legislation of the Republic of Kazakhstan on rehabilitation and bankruptcy.

Article 127. Publishing of lists of delinquent taxpayers (tax agents) in mass media

      1. Tax authorities publish in mass media a list of delinquent taxpayers (tax agents) that failed to pay their tax debts within four months from the date of their emergence, who are:

      individual entrepreneurs, private practice owners, whose debts’ amount exceeds 10 times the monthly calculation index established by the law on the republican budget and effective as of January 1 of a relevant financial year;

      legal entities, their structural subdivisions, whose debts’ amount exceeds 150 times the monthly calculation index established by the law on the republican budget and effective as of January 1 of a relevant financial year.

      In this case, the last name, first name, patronymic (if it is indicated in an identity document) or the name of the taxpayer (tax agent), type of economic activity, identification number, the last name, first name, patronymic (if it is indicated in an identity document) of the head of the taxpayer (tax agent) and the total amount of the tax debt are indicated in the lists.

      2. The list of taxpayers (tax agents) posted on the website of the authorized body is updated on a quarterly basis, on or before the 20th day of a month following the end of a quarter, by including taxpayers (tax agents) meeting the criteria specified in this article, and also by removing taxpayers (tax agents) that paid their tax debts or whose tax obligations were terminated.

Article 128. Collection of tax debts of an individual taxpayer that is not an individual entrepreneur, a private practice owner

      1. If an individual that is not an individual entrepreneur, a private practice owner fails to pay or underpays tax debts in the amount exceeding 1 monthly calculation index established by the law on the republican budget and effective as of January 1 of a relevant financial year, a tax authority, upon expiration of thirty business days from the delivery of a notice of individuals’ tax debts, shall issue a tax order for collecting tax debts of the individual (hereinafter referred to as a tax order) in the form established by the authorized body and send it to the individual within five business days from its issuance.

      2. If an individual fails to pay tax debts, a tax authority, within five business days from the delivery of a tax order to the individual, sends such a tax order to law enforcement agencies for compulsory execution in the manner prescribed by the legislation of the Republic of Kazakhstan on enforcement proceedings and the status of law enforcement agents.

      3. A tax order shall be canceled by the tax authority that issued it within one business day of the payment of tax debts by an individual.

Chapter 15. TAX MONITORING

Article 129. General provisions

      1. Tax monitoring is conducted by analyzing financial and economic activity of taxpayers to determine their actual tax base, to oversee the compliance with the tax legislation of the Republic of Kazakhstan and current market prices to supervise transfer pricing.

      2. Tax monitoring includes:

      1) the monitoring of large taxpayers;

      2) takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

Article 130. Monitoring of large taxpayers

      1. Taxpayers that are commercial organizations, except for state enterprises, with the largest total annual income less the adjustment provided for in Article 241 of this Code, are subject to the monitoring of large taxpayers provided all of the following requirements are met, unless otherwise specified by this paragraph:

      1) the sum of transaction tables of fixed assets at the end of a taxable period is not less than 325 000 times the monthly calculated index established by the law on the republican budget and effective as of the end of the year in which the list of taxpayers subject to the monitoring of large taxpayers shall be approved;

      2) the number of employees is at least 250 people.

      For the purposes of this article:

      1) the total annual income less the adjustment provided for in Article 241 of this Code is determined on the basis of a corporate income tax declaration for a taxable period preceding the year in which the list of taxpayers subject to the monitoring of large taxpayers shall be approved;

      2) the sum of transaction tables of fixed assets is determined on the basis of tax returns for a year preceding the year in which the list of taxpayers subject to the monitoring of large taxpayers shall be approved;

      3) the number of employees is determined on the basis of the declaration of individual income tax and social tax for the last month of the first quarter of the year in which the list of taxpayers subject to the monitoring of large taxpayers shall be approved.

      Irrespective of the observance of conditions set forth in this paragraph, large taxpayers subject to monitoring are:

      1) an authorized person (operator) and (or) subsoil user (subsoil users) specified in a production sharing agreement (contract), which was concluded between the Government of the Republic of Kazakhstan or the competent authority and subsoil user before January 1, 2009 and underwent obligatory tax due diligence, having the largest total annual income less the adjustment provided for in Article 241 of this Code, and (or) carrying out activities in the oil and gas condensate field in accordance with the specified agreements (contracts);

      2) a subsoil user who, as of October 1 of a year preceding that in which the list of taxpayers subject to the monitoring of large taxpayers was put into effect, meets the following requirements:

      a contract on exploration, production, combined exploration and production of minerals, except for contracts on exploration, extraction of widespread minerals and groundwater, was concluded with a subsoil user;

      a subsoil user is classified as a town-forming legal person in accordance with the list approved by the authorized agency for regional development.

      2. The list of taxpayers subject to the monitoring of large taxpayers shall include:

      1) the first three hundred large taxpayers, with the largest total annual income less the adjustment provided for in Article 241 of this Code, from large taxpayers meeting the requirements established by part one of paragraph 1 of this article;

      2) taxpayers specified in part three of paragraph 1 of this article.

      3. The list of taxpayers subject to the monitoring of large taxpayers is drawn up on the basis of data of tax returns filed as of October 1 of a year preceding the year in which the said list is put into effect and is approved by the authorized body on or before December 31 of the year preceding the year in which the said list is put into effect.

      If, as of October 1 of a year preceding that in which the list of taxpayers subject to the monitoring of large taxpayers is put into effect, a taxpayer, meeting the requirements set forth in paragraph 1 of this article, is being in liquidation, such a taxpayer shall not be entered into this list.

      The approved list of taxpayers subject to the monitoring of large taxpayers shall be put into effect on or after January 1 of a year following the year of its approval, shall be valid for two years from the day it was put into effect and not be revised during this period.

      4. In case of reorganization of a taxpayer subject to the monitoring of large taxpayers, its successor (successors) shall be subject to the monitoring of large taxpayers before a subsequent list of taxpayers subject to the monitoring of large taxpayers is put into effect.

      5. In case of liquidation of a taxpayer subject to the monitoring of large taxpayers, and also from the day of entry into legal force of a court decision declaring it bankrupt, this taxpayer is deemed to be removed from the list of taxpayers subject to the monitoring of large taxpayers.

      Note of the RCLI!
      Article 131 takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

Article 131. Horizontal monitoring

Article 132. Procedure for monitoring large taxpayers

      1. In the course of large taxpayers’ monitoring, the authorized body is entitled to require the taxpayers subject to the monitoring of large taxpayers to provide documents and written explanations confirming correct calculation of taxes and timely payment (withholding and transfer) of taxes and payments to the budget, as well as financial statements of the taxpayer (tax agent), including those of its subsidiaries.

      In this case, this requirement must be fulfilled by taxpayers subject to the monitoring of large taxpayers within thirty calendar days from the day following the delivery of the request.

      2. In case of detection of violations and discrepancies based on the results of mandatory monitoring, the authorized body notifies a taxpayer subject to the monitoring of large taxpayers thereof.

      In this case, a taxpayer subject to the monitoring of large taxpayers is required to provide a written explanation within fifteen calendar days from the day following the delivery (receipt) of such a notice.

      In case of disagreement with the presented explanation, the authorized body has the right to invite such a taxpayer subject to the monitoring of large taxpayers for discussing issues that arose and for providing additional documents and explanations.

      Based on the results of the monitoring, the authorized body shall issue a written reasoned decision, which is sent within two business days from its issuance to the taxpayer subject to the monitoring of large taxpayers.

      The taxpayer subject to the monitoring of large taxpayers notifies of its agreement with the decision within five calendar days from its receipt.

      Note of the RCLI!
      Article 133 takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

Article 133. Procedure for horizontal monitoring

      Note of the RCLI!
      Chapter 16 takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

Chapter 16. PRELIMINARY CLARIFICATION

      Note of the RCLI!
      This wording of Chapter 17 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

Chapter 17. RISK MANAGEMENT SYSTEM

Article 136. General provisions

      1. A risk management system is based on risk assessment and includes measures developed and/or applied by tax authorities in order to identify and prevent risks. Based on the results of risk assessment, differentiated forms of tax control are implemented.

      2. A risk is probability of non-fulfillment and (or) incomplete fulfillment of the tax obligation by a taxpayer (tax agent), which could and (or) may cause damage to the state.

      3. Tax authorities apply the risk management system pursuing the goal of:

      1) focusing on areas of increased risk and ensuring more efficient use of available resources;

      2) increasing opportunities for identification of violations in the field of taxation.

      4. The risk management system is used in the implementation of tax control, also in order to:

      1) select taxpayers (tax agents) for conducting tax audits;

      2) confirm the reliability of excess VAT amounts;

      3) determine the degree of risk of a violation identified pursuant to the results of an in-house audit;

      4) determine the right to a simplified procedure for the refund of excess VAT amount with account of the provisions of Article 434 of this Code.

Article 137. Criteria for the degree of risk

      Tax authorities analyze the data of tax returns filed by a taxpayer (tax agent), information received from authorized state bodies, as well as other documents and (or) information on the activities of the taxpayer (tax agent).

      The results of such analysis are used by tax authorities to achieve the goals specified in Article 136 of this Code.

      Criteria for the degree of risks used for the purposes specified in subparagraphs 1) and 3) of paragraph 4 of Article 136 of this Code are confidential (insider) information, except for the criteria approved by the authorized body jointly with the authorized body on entrepreneurship.

      Criteria for the degree of risk and the procedure for the application of the risk management system in order to confirm the reliability of excess VAT amounts are determined by the authorized body.

Chapter 18. TAX AUDITS Clause 1. General provisions for conducting tax audits

Article 138. The definition of a tax audit

      1. A tax audit is an inspection, conducted by a tax authority, of the compliance with regulations of the tax legislation of the Republic of Kazakhstan, as well as other legislation of the Republic of Kazakhstan, control over the execution of which is assigned to tax authorities, except for the fulfillment of the tax obligation for the payment for emissions into the environment (except for the tax obligation for the payment for emissions into the environment from mobile sources).

      2. Tax authorities have exclusive competence to conduct tax audits.

Article 139. Tax audit participants

      1. Tax audit participants are:

      1) tax officials and other persons specified in a prescription, who are involved by a tax authority in conducting a tax audit in accordance with this Code;

      2) the following audited persons subject to tax audits:

      within thematic audits on the issues specified in subparagraphs 12) - 18) of paragraph 1 of Article 142 of this Code - a taxpayer conducting entrepreneurial activities in the premises specified in the prescription;

      within other forms of tax audits - a taxpayer (tax agent) specified in the prescription.

      2. In order to examine issues requiring special knowledge and skills and to receive consultations, a tax authority has the right to involve in a tax audit a specialist with such special knowledge and skills, including officials of other state bodies of the Republic of Kazakhstan.

      In reply to written questions posed by a tax official that is a tax audit participant, a specialist involved in conducting the audit shall draw up an opinion, which is used during the tax audit. Copies of such written questions and opinions shall be attached to a tax audit act, including the copy of a relevant audit act handed to a taxpayer (tax agent).

      3. A tax audit is also carried out with respect to persons holding documents, information relating to activities of an audited taxpayer (tax agent), including an authorized representative of participants in a simple partnership (consortium) responsible for maintaining consolidated tax accounting for such activities, to obtain information on the audited taxpayer (tax agent) on issues related to the entrepreneurial activity of the audited taxpayer (tax agent).

      4. Tax authorities are entitled to apply a risk management system to select a taxpayer (tax agent) for conducting tax audits.

Article 140. Forms of tax audits

      1. Tax audits are carried out in the form of a comprehensive, thematic, third-party audit, a chronometric inspection.

      2. A taxpayer (tax agent) is not required to suspend activity in the course of a tax audit, except for cases established by the laws of the Republic of Kazakhstan.

      3. Tax authorities have the right to carry out tax audits of structural units of a legal entity whether or not the legal entity itself is being audited.

      4. If an in-house audit reveals violations with regard to an action (actions) on the issuance of an invoice, which a court recognizes as committed without actual performance of works, rendering of services, shipment of goods, tax authorities are not entitled to carry out thematic audits on this issue:

      until a notice of elimination of violations revealed pursuant to an in-house audit is sent to the taxpayer (tax agent);

      until the expiration of a deadline set for the execution of the notice of elimination of violations revealed pursuant to an in-house audit, established by paragraph 5 of Article 115 of this Code.

      5. A time period subject to tax audit shall not exceed that calculated in the procedure set forth in Article 48 of this Code.

      In addition to the above, it is possible to carry out a third-party audit for a period corresponding to that inspected in a comprehensive or thematic audit of a taxpayer (tax agent), within the framework of which such a third-party audit has been scheduled.

      6. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      7. Tax authorities have the right to send requests to persons performing transactions with a taxpayer (tax agent) with respect to whom a tax authority has been conducting a comprehensive or thematic audit in order to obtain additional information on such transactions from these persons.

      The procedure for sending requests specified in this paragraph, as well as the persons’ submission of information and (or) documents upon such requests is determined by the authorized body.

Article 141. Comprehensive audit

      1. A comprehensive audit is an audit conducted by a tax authority with respect to a taxpayer (tax agent) on the fulfillment of a tax obligation for all types of taxes, payments to the budget and social welfare payments.

      2. A comprehensive audit may also cover issues pertaining to thematic audits, such as:

      performance of duties set forth in this Code, as well as the laws of the Republic of Kazakhstan “On Compulsory Social Insurance”, “On Pensions in the Republic of Kazakhstan” and “On Compulsory Social Health Insurance” by banks and organizations carrying out certain types of banking operations;

      legitimacy of application of the provisions of international treaties (agreements);

      transfer pricing;

      state regulation of production and turnover of certain types of excisable goods, as well as turnover of aviation fuel, biofuel, fuel oil;

      other issues related to the compliance with the legislation of the Republic of Kazakhstan, the execution of which is under the supervision of tax authorities.

      3. Tax audits of a taxpayer (structural unit of a legal entity) being in liquidation (terminating activity) are conducted only in the form of a comprehensive audit (hereinafter referred to as a liquidation tax audit).

      A structural unit of a deregistered resident legal entity is not subject to a comprehensive audit unless the taxpayer submits an application for such an audit.

Article 142. Thematic audit

      1. A thematic audit is an audit carried out by a tax authority with respect to a taxpayer (tax agent) regarding:

      1) the fulfillment of a tax obligation for certain types of taxes and (or) payments to the budget;

      2) the fulfillment of a tax obligation for VAT and (or) excise duty on goods imported into the territory of the Republic of Kazakhstan from the territory of the member states of the Eurasian Economic Union;

      3) the determination of a tax obligation for the action (actions) on the issuance of an invoice, which a court recognizes as committed without actual performance of works, rendering of services, shipment of goods;

      4) the determination of mutual settlements of the taxpayer and his/her/its debtors;

      5) the legitimacy of application of the provisions of international treaties (agreements);

      6) the confirmation of reliability of excess VAT amounts, including those claimed for refund;

      7) the confirmation of income tax claimed for refund from the budget by a non-resident in connection with application of the provisions of an international treaty governing the avoidance of double taxation and the prevention of tax evasion;

      8) issues stated in a non-resident’s application for reconsideration of a tax application for the return of income tax from the budget in connection with application of the provisions of the international treaty governing the avoidance of double taxation and the prevention of tax evasion;

      9) the taxpayer’s (tax agent’s) failure to notify tax authorities of the elimination of violations revealed pursuant to an in-house audit in accordance with the procedure set forth in Article 115 of this Code;

      10) satisfaction of the requirements provided for in Article 29 of this Code;

      11) those set out in a taxpayer’s (tax agent’s) complaint about an audit findings report;

      12) registration with tax authorities;

      13) availability of cash registers.

      A thematic audit on the issue specified in this subparagraph is not carried out with regard to a cash register transmitting information on cash settlements to tax authorities online via public telecommunications networks;

      14) the availability of an equipment (device) for making payments using payment cards;

      15) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      16) the availability of documents provided for by regulatory legal acts of the Republic of Kazakhstan, effective international treaties ratified by the Republic of Kazakhstan when exporting goods from the territory of the Republic of Kazakhstan to the territory of the member states of the Eurasian Economic Union and the conformity of goods with information specified in the documents;

      Note of the RCLI!
      This wording of subparagraph 17) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      17) the existence and authenticity of excise and inventory-control stamps, accompanying notes for alcohol products, oil products and biofuels, tobacco products, the availability of a license;

      18) the availability of consignment notes for imported goods and the conformity of the name of goods with the information specified in the consignment notes when checking vehicles at traffic control or road police posts;

      19) compliance with the procedure for the use of cash registers;

      20) compliance with the legislation of the Republic of Kazakhstan on permits and notifications and conditions for the production, storage and sale of certain types of excisable goods;

      21) execution of an order on the suspension of debit transactions with cash issued by the tax authority;

      22) compliance with the procedure for issuing electronic invoices;

      23) confirmation of the presence of remnants of goods included in the list of goods subject to reduced rates of customs duties in connection with the accession of the Republic of Kazakhstan to the World Trade Organization;

      24) failure to execute the decision within the monitoring of large taxpayers.

      2. A thematic audit may also be conducted on such issues as:

      1) full and timely calculation, withholding and transfer of social welfare payments;

      2) performance of the duties established by this Code, as well as the laws of the Republic of Kazakhstan “On Compulsory Social Insurance” and “On Pensions in the Republic of Kazakhstan”, “On Compulsory Social Health Insurance” by banks and organizations carrying out certain types of banking operations;

      3) transfer pricing;

      4) state regulation of production and turnover of certain types of excisable goods, as well as turnover of aviation fuel, biofuels, fuel oil.

      3. A thematic audit may be conducted simultaneously on several issues specified in paragraphs 1 and 2 of this article. The fulfillment of obligations for all types of taxes and payments to the budget may not be checked in a thematic audit.

      4. In coordination with associations of private business entities, representatives of such associations may be invited to participate in thematic audits on issues specified in subparagraphs 12) - 18) of paragraph 1 of this article.

      Representatives of associations of private business entities oversee the observance of the rights of a taxpayer in the course of these thematic audits. A thematic audit act states the fact of participation of representatives of associations of private business entities.

      5. Based on the decision of a tax authority at the location indicated in the registration data of a taxpayer and (or) at the location of a taxable and (or) tax-related item, thematic audits are scheduled on the issues specified in subparagraphs 12) - 23) paragraph 1 of this article, in accordance with the procedure determined by the authorized body.

      6. A thematic audit is carried out simultaneously on the issues specified in subparagraphs 1) and 6) of paragraph 1 of this article, when it is scheduled on the grounds specified in subparagraphs 2) or 7) of paragraph 3 of Article 145 of this Code.

Article 143. Third-party audit

      1. A third-party audit is an audit by a tax authority of persons who performed transactions with a taxpayer (tax agent), in whose respect the tax authority conducts a comprehensive or thematic audit in order to obtain additional information on such transactions, confirm the fact and content of operations, on issues arising in the course of the audit of the said taxpayer (tax agent).

      2. A third-party audit is auxiliary to a comprehensive or a thematic one.

      Third-party audits are fixed in accordance with the procedure determined by the authorized body.

      3. A third-party audit is also an inspection conducted:

      at the request of tax authorities or law enforcement agencies of other states, international organizations in accordance with international treaties (agreements) on mutual cooperation between tax authorities or law enforcement agencies to which the Republic of Kazakhstan is a party, as well as agreements concluded by the Republic of Kazakhstan with international organizations;

      in respect of persons who performed transactions with a taxpayer (tax agent) that failed to eliminate violations of the VAT tax obligation revealed pursuant to an in-house audit and related to such transactions, or provided explanations not confirming the absence of such violations.

Article 144. Chronometric inspection

      1. A chronometric inspection is an audit conducted by a tax authority to determine the actual income of a taxpayer and actual costs associated with activities aimed at generating income for a period during which the audit is being carried out.

      2. A decision to conduct a chronometric inspection shall be made by a tax authority at the location specified in taxpayer’s registration data and (or) at the location of a taxable and (or) tax-related item in accordance with the procedure determined by the authorized body.

Article 145. Types of tax audits

      1. Tax audits are divided into the following types:

      1) selective tax audits;

      2) unscheduled tax audits.

      2. Selective tax audits are audits scheduled by tax authorities with respect to taxpayers (tax agents) pursuant to results of the analysis of tax returns, information from authorized state bodies, as well as other documents and information on taxpayers’ (tax agents’) activities.

      3. Unscheduled tax audits are audits not specified in paragraph 2 of this article, including those carried out:

      1) pursuant to a tax application or complaint of the taxpayer (tax agent), also:

      in connection with reorganization through separation or liquidation of a resident legal entity, structural unit of a non-resident legal entity;

      in connection with termination of activity in the Republic of Kazakhstan through a permanent establishment by a non-resident legal entity;

      in connection with termination of activity of an individual entrepreneur;

      in connection with deregistration for VAT;

      in connection with a taxpayer’s (tax agent’s) complaint about an audit findings report;

      2) pursuant to a taxpayer’s tax application to confirm the reliability of excess VAT amounts submitted in connection with application of paragraphs 1 and 2 of Article 432 of this Code.

      In this case, tax applications specified in this subparagraph may be submitted before the date:

      of accepting of buildings and structures into operation for industrial purposes;

      of the beginning of the export of minerals extracted under a relevant subsoil use contract;

      3) on the grounds provided for by the Criminal Procedure Code of the Republic of Kazakhstan;

      4) in case of failure by a taxpayer (tax agent) to notify tax authorities of the elimination of violations revealed pursuant to an in-house audit in accordance with the procedure set forth in Article 115 of this Code;

      5) due to the expiration of a subsoil use contract;

      6) on the issues of determining mutual settlements of a taxpayer (tax agent) and his/her/its debtors in accordance with the tax legislation of the Republic of Kazakhstan, also in case of:

      the taxpayer’s (tax agent’s) failure to submit a list of debtors or information on the absence of debtors at the request of a tax authority in due time;

      the debtor’s failure to submit a statement of reconciliation of settlements with the taxpayer (tax agent) at the request of a tax authority in due time;

      7) at the request of a taxpayer in VAT declaration to confirm the reliability of excess VAT amounts claimed for refund;

      8) pursuant to a non-resident’s tax application for the return of income tax from the budget in connection with application of the provisions of the international treaty governing the avoidance of double taxation and the prevention of tax evasion, and also in connection with the request of a non-resident to reconsider such a tax application;

      9) on performance of duties established by the tax legislation of the Republic of Kazakhstan by banks and organizations carrying out certain types of banking operations, as well as of other laws of the Republic of Kazakhstan, control over the execution of which is assigned to the tax authorities;

      10) on determination of a tax obligation for an action (actions) on the issuance of an invoice, which a court recognizes as committed without actual performance of works, rendering of services, shipment of goods;

      11) on the basis of a decision of the authorized body;

      12) on the basis of a decision of the tax authority in the cases established by paragraph 5 of Article 142, paragraph 2 of Article 144 of this Code and paragraph 7 of this article.

      4. Unscheduled tax audits specified in paragraph 3 of this article may be conducted with respect to an earlier audited time period.

      In addition to the above, unscheduled (comprehensive or thematic) tax audits for an earlier audited time period are conducted on the basis of a decision of the authorized body, except for tax audits conducted:

      pursuant to an application of the taxpayer (tax agent);

      at the request for the return of excess VAT amounts indicated in VAT declaration;

      based on the taxpayer’s tax application for confirmation of the reliability of excess VAT amounts submitted in connection with the application of paragraphs 1 and 2 of Article 432 of this Code;

      on the grounds provided for by the Criminal Procedure Code of the Republic of Kazakhstan;

      in connection with the taxpayer’s (tax agent’s) complaint about an audit findings report.

      5. If a taxpayer (tax agent) files a complaint about an audit findings report with a court, unscheduled comprehensive and (or) thematic audits on the issue complained of for an earlier audited time period are not conducted until a final and binding court judgment.

      6. Takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      7. In case of changing the time period to be audited by issuing an additional prescription and completing a tax audit for the period being audited before expiration of the limitation period set forth in Article 48 of this Code, a tax authority, on the grounds that caused the previous tax audit, may schedule a tax audit for an unaudited taxable period earlier specified in the prescription before the change of the period being audited.

Clause 2. Procedure and time limits for tax audits

Article 146. Time limits for tax audits

      1. Time limits for conducting a tax audit specified in a prescription shall not exceed thirty business days of the delivery of a prescription, unless otherwise provided for by this article.

      2. Time limits for conducting a tax audit can be extended:

      1) for legal entities that have no structural units, individual entrepreneurs and non-residents operating through permanent establishments provided that they have only one location in the Republic of Kazakhstan, except for the cases specified in subparagraph 2) of this paragraph:

      by a tax authority that fixed the tax audit - up to forty-five business days;

      by a higher-level tax authority - up to sixty business days;

      2) for legal entities having structural units and non-residents operating through permanent establishments provided that they have only one location in the Republic of Kazakhstan, as well as for taxpayers subject to tax monitoring:

      by a tax authority that fixed the tax audit - up to seventy-five business days;

      by a higher-level tax authority - up to one hundred and eighty business days.

      3. The authorized body may extend time limits for a tax audit fixed by it for the taxpayers indicated:

      1) in subparagraph 1) of paragraph 2 of this article - up to sixty business days;

      2) in subparagraph 2) of paragraph 2 of this article - up to one hundred and eighty business days.

      4. The running of a tax audit period may be suspended by tax authorities for the period:

      of delivery of a tax authority’s request for the submission of information and (or) documents to the taxpayer (tax agent) and submission by the taxpayer (tax agent) of information and (or) documents requested during the tax audit;

      of a tax authority’s request to other territorial tax authorities, state bodies, banks and organizations carrying out certain types of banking operations and other organizations operating in the territory of the Republic of Kazakhstan and receipt of information and (or) documents upon the request;

      of a tax authority’s request to foreign countries for information and receipt of information from tax authorities in accordance with international treaties;

      of preparation of a written objection by the taxpayer (tax agent) to a preliminary tax audit act and its consideration by the tax authority in the manner prescribed by the legislation of the Republic of Kazakhstan.

      In this case, a tax authority conducting a tax audit must deliver a notice of suspension or renewal of the tax audit to a taxpayer (tax agent) against signature or by registered mail with return receipt or electronically within three business days from the suspension or renewal along with a notification of a legal statistics body. In addition to the above, the notice of suspension or renewal of a tax audit shall be deemed delivered to the taxpayer (tax agent) electronically on the date of delivery of such a notice by the tax authority to the web application. This electronic method applies to a taxpayer registered as an electronic taxpayer in accordance with the procedure set forth in Article 86 of this Code.

      5. The period of suspension on the grounds established by paragraph 4 of this article shall not be included in the period of a tax audit:

      1) of taxpayers subject to tax monitoring;

      2) conducted in connection with the liquidation of a resident legal entity, a structural unit of a non-resident legal entity, a non-resident legal entity’s termination of activity carried out in the Republic of Kazakhstan through a permanent establishment, an individual entrepreneur’s termination of activity;

      3) thematic audits on such issues as:

      transfer pricing;

      confirmation of the reliability of excess VAT amounts claimed for refund;

      audits of tax agents on the return of income tax from the budget on the basis of a non-resident’s application;

      stated in the taxpayer’s (tax agent’s) complaint about an audit findings report;

      4) conducted on the grounds provided for by the Criminal Procedure Code of the Republic of Kazakhstan;

      5) in case the tax authority requests a taxpayer (tax agent) to submit documents (information) in the course of tax audits in accordance with Article 161 of this Code;

      6) in cases when a preliminary tax audit act was submitted to a taxpayer (tax agent), as well as the tax authority’s consideration of the taxpayer’s (tax agent’s) written objection to the preliminary tax audit act in accordance with the legislation of the Republic of Kazakhstan.

      For tax audits not specified in subparagraphs 1) - 6) of part one of this paragraph, the suspension period shall be included in the tax audit period.

      6. Time limits for a comprehensive or thematic audit, with account of terms of the extension or suspension, unless otherwise specified in paragraphs 5 and 7 of this article, shall not exceed:

      1) for legal entities having structural units, individual entrepreneurs and non-residents operating through permanent establishments provided that they have only one location in the Republic of Kazakhstan, except for the cases specified in subparagraph 2) of this paragraph - sixty business days;

      2) for legal entities having structural units and non-residents operating through permanent establishments provided that they have only one location in the Republic of Kazakhstan, as well as for taxpayers subject to tax monitoring - one hundred and eighty business days.

      Note of the RCLI!
      This wording of paragraph 7 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      7. Time limits for conducting, extending and suspending thematic audits to confirm the reliability of excess VAT amounts claimed for refund shall be established within time frames specified in Article 431 of this Code.

      8. When conducting a chronometric inspection, the period specified in the prescription may not exceed thirty business days.

      In this case, a chronometric inspection can be conducted during after-hours (at night, on weekend, holidays), if the audited person carries out his/her/its activity at the time and on the days specified.

Статья 147. Notification of a selective tax audit

      1. Tax authorities shall send or hand a notification of a selective tax audit to a taxpayer (tax agent) at least 30 calendar days prior to the commencement of a selective comprehensive and (or) a selective thematic audit, in the form established by the authorized body, unless otherwise specified in this article.

      2. A notification shall be sent or delivered to a taxpayer (tax agent) at the location indicated in the registration data.

      A notification sent by registered mail with return receipt is considered to be delivered on the day of receipt of a reply from a postal or other communications organization.

      3. If a taxpayer (tax agent) is absent from the location indicated in the registration data, a selective comprehensive and (or) a selective thematic audit is carried out without notification.

      4. A notification shall indicate the form of a tax audit, the list of issues to be checked, preliminary list of required documents, the rights and obligations of a taxpayer (tax agent) in the course of the tax audit, as well as other data necessary for conducting the tax audit.

      5. A tax authority has the right to begin a selective tax audit without notifying a taxpayer (tax agent) of the commencement of the audit if a risk that the taxpayer (tax agent) can conceal or destroy documents related to taxation that are necessary for the audit is well-reasoned, or there are other circumstances making the audit impossible or preventing its comprehensive performance.

      A tax authority performs a selective tax audit without notifying a taxpayer (tax agent) on the basis of a written permission from a higher-level tax authority.

Article 148. Grounds for conducting a tax audit

      1. A tax audit shall be conducted on the basis of a prescription, which shall contain the following information:

      1) the date and registration number of the prescription in a tax authority;

      2) the name of the tax authority that issued the prescription;

      3) the last name, first name and patronymic (if it is indicated in an identity document) or full name of the taxpayer (tax agent);

      4) identification number;

      5) the form and type of audit;

      6) last names, first names, patronymics (if they are indicated in identity documents) of auditors, and also of specialists involved in the tax audit in accordance with this Code;

      7) the period for conducting the tax audit;

      8) the period to be audited, except for a chronometric inspection.

      The form of a prescription is approved by the authorized body.

      2. A prescription for conducting thematic audits shall specify:

      1) the area of premises to be audited, issues to be clarified during the audit, as well as the information provided for in part one of paragraph 1 of this article, except for cases provided for in subparagraphs 3), 4), 7) and 8) of part one of paragraph 1 of this article, when scheduling thematic audits on the issues specified in subparagraphs 12) - 18) of paragraph 1 of Article 142 of this Code;

      2) the information specified in part one of paragraph 1 of this article, except for the case provided for in subparagraph 8) of part one of paragraph 1 of this article, when scheduling thematic audits on the issues specified in subparagraphs 19) - 23) of paragraph 1 of Article 142 of this Code;

      3) the information provided for in part one of paragraph 1 of this article, when scheduling thematic audits on issues not specified in subparagraphs 1) and 2) of this paragraph.

      3. When scheduling tax audits, except for chronometric inspections, a prescription shall specify issues to be audited depending on the form of an audit.

      When carrying out comprehensive audits, the types of audited taxes, payments to the budget and social welfare payments are not specified in the prescription.

      4. A prescription must be signed by the head of a tax authority or by a person acting as its head, unless otherwise provided for in this paragraph.

      A prescription for conducting third-party audits, as well as a chronometric inspection, can be signed by the deputy head of a tax authority or by a person acting as a deputy head.

      A prescription can be certified by electronic digital signature of the authorized tax official in accordance with the legislation of the Republic of Kazakhstan on electronic document and electronic digital signature.

      5. In case of extension of the time frame for conducting a tax audit specified in Article 146 of this Code and (or) changing the number and (or) replacement of persons conducting the audit and (or) selecting another time period for audit, an additional prescription is issued indicating the number and date of registration of the previous prescription, the last names, first names and patronymics (if they are indicated in identity documents) of persons involved in conducting the audit in accordance with this Code.

      The form of the additional prescription is approved by the authorized body.

      6. On the basis of one prescription, only one tax audit may be conducted, except for thematic audits on the issues specified in subparagraphs 12) - 18) of paragraph 1 of Article 142 of this Code.

Article 149. Commencement of tax audits

      1. The date of commencement of a tax audit shall be that of delivery of a prescription to a taxpayer (tax agent), unless otherwise specified in paragraph 6 of this article.

      2. A prescription is handed to a taxpayer (tax agent) by a tax official conducting an audit.

      When a taxpayer (tax agent) is handed a prescription, he/she shall sign the tax authority’s copy of the prescription to confirm his/her familiarization and receipt, and also write down the date and time of the prescription’s receipt.

      The provisions of this paragraph shall not apply to thematic audits on the issues specified in subparagraphs 12)-18) of paragraph 1 of Article 142 of this Code.

      3. When conducting thematic audits on the issues specified in subparagraphs 12)-18) of paragraph 1 of Article 142 of this Code, a taxpayer (tax agent) or his/her/its employee, engaged in sale of goods, performance of works or rendering of services, is shown an original prescription for conducting an audit and receives its copy.

      A taxpayer (tax agent) or his/her/its employee, engaged in sale of goods, performance of works or rendering of services signs an original prescription to confirm his/her familiarization with it and receipt of a copy, and also writes down the date and time of receipt of the prescription’s copy in it.

      4. In case of refusal to receive a prescription, a tax official shall make an appropriate note on the copy of the tax authority’s prescription and draw up an act on the taxpayer’s (tax agent’s) refusal to receive the prescription in the presence of (at least two) witnesses.

      In this case, the act on refusal to receive a tax audit prescription indicates:

      1) the place and date of its drawing up;

      2) the last name, first name and patronymic (if it is indicated in an identity document) of the tax official that drew up the act;

      3) the last name, first name and patronymic (if it is indicated in an identity document), ID card number, address of the place of residence of the witnesses;

      4) the number, the date of the prescription, the name of the taxpayer (tax agent), its identification number;

      5) the circumstances of refusal to receive the prescription.

      5. The taxpayer’s (tax agent’s) refusal to receive a tax audit prescription is not a ground for canceling a tax audit.

      The taxpayer’s (tax agent’s) refusal to receive a tax authority’s prescription means that tax officials are denied entry for conducting a tax audit.

      The provision of this paragraph does not apply in cases specified in paragraph 3 of Article 154 of this Code.

      6. In case a taxpayer (tax agent) refuses to receive a prescription, an audit is considered to commence on the date of drawing up an act on the taxpayer’s (tax agent’s) refusal to receive the prescription.

      7. During a tax audit period, it is not allowed to terminate this audit:

      1) pursuant to a tax application of the taxpayer (tax agent);

      2) because of termination of the criminal case, if the audit is conducted as part of a pre-trial investigation.

      Note of the RCLI!
      Article 150 takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

Article 150. Standard audit file

Article 151. Features of conducting a chronometric inspection

      1. A chronometric inspection is carried out in the presence of a taxpayer and (or) his/her representative.

      2. To conduct a chronometric inspection, tax authorities independently determine issues with respect to a taxable and (or) tax-related item. In this case, subject to mandatory inspection:

      1) are taxable and (or) tax-related items. If necessary, tax authorities have the right to take inventory of tangible assets of the taxpayer;

      2) is availability of money, money documents, books of account, reports, estimates, securities, settlements, declarations and other documents related to a taxable and (or) tax-related item being audited;

      3) the balance sheet of a cash register.

      3. Tax officials conducting a chronometric inspection shall ensure daily entry of full and accurate information, obtained in the course of the inspection, into chronometric-inspection data cards. A separate chronometric-inspection data card is made for each taxable and (or) tax-related item, as well as for every other source of income generation, which contains the following information:

      1) the name of the taxpayer, identification number and type of activity;

      2) the date of the inspection;

      3) the location of a taxable and (or) tax-related item;

      4) the time the chronometric inspection began and ended;

      5) the cost of goods sold, works performed, services rendered;

      6) data on a taxable and (or) tax-related item being audited;

      7) the inspection results.

      4. Daily, at the end of an inspection day, a summary table is drawn up for all taxable and (or) tax-related items being audited, as well as for other sources of income generation.

      5. It is mandatory for a tax official and a taxpayer or his/her representative to sign a chronometric-inspection data card and a summary table that are attached to a chronometric tax inspection act.

      If necessary, copies of documents, calculations and other materials obtained in the course of an inspection, confirming the data specified in a chronometric-inspection data card, are attached to the chronometric-inspection data card.

      6. The results of a chronometric inspection of taxpayers are taken into account when assessing the amount of taxes and payments to the budget following a comprehensive or a thematic audit.

Article 152. Features of conducting thematic audits to confirm reliability of excess VAT amounts

      1. A thematic audit of reliability of excess VAT amount is carried out using a risk management system with respect to a taxpayer who submitted:

      a tax application in connection with application of paragraphs 1 and 2 of Article 432 of this Code;

      a claim for refund of excess VAT amount indicated in VAT declaration (hereinafter referred to as a claim for refund of excess VAT amount).

      2. The audited period includes a taxable period:

      which a taxpayer indicates in a tax application, in connection with application of paragraphs 1 and 2 of Article 432 of this Code;

      the running of which begins from the taxable period for which the taxpayer requested the return of excess VAT amount, including the taxable period in which a VAT declaration with the claim for the refund of excess VAT amount was submitted.

      Unless otherwise specified in paragraphs 3 and 4 of this article, the audited period specified in this paragraph shall also include taxable periods not audited for this type of tax and not exceeding the limitation period established by Article 48 of this Code.

      3. When conducting a thematic audit to confirm the reliability of excess VAT amount claimed for refund in accordance with Article 432 of this Code, the audited period includes the time period the running of which begins from the taxable period in which:

      the construction of buildings and industrial facilities started;

      a subsoil use contract was concluded in accordance with the procedure established by the legislation of the Republic of Kazakhstan.

      When confirming the reliability of excess VAT amount claimed for refund in accordance with Article 432 of this Code, it is necessary to take into account results of tax audits, conducted pursuant to a taxpayer’s tax application in accordance with subparagraph 2) of paragraph 3 of Article 145 of this Code.

      When confirming the reliability of excess VAT amount that emerged in taxable periods before January 1, 2013, it is necessary to take into account the results of taxpayer’s previous tax audits, including third-party audits.

      4. Takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      5. In case of export of goods, when determining VAT amount claimed for refund in accordance with this Code, it is necessary to take into account the customs authority’s information confirming the fact of export of goods from the customs territory of the Eurasian Economic Union under a customs export procedure.

      In case of export of goods from the territory of the Republic of Kazakhstan to the territory of a member state of the Eurasian Economic Union, when determining VAT amount claimed for refund in accordance with this Code, it is necessary to take into account information from the documents specified in Article 447 of this Code.

      6. In case of performing works on the processing of customer-supplied raw materials imported into the territory of the Republic of Kazakhstan from the territory of another member state of the Eurasian Economic Union for subsequent export of processed products to the territory of another state, when determining VAT amount claimed for refund in accordance with this Code, it is necessary to take into account information from the documents specified in Article 449 of this Code.

      In case of performing works on the processing of customer-supplied raw materials imported into the territory of the Republic of Kazakhstan from the territory of one member state of the Eurasian Economic Union for subsequent sale of processed products to the territory of a state that is not a member of the Eurasian Economic Union, when determining VAT amount claimed for refund in accordance with this Code, it is necessary to take into account the customs authority’s information confirming the fact of export of processed products from the customs territory of the Eurasian Economic Union under a customs export procedure.

      7. In case of export of goods, when determining excess VAT amount claimed for refund, it is necessary to take into account export of goods, for which currency proceeds were received on the taxpayer’s bank accounts with second-tier banks in the territory of the Republic of Kazakhstan, opened in accordance with the procedure established by the legislation of the Republic of Kazakhstan, or actual importation of goods delivered to the VAT payer by the buyer of exported goods under foreign trade commodity exchange (barter) transactions into the territory of the Republic of Kazakhstan.

      In case of export of goods under foreign trade barter transactions, it is necessary to take into account the existence of an agreement (contract) on a foreign trade barter transaction, as well as a declaration for imported goods for goods supplied to the VAT payer by the buyer of exported goods under foreign trade commodity exchange (barter) transactions, when determining excess VAT amount claimed for refund.

      In case of export of goods from the territory of the Republic of Kazakhstan to the territory of a member state of the Eurasian Economic Union under foreign trade commodity exchange (barter) transactions, the granting of loans in the form of objects when determining excess VAT amount claimed for refund, it is necessary to take into account the existence of an agreement (contract) on foreign trade commodity exchange (barter) transactions, an agreement (contract) for the granting of loans in the form of objects, as well as applications for the import of goods and the payment of indirect taxes on goods supplied to the VAT payer by the buyer of exported goods under the specified transactions.

      In case of export of goods from the territory of the Republic of Kazakhstan to the territory of a member state of the Eurasian Economic Union under a lease agreement (contract) providing for the transfer of the right of ownership to it to the lessee, it is necessary to take into account foreign currency receipts on the taxpayer’s bank accounts with second-tier banks in the territory of the Republic of Kazakhstan, opened in accordance with the procedure established by the legislation of the Republic of Kazakhstan, confirming the actual receipt of the lease payment (with regard to compensation of the acquisition cost of the commodity (leased item).

      In case of performing works on the processing of customer-supplied raw materials imported into the territory of the Republic of Kazakhstan from the territory of another member state of the Eurasian Economic Union for subsequent export of processed products to the territory of another state or to the territory of a non-member state of the Eurasian Economic Union, when determining excess VAT amount claimed for refund in accordance with this Code, it is necessary to take into account information on foreign exchange receipts on a taxpayer’s bank accounts with second-tier banks in the territory of the Republic of Kazakhstan opened in accordance with the procedure established by the legislation of the Republic of Kazakhstan.

      The National Bank of the Republic of Kazakhstan and second-tier banks submit a statement on foreign currency receipts to tax authorities in accordance with the procedure and in the form approved by the authorized body in coordination with the National Bank of the Republic of Kazakhstan.

      To receive this statement, tax authorities send an appropriate request for foreign exchange receipts as of the date of such a statement.

      The requirements of this paragraph for foreign currency receipts on a taxpayer’s bank accounts with second-tier banks in the territory of the Republic of Kazakhstan shall not apply to taxpayers specified in paragraph 2 of Article 393 of this Code.

      8. In the course of a thematic audit, a tax authority shall schedule third-party audits of direct suppliers of goods, works, services of the audited taxpayer in accordance with the procedure set forth in Article 143 of this Code.

      9. The reliability of VAT amount on transactions between the audited taxpayer and its direct supplier that is a taxpayer subject to tax monitoring is confirmed by a tax authority that scheduled the thematic audit, on the basis of tax returns and (or) the electronic invoice information system available to tax authorities.

      10. If in the course of a thematic audit, a tax authority reveals violations based on the analysis of the Pyramid analytical report, it sends a notice provided for by subparagraph 10) of paragraph 2 of Article 114 of this Code to suppliers.

      In this case, if the supplier of goods, works, services of the audited taxpayer is registered at the location of another tax authority, the tax authority that scheduled the thematic audit shall request the relevant tax authority for taking measures in accordance with this Code to eliminate violations revealed based on the analysis of the “Pyramid” analytical report by such suppliers of goods, works, services.

      11. For the purposes of this Code, the “Pyramid” analytical report means the results of control exercised by tax authorities on the basis of the study and analysis of tax returns on VAT filed by the taxpayer (tax agent) and (or) information from information systems.

      The “Pyramid” analytical report is drawn up for the taxable period specified in paragraph 2 of this article.

      12. VAT shall not be refunded in the amounts for which as of the date of completion of a tax audit:

      1) no reply has been received to requests for third-party audits to confirm the reliability of mutual settlements with the supplier;

      2) violations were revealed with respect to the suppliers of the audited taxpayer based on the results of the analysis of the “Pyramid” analytical report;

      3) the reliability of VAT amounts has not been confirmed;

      4) the reliability of VAT amounts has not been confirmed due to the impossibility of a third-party audit, also because of:

      the absence of a supplier from the location;

      loss of the supplier’s accounting records.

      In this case, the provisions of subparagraph 2) of part one of this paragraph are not applied in case of elimination of violations revealed based on the results of the “Pyramid” analytical report by the direct suppliers of the audited taxpayers:

      who have the right to apply a simplified procedure for returning excess VAT amount;

      implementing an investment project within the framework of the national industrialization map approved by the Government of the Republic of Kazakhstan, the value of which is not less than 150 000 000 times the monthly calculation index established by the law on the national budget and effective as of January 1 of a relevant financial year;

      carrying out activities under a subsoil use contract concluded in accordance with the legislation of the Republic of Kazakhstan and whose average tax burden ratio is at least 20 percent calculated for the last 5 years preceding the taxable period in which excess VAT amount was claimed for refund.

      A tax audit act shall indicate a reason for the refusal to return VAT.

      13. VAT is refunded on the basis of an opinion to the tax audit act in the form established by the authorized body in the following cases:

      1) upon receipt of a reply to a tax authority’s request concerning the buyer of processed products in the case provided for in paragraph 6 of Article 393 of this Code;

      2) when applying Article 432 of this Code.

      14. The opinion to the tax audit act shall be drawn up on or before the 25th day of the last month of a quarter at least in two copies and signed by tax officials. One copy of the opinion to the tax audit act is given to the taxpayer, who is obliged to make a note of receipt of the said opinion on the other copy.

      15. The total amount of excess VAT confirmed by a thematic audit act and an opinion to the tax audit act shall not exceed the amount specified in the demand for the return of excess VAT amount for the audited period.

      16. If by the time of a tax audit, a supplier has terminated activity due to liquidation and a liquidation tax audit has been carried out with respect to such a supplier, the confirmation of the offset VAT amount is made on the basis of the register of invoices for the goods sold, works performed and services rendered and (or) information of the electronic invoice information system with account of the results of the liquidation audit.

      17. The provisions of this article shall also apply in case of a thematic audit of the reliability of excess VAT amounts returned from the budget to the taxpayer that was subject to a simplified procedure for refund, an unscheduled thematic audit of the reliability of VAT amounts claimed and returned, and also in case the issue of confirming the reliability of excess VAT amounts claimed for refund was included in a comprehensive audit by a tax authority.

Article 153. Features of conducting thematic audits of taxpayers that are tax agents on the confirmation of income tax claimed by a non-resident for refund from the budget in connection with application of the provisions of the international treaty regulating the avoidance of double taxation and the prevention of tax evasion

      1. A thematic audit on the return of income tax from the budget on the basis of a tax application of a non-resident is conducted with respect to the tax agent for the fulfillment of its tax obligations for the calculation, withholding and transfer of income tax at the source of payment from the income of the non-resident who submitted such an application for the period determined in accordance with the procedure prescribed by Article 48 of this Code.

      2. A tax authority is obliged to schedule a thematic audit within ten business days from the receipt of a non-resident’s tax application.

      3. In the course of a thematic audit, a tax authority checks documents to establish:

      1) the completeness of the tax agent’s fulfillment of tax obligations for the calculation, withholding and transfer of income tax at the source of payment from non-resident income;

      2) that a permanent establishment was set up by a non-resident in accordance with Article 220 of this Code or an international treaty;

      3) the registration of a non-resident applicant in accordance with the legislation of the Republic of Kazakhstan on state registration of legal entities and registration of branches and representative offices, registration as a taxpayer in accordance with the procedure prescribed by Article 76 of this Code;

      4) the reliability of the data specified in the tax application for the return of income tax from the budget.

Article 154. Access of officials of a tax authority and other state bodies to the site and (or) premises for conducting a tax audit

      1. A taxpayer (tax agent) is obliged to provide access to his/her site and (or) premises (except for residential premises) used for income generation or to taxable and (or) tax-related items to tax officials and officials of other state bodies involved in the tax audit for inspection, upon presentation of a prescription and service cards by tax officials.

      2. Tax officials must have special permits with them, if these are required to enter the site and (or) premises of the taxpayer (tax agent), in accordance with the legislation of the Republic of Kazakhstan.

      3. A taxpayer (tax agent) has the right to deny entry to its site and (or) premises to tax officials and officials of other state bodies involved in conducting a tax audit if:

      1) the officials have not presented a prescription and (or) service cards;

      2) the officials are not indicated in the prescription;

      3) the officials do not have a special permit to enter the site and (or) premises of the taxpayer (tax agent), if such a permit is required in accordance with the legislation of the Republic of Kazakhstan.

      4. In case of the taxpayer’s (tax agent’s) unjustified refusal and (or) denial of access to tax officials conducting a tax audit and officials of other state bodies involved in the tax audit to his/her site and (or) premises, an act on denial of access shall be drawn up.

      5. An act on denial of access shall be signed by tax officials conducting the tax audit and the taxpayer (tax agent).

      If the taxpayer (tax agent) refuses to sign the act, he/she is obliged to give a written explanation of a reason for the refusal.

      If a taxpayer (tax agent) refuses to sign an act on denial of access, a tax official conducting the audit shall make an appropriate entry in the specified act. In this case, this act shall also be signed by the witnesses involved in the procedure established by this Code.

Article 155. The rights and obligations of tax officials when conducting a tax audit

      1. When conducting a tax audit, tax officials have a right:

      1) to request for and obtain from banks and organizations carrying out certain types of banking operations documents and information on the existence and numbers of bank accounts of the audited person, as well as documents and information concerning balances and movements of money in the accounts of taxpayers (audited persons) required for conducting an audit, including those constituting a bank secret in accordance with the legislation of the Republic of Kazakhstan;

      2) to request for and obtain from state bodies documents and information required for conducting an audit, including those constituting commercial, bank, tax and other secrets protected by law in accordance with the laws of the Republic of Kazakhstan;

      3) to request for and obtain accounting records in hard and soft copy, as well as access to automated databases (information systems) with respect to an audited item;

      4) to request for and receive written explanations from the taxpayer, including his/her employees, of issues arising in the course of a tax audit;

      5) to send requests to state and other bodies (organizations) of foreign states on issues arising in the course of a tax audit;

      6) require of a taxpayer (tax agent) access to data from the software used to automate accounting and tax records, and (or) an information system containing data of primary accounting documents, accounting registers, information on taxable and (or) tax-related items, except for the right of access to viewing data of the software and (or) the information system of second-tier banks and organizations carrying out certain types of banking operations, which contain information on their clients’ bank accounts, which constitutes bank secrets in accordance with the laws of the Republic of Kazakhstan.

      The exception established by this subparagraph does not apply to tax authorities’ requirements specified in the course of a tax audit in respect of income and expenses;

      7) to examine property that is a taxable and (or) tax-related item, irrespective of its location, to take an inventory of property of the audited person (except for residential premises), also for comparing with information specified in freight invoices;

      8) to identify, by an indirect method, taxable and (or) tax-related items in accordance with the procedure prescribed by this Code;

      9) other rights stipulated by the legislation of the Republic of Kazakhstan.

      2. When conducting a tax audit, tax officials are obliged:

      1) to observe the rights and legitimate interests of the audited person, to prevent damage to the audited person by unlawful decisions and actions (inaction);

      2) to ensure the safety of documents received and drawn up during the tax audit, not to disclose their contents without the consent of the audited person, except for cases provided for by the laws of the Republic of Kazakhstan;

      3) to follow the professional ethics code;

      4) to inform the audited person of his/her rights and duties in the course of a tax audit;

      5) to inform of the rights and obligations of tax officials;

      6) not to disturb the current work routine of the taxpayer (audited person) during the tax audit;

      7) at the request of the audited person, to submit necessary information on the provisions of this Code relating to the procedure for conducting audits;

      8) to present the prescription and their service cards to the representatives of the audited person during the tax audit;

      9) to perform other obligations stipulated by this Code.

Article 156. The rights and obligations of a taxpayer (tax agent) in the course of a tax audit

      1. In the course of a tax audit, a taxpayer (tax agent) has a right:

      1) to request a tax authority for information on the provisions of this Code and the legislation of the Republic of Kazakhstan on the audit procedure and receive it from it;

      2) to require tax officials conducting tax audits to present a prescription for a tax audit and their service cards;

      3) to be present at a tax audit and give explanations on issues related to an audited item;

      4) to submit a written objection to a preliminary tax audit act in accordance with the procedure established by the tax legislation of the Republic of Kazakhstan;

      5) to enjoy other rights stipulated by this Code.

      2. In the course of a tax audit, a taxpayer (tax agent) is obliged:

      1) at the request of tax officials, to produce documents and information in hard copy and also in soft copy, if necessary, within the established time limits;

      2) to submit accounting records compiled by the taxpayer (tax agent) in accordance with Chapter 23 of this Code;

      3) to ensure unhindered access to tax officials performing a tax audit and officials involved in this audit to the site and (or) premises of the audited person and provide them with a workplace;

      4) to ensure the taking an inventory during tax audits;

      5) at the request of tax officials conducting a tax audit, to give written and oral explanations regarding the activity of the taxpayer (tax agent);

      6) to provide access to viewing the data of the software and (or) the information system specified in subparagraph 6) of paragraph 1 of Article 155 of this Code;

      7) to perform other obligations stipulated by the legislation of the Republic of Kazakhstan.

Article 157. Preliminary tax audit act

      Before drawing up a tax audit act provided for by Article 158 of this Code, a tax official delivers a preliminary tax audit act to the taxpayer.

      For the purposes of this Code, a preliminary tax audit act is a document on preliminary results of a tax audit drawn up by the auditor in accordance with the tax legislation of the Republic of Kazakhstan.

      The taxpayer has the right to submit a written objection to the preliminary tax audit act.

      The categories of taxpayers in whose respect the provisions of this article are applied, as well as the procedure and terms for delivering a preliminary tax audit act to the taxpayer, submitting a written objection to the preliminary tax audit act and considering such objection are approved by the authorized body.

Article 158. Completion of a tax audit

      1. Upon completion of a tax audit, a tax official shall draw up a tax audit act specifying:

      1) the place and date of drawing up the audit act;

      2) the type and form of an audit;

      3) positions, last names, first names, patronymics (if they are indicated in identity documents) of tax officials that conducted the tax audit;

      4) the name of the tax authority;

      5) the last name, first name, patronymic (if it is indicated in an identity document) or the full name of the taxpayer (tax agent);

      6) location, bank details of the audited person, as well as his/her/its identification number;

      7) the last names, first names, patronymics (if they are indicated in identity documents) of the head and officials of the taxpayer (tax agent) responsible for maintaining tax and accounting records and paying taxes and payments to the budget;

      8) information on the previous audit and measures taken to eliminate earlier revealed violations (in the course of comprehensive or thematic audits);

      9) the audited period and general information on documents submitted by the taxpayer (tax agent) for conducting the audit;

      10) detailed description of the violations revealed, indicating relevant provisions of the legislation of the Republic of Kazakhstan, which requirements were violated;

      11) audit results.

      2. A tax audit act shall be drawn up in at least two copies, signed by tax officials that conducted the audit.

      3. The end of a tax audit period is the day a taxpayer (tax agent) is delivered a tax audit act.

      Upon receipt of a tax audit act, a taxpayer (tax agent) is obliged to sign it and write down the date of receipt thereof in the tax authorities’ copy of the tax audit act.

      If it is impossible to deliver a tax audit act to a taxpayer (tax agent) in connection with his/her absence from the location, it is necessary to carry out a tax inspection with the involvement of witnesses in accordance with the procedure set forth in this Code. In this case, the date of delivery of a tax audit act is that of drawing up a tax inspection act.

      4. If a tax audit has not revealed any violations of the tax legislation of the Republic of Kazakhstan, as well as other legislation of the Republic of Kazakhstan, the compliance with which is supervised by tax authorities, a relevant entry is made in a tax audit act upon completion of the tax audit.

      5. In cases where a taxpayer (tax agent) is absent from the location of the taxpayer (tax agent) and (or) the site of a tax audit on the date of completion of the tax audit, a tax official conducting the tax audit makes a relevant entry in the tax audit act.

      6. Necessary copies of documents, calculations made by a tax official, and other materials received during the tax audit, except for information that is a tax secret in accordance with Article 30 of this Code, shall be attached to the tax audit act.

      7. If obligations for the calculation and payment of taxes, payments to the budget and social welfare payments arise in a period running from the date of receipt of liquidation tax returns until the date of completion of a liquidation tax audit, such obligations are specified in an annex to a tax audit act without accrual of penalties and application of penalty sanctions.

Article 159. Decision made pursuant to a tax audit

      1. A tax authority draws up a tax audit report to be sent (delivered) to a taxpayer (tax agent) in accordance with the procedure and within the time limits set forth in Articles 114 and 115 of this Code if, as a result of a tax audit, violations have been revealed that factor into the calculation of taxes and payments to the budget, the reduction of losses, failure to confirm the refund of excess VAT amount and (or) corporate (individual) income tax withheld at the source of payment from non-residents’ income.

      2. A tax authority assigns the same registration number both to the tax audit report and the tax audit act.

      3. A tax audit report shall contain the following details and information:

      1) the date and registration number of a tax audit report and a tax audit act;

      2) the last name, first name, patronymic (if it is indicated in an identity document) or full name of the taxpayer (tax agent);

      3) identification number of a taxpayer (tax agent);

      4) the amount of assessed taxes and payments to the budget, social welfare payments and penalty;

      5) the amount of reduced losses;

      6) excess VAT amount not confirmed for refund;

      7) the amount of the corporate (individual) income tax, withheld at the source of payment from non-residents’ income, not confirmed for refund;

      8) the demand for payment and deadline for it;

      9) details of relevant taxes and payments to the budget and penalty;

      10) the time and place of appeal.

      4. If a tax audit is carried out as part of a pre-trial investigation, an audit findings report with respect to a taxpayer under pre-trial investigation shall be drawn up after completion of the criminal case.

      In this case, an audit findings report shall be issued and delivered to the taxpayer within five business days from the receipt of an official document confirming the completion of the criminal case.

      5. An audit findings report shall be delivered to a taxpayer (tax agent) by hand against signature or sent by registered mail with return receipt. The audit findings report sent by registered mail with return receipt is considered to be delivered to the taxpayer (tax agent) on the date of the taxpayer’s (tax agent’s) note of receipt in the notification of a postal or other communications organization, unless otherwise specified in this article.

      6. In case of return by a postal or other communications organization of audit findings reports sent by tax authorities to a taxpayer (tax agent) by registered mail with return receipt, the date of delivery of such reports is that of:

      1) conducting a tax inspection with the involvement of witnesses on the grounds and in accordance with the procedure established by this Code;

      2) the return of such a letter by a postal or other communications organization – if a tax audit act has been delivered pursuant to a tax inspection act in accordance with paragraph 3 of Article 158 of this Code.

      7. A taxpayer (tax agent) that received an audit findings report is obliged to execute it within the time limits established in the report, if he has not appealed against audit findings.

      8. If a taxpayer (tax agent) agrees with assessed amounts of taxes, payments to the budget and (or) penalty specified in an audit findings report, the time limits for fulfillment of the tax obligation to pay taxes, payments to the budget and also obligations to pay penalty may to be extended by sixty business days upon a taxpayer’s (tax agent’s) application submitted along with an attached payment schedule, unless otherwise specified in Article 51 of this Code.

      At the same time, the specified amount is payable to the budget together with penalties accrued for each day of extension of the payment period and shall be paid in equal installments every fifteen business days within the specified period.

      The deadline for the fulfillment of a tax obligation in accordance with the procedure established by this paragraph is not subject to extension if it is an obligation:

      for the payment of amounts of excise duties and taxes withheld at the source of payment assessed as a result of an audit;

      for the payment of assessed amounts of taxes, payments to the budget and penalties as a result of an audit conducted pursuant to an appeal against audit findings.

      9. The amount of obligations specified in paragraph 7 of Article 158 of this Code is indicated in a notification of assessed taxes, payments to the budget and social welfare payments for the period running from the date of filing liquidation tax returns until the date of completion of a liquidation tax audit, which is sent to the taxpayer in accordance with the procedure set forth in Article 115 of this Code.

      10. If, during an unscheduled tax audit, except for thematic audits specified in subparagraphs 8) and 11) of paragraph 1 of Article 142 of this Code, a tax authority has revealed a taxpayer’s (tax agent’s) violation of the tax legislation of the Republic of Kazakhstan for the same taxable period on the same issue, which was not revealed during any of the previous tax audits, no proceeding in a case concerning an administrative offence may be initiated in relation to this taxpayer, and the one that has been initiated shall be terminated.

      The provisions of this paragraph do not apply to violations of the tax legislation of the Republic of Kazakhstan, which were revealed:

      1) with regard to the taxpayer’s (tax agent’s) reduction of the amount of a tax or payment to the budget by filing additional tax returns for an earlier audited taxable period for this type of tax or payment;

      2) as a result of a reply to a tax authority’s inquiry in the course of any of the previous tax audits of the same taxable period, if the reply was received after the completion of such an audit;

      3) as a result of consideration of documents affecting the amount of a tax or payment to the budget and not submitted by a taxpayer (tax agent) upon a tax authority’s written request in the course of any of the previous tax audits of the same taxable period for this type of tax or payment;

      4) with regard to an action (actions), committed with a private business entity, on the issuance of an invoice without actual performance of works, rendering of services, shipment of goods, after the entry into legal force of a court judgment or decision if a tax authority receives information on such an action (actions) for the first time after the completion of any of the previous tax audits of the taxable period, in which such an action (actions) was (were) committed.

Clause 3. Identification of taxable and (or) tax-related items in individual cases, also by indirect method

Article 160. General provisions

      1. In case of violation of the accounting procedure, loss or destruction of accounting records, tax authorities identify taxable and (or) tax-related items using indirect methods (assets, liabilities, turnover, costs, expenses) in accordance with the procedure set forth in this article and Articles 161, 162 and 163 of this Code.

      2. The violation of the accounting procedure, loss or destruction of accounting records are understood to mean the absence of or the taxpayer’s (tax agent’s) failure to produce documents, providing a basis for identification of taxable and (or) tax-related items to calculate tax obligations, which are requested pursuant to tax authorities’ orders in accordance with Article 161 of this Code.

      3. Indirect methods of identifying taxable and (or) tax-related items are understood to mean the determination of an amount of taxes and payments to the budget on the basis of the valuation of assets, liabilities, turnover, expenses, as well as valuation of other taxable and (or) tax-related items taken into consideration for the calculation of a tax obligation for a specific tax and payment to the budget in accordance with this Code. Taxable and (or) tax-related items are appraised on the basis of information received from tax returns and (or) primary accounting documents, as well as from other sources.

Article 161. Tax audits in case of absence of accounting and other documents (information)

      If in the course of a tax audit, a taxpayer (tax agent) fails to produce all or part of the documents required for identification of taxable and (or) tax-related items, it is mandatory to deliver the taxpayer (tax agent) a tax authority’s request for the submission or restoration of the said documents, as well as a notification of tax audit suspension.

      The tax authority’s request is subject to execution within thirty business days from the day following the delivery of the request to the taxpayer (tax agent).

      A taxpayer (tax agent) who failed to submit documents required by the tax authority to identify taxable and (or) tax-related items must give a written explanation of reasons for the failure to submit the said documents.

Article 162. Sources of information

      1. To identify taxable and (or) tax-related items by indirect methods, tax authorities may use, depending on the circumstances, nature and type of activity of an audited taxpayer (tax agent), the following information:

      1) statements of second-tier banks and organizations carrying out certain types of banking operations on the availability and movement of money in bank accounts of the taxpayer (tax agent);

      2) on taxable and (or) tax-related items according to the data of authorized state bodies, legal entities, local executive bodies;

      3) on the calculation and receipt of amounts of taxes and payments to the budget on the basis of the personal account of the taxpayer (tax agent) to be compared with the taxpayer’s (tax agent’s) accounting records;

      4) on taxable and (or) tax-related items received from the forms of tax returns filed by the taxpayer (tax agent) and his/her/its suppliers and buyers for the taxable period being audited and previous taxable periods;

      5) on the results of third-party audits with respect to persons who shipped goods and (or) performed works, and (or) rendered services, which was received through information systems of state bodies, as well as from other sources;

      6) received by a tax authority in the course of earlier conducted tax audits, including the taking an inventory of property (except for residential premises) of the audited taxpayer (tax agent), which is a taxable and (or) tax-related item;

      7) received by a tax authority as a result of other forms of tax and customs control.

      2. Tax authorities send requests to:

      1) banks and organizations carrying out certain types of banking operations;

      2) relevant authorized state bodies, local executive bodies and other organizations carrying out activities in the territory of the Republic of Kazakhstan;

      3) other tax authorities for conducting third-party tax audits in terms of mutual settlements with suppliers and buyers of the audited taxpayer;

      4) competent authorities of foreign states.

      3. Necessary information can also be obtained from the following sources (it shall be documented in this case):

      1) from clients on the cost of services provided by a taxpayer (tax agent) and from buyers on the cost and quantity of purchased products;

      2) from individuals and legal entities that provided services to the audited taxpayer (tax agent), released raw materials, energy resources and auxiliary materials in the field of production and turnover of certain types of excisable goods.

      4. Sources of information may vary from case to case, depending on the circumstances, nature and type of activity of an audited taxpayer (tax agent).

Article 163. Procedure for identifying taxable and (or) tax-related items

      1. Taxable and (or) tax-related items are identified on the basis of information received in accordance with the procedure set forth in Article 162 of this Code.

      2. Information on the receipt of money on bank accounts, payment cards, and also from other payment and settlement documents of a taxpayer (tax agent), which is confirmed by a bank account statement and other information (documents) confirming the receipt of money by the taxpayer (the tax agent), is (are) used for income calculation.

      3. When individuals or organizations specified in Article 162 of this Code provide information regarding the existence of other received (receivable) income of an audited taxpayer (tax agent), the amount of these revenues shall be included in the total income amount (taxable turnover).

      4. In case of establishing the fact of receipt of currency proceeds from taxpayer’s (tax agent’s) export transactions on the basis of information provided by the National Bank of the Republic of Kazakhstan and second-tier banks, as well as by the tax authorities of the Eurasian Economic Union member states, this amount of currency proceeds is included in the sales turnover and total income.

      5. When identifying taxable and (or) tax-related items, in accordance with this article, the taxpayer’s (tax agent’s) expenses not confirmed by source documents are not deductible for the calculation of corporate income tax and for offset to calculate VAT.

      6. The tax base for excisable goods is determined on the basis of Article 466 of this Code.

      In this case, the volume of produced excisable goods is determined in accordance with industry rates of expenditure and loss of raw materials, energy resources and auxiliary materials.

      7. If a taxpayer (tax agent) has been found to have fixed assets, including construction in progress, vehicles, land plots, intangible assets, investment property, and no documents confirming their original value, the market value of the said property shall be included in the total income of this taxpayer.

      The market value of items is determined on the basis of the report of an appraiser engaged by tax authorities, who carries out his/her activity in accordance with the legislation of the Republic of Kazakhstan.

      8. Money can also be subject to individual income taxation, social taxation in case of establishing facts of withdrawing money from a bank account to pay wages and (or) transfer of money from a bank account to bank accounts of individuals. In this case, a tax obligation arises at the moment when a second-tier bank or organization carrying out certain types of banking operations executes the taxpayer’s (tax agent’s) orders to transfer (give out) appropriate amounts of money to the taxpayer (tax agent) or third parties.

      9. Information on taxable and (or) tax-related items identified by tax authorities using indirect methods is compared with the relevant data indicated by the taxpayer (tax agent) in the forms of tax returns and other reports submitted to tax authorities.

      10. If amounts of taxes and payments to the budget declared by a taxpayer (tax agent) in his/her/its tax returns exceed amounts of taxes determined by indirect methods, the tax amounts indicated by the taxpayer (tax agent) in the tax returns are accepted in the course of an audit.

      11. If an amount of income declared by a taxpayer (tax agent) in his/her/its tax returns exceeds an amount of income identified on the basis of other (additional) sources of information, the amount of income specified in the tax returns is accepted in the course of an audit.

Article 164. Identification of taxable items in individual cases

      1. If an individual’s income indicated in his/her tax returns does not correspond to his/her expenses incurred for personal consumption, including the acquisition of property, tax authorities determine the income and tax on the basis of expenses incurred with account of incomes of previous periods.

      2. Income shall be subject to taxation in cases when other persons and bodies contest the legality of this income’s receipt.

      3. If, by a court decision, income shall be collected to the budget in cases stipulated by the laws of the Republic of Kazakhstan, this income is collected inclusive of a tax paid on it.

      4. If tax authorities establish facts of the individual’s receipt of income, which is not subject to individual income tax at the source of payment and also not related to property income or other incomes established by Chapter 36 of this Code, from entrepreneurial activity he/she carries out without state registration as an individual entrepreneur, such income in the amount exceeding the level of income requiring to register as an individual entrepreneur in accordance with the civil legislation of the Republic of Kazakhstan or legislation of the Republic of Kazakhstan in the sphere of entrepreneurship, is subject to imposition of individual income tax at the rate established by paragraph 1 of Article 320 of the Code.

Chapter 19. USE OF CASH REGISTERS

Article 165. Basic definitions used in this chapter

      The following basic definitions are used in this chapter:

      1) monetary transactions - payments for the purchase of goods, works, services with cash and (or) payments using payment cards;

      2) a cash register maintenance center (hereinafter referred to as a maintenance center) – a business entity that carries out the maintenance of cash registers in accordance with its charter (type of activity);

      3) the state register of cash registers (hereinafter referred to as the state register) - a list of models of cash registers approved for use in the territory of the Republic of Kazakhstan by the authorized body;

      4) cash register - an electronic device with a fiscal memory unit without a data transfer function, a hardware-software complex with (without) a function(s) of data recording and (or) transfer, an electronic device with a function of data recording and (or) transfer that register and display information on monetary transactions carried out in the course of sales of goods, performance of works, rendering of services;

      5) registration card of a cash register – a record document confirming the fact of registration (deregistration) of the cash register with a tax authority;

      6) a cash register receipt – an accounting source document issued in hard or soft copy by a cash register, which confirms a monetary transaction committed by a seller (the supplier of goods, works, services) and a customer (client);

      7) self-service payment terminal - an electromechanical device for accepting cash or payments using payment cards for services rendered;

      8) cash book - a daybook used to record shift-time cash turnover, sales receipts, readings of fiscal memory or fiscal data storage medium of a cash register;

      9) the seal of a tax authority - a means of protection against unauthorized opening of the case of a cash register with a fiscal memory unit;

      10) vending machine - an electromechanical device that sells goods in automatic mode for cash or using payment cards;

      11) sales receipt – an accounting source document that confirms a monetary transaction, used in cases of technical malfunction of a cash register or power outage;

      12) sales receipt book – all sales receipts collected in a book;

      13) fiscal sign - a distinctive symbol on cash register receipts confirming the operation of a cash register in fiscal mode;

      14) fiscal data - information on monetary transactions with a fiscal sign recorded in the fiscal memory of a cash register with a fiscal memory unit or a fiscal data storage medium with a function of data recording and (or) transfer and transmitted to tax authorities;

      15) fiscal data storage medium - a software-hardware complex ensuring uncorrectable registration and non-volatile long-term storage of information on committed monetary transactions in a cash register with a function of data recording and transfer;

      16) fiscal data operator - a legal entity transferring information on monetary transactions to tax authorities online via public telecommunications networks, assigned by the authorized body in coordination with the authorized body in the field of information;

      17) fiscal report - a report on fiscal data readings over a certain time period;

      18) fiscal memory - a software-hardware complex ensuring uncorrectable shift-time registration and non-volatile long-term storage of information on committed monetary transactions in a cash register with a function of data recording and transfer;

      19) fiscal mode - the mode of operation of a cash register ensuring uncorrectable registration and non-volatile long-term storage of information on committed monetary transactions in fiscal memory or fiscal data storage medium with simultaneous transfer of information on monetary transactions to tax authorities through a fiscal data operator.

      Note of the RCLI!
      Article 166 is provided for in the version of Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (to be in effect from 01.01.2019 until 01.01.2020)
      Note of the RCLI!
      This wording of Article 166 has been in effect from 01.01.2018 until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

Article 166. General provisions

      1. It is mandatory to use cash registers for monetary transactions in the territory of the Republic of Kazakhstan, unless otherwise provided for by this article.

      2. The provisions of paragraph 1 of this article do not apply to monetary transactions:

      1) of individuals;

      2) of lawyers and mediators;

      3) of individual entrepreneurs (except for those selling excisable goods) that carry out their activities:

      applying a patent-based special tax regime;

      under a special tax regime for small business entities through non-stationary trade facilities in the territory of outdoor markets;

      under a special tax regime based on the payment of a uniform land tax on activities covered by this special tax regime;

      4) in respect of services to the population for public urban transportation involving the issuance of tickets in the form approved by the authorized state body implementing the state policy in the field of transport, in coordination with the authorized body;

      5) of the National Bank of the Republic of Kazakhstan;

      6) of second-tier banks.

      3. Tax authorities’ registration of cash registers used by taxpayers includes:

      1) the registration of a cash register;

      2) update of registration data;

      3) deregistration of a cash register.

      4. Vending machines and self-service payment terminals performing monetary transactions in trade operations or providing services for cash shall be equipped with cash-registers.

      5. The obligation to use cash registers with a function of data recording and (or) transfer in monetary transactions extends to taxpayers engaged in wholesale and (or) retail sales of gasoline (except for aviation fuel), diesel fuel, alcohol products, types of activities established by the authorized body.

      The provisions of this paragraph shall not apply to taxpayers operating in places without a public telecommunications network.

      Information on administrative and territorial units of the Republic of Kazakhstan without public telecommunications networks is subject to placement on the website of the authorized body.

      6. Following requirements are set for the use of cash registers:

      1) a cash register shall be registered with a tax authority before the commencement of an activity involving monetary transactions;

      2) a cash register receipt or a sales receipt shall be issued for an amount paid for a product, work or service;

      3) tax officials shall be provided access to a cash register.

      7. A cash register receipt shall contain the following information:

      1) the name of a taxpayer;

      2) taxpayer identification number;

      3) the serial number of a cash register;

      4) registration number of a cash register with a tax authority;

      5) receipt number;

      6) the date and time goods were purchased, works performed, services rendered;

      7) the price of a commodity, work, service and (or) the purchase amount;

      8) a fiscal sign;

      9) the name of a fiscal data operator and the details of the website of the fiscal data operator to verify the authenticity of a receipt issued by cash registers with the function of data recording and (or) transfer.

      The form and contents of a receipt of hardware-software complexes used by banks and organizations carrying out certain types of banking operations are established by the National Bank of the Republic of Kazakhstan in coordination with the authorized body.

      A cash register receipt used in currency exchange offices, reception points of metal scrap, glassware, pawnshops, must contain additional information on the amounts of sale and purchase.

      8. A cash register receipt may contain additional data provided for by technical documents of a cash register’s manufacturer, including VAT amount.

      9. The procedure for the use of cash registers is determined by the authorized body.

      Note of the RCLI!
      This wording of Article 167) is in effect until 01.01.2024 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

Article 167. Registration of cash registers by a tax authority

      1. Serviceable cash registers with the function of data recording and (or) transfer, the models of which are entered into the state register, except for the case established by this paragraph, shall be registered by tax authorities at the place of their use.

      In places without a public telecommunications network, cash registers without a data transfer function shall be registered by tax authorities.

      2. For tax authorities’ registration of a cash register with the function of data recording and (or) transfer, except for hardware-software complexes, a taxpayer shall submit to a tax authority:

      1) a tax application for registering a cash register by a tax authority;

      2) a cash register containing information on a taxpayer;

      3) a sales receipt book that is numbered, bound, signed and (or) sealed (if a seal is available) by the taxpayer.

      3. To register a cash register that is a hardware-software complex with a data transfer function, a taxpayer submits to a tax authority:

      1) a tax application for registering a cash register by a tax authority;

      2) a brief description of the functionality and performance specifications of the hardware-software complex;

      3) a handbook on the “Tax Inspector Workplace” module of the hardware-software complex, the model of which is submitted for registration, and provides access to it.

      4. To register a cash register without a data transfer function, except for hardware-software complexes used in places without a public telecommunications network, a taxpayer submits to a tax authority:

      1) a tax application for registering a cash register by a tax authority;

      2) a cash register containing information on the taxpayer, the input of which is possible without setting a fiscal mode;

      3) a cash book and sales receipt book that are numbered, bound, signed and (or) sealed (if a seal is available) by the taxpayer.

      5. To register a cash register that is a hardware-software complex without a data transfer function used in places without a public telecommunications network, a taxpayer submits to a tax authority the following documents:

      1) a tax application for registering a cash register by a tax authority;

      2) a brief description of the functionality and performance specifications of the hardware-software complex;

      3) a handbook on the “Tax Inspector Workplace” module of the hardware-software complex, the model of which is submitted for registration.

      6. Tax authorities shall register a cash register within three business days from the receipt of a tax application for registering a cash register by a tax authority.

      7. Registered cash registers are assigned a registration number and a cash register’s registration card is created within three business days from the receipt of the tax application for registering a cash register by a tax authority.

      8. The forms of a cash register’s registration card, a sales receipt, a cash book and a sales receipt book are approved by the authorized body.

      Note of the RCLI!
      This wording of Article 168 is in effect until 01.01.2024 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

Article 168. Update of registration data of a cash register

      1. Information indicated in a cash register’s registration card shall be updated after a taxpayer in person, without prior arrangement, submits to a tax authority a hard copy of:

      1) a tax application for registering a cash register by a tax authority;

      2) the registration card of a cash register.

      2. A taxpayer shall update information indicated in the registration card of the cash register within five business days from the date of changes.

      3. A tax authority at the place of registration of a cash register shall replace a registration card in case of:

      1) loss of (damage to) the registration card - within three business days from the receipt of the tax application specified in subparagraph 1) of paragraph 1 of this article;

      2) changes in the information specified in the registration card - within three business days from the receipt of the tax application specified in subparagraph 1) of paragraph 1 of this article.

      4. When issuing a new registration card of a cash register, the registration card of the cash register earlier issued by a tax authority is to be returned to the tax authority, except for cases when the specified registration card of the cash register was lost (damaged) by the taxpayer.

      Note of the RCLI!
      This wording of Article 169 is in effect until 01.01.2024 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

Article 169. Deregistration of a cash register by a tax authority

      1. A cash register is deregistered in case of:

      1) termination of activity involving monetary transactions carried out during trade operations, performance of works, rendering of services;

      2) change of the place of use of a cash register or the location of a taxpayer using a cash register in a vending machine or self-service payment terminal, if such a change requires the registration of a cash register by another tax authority;

      3) impossibility of further use due to a technical malfunction of the cash register;

      4) removal of the cash register from the state register;

      5) replacement of a serviceable model of a cash register with a new model of a cash register;

      6) theft, loss of a cash register given a copy of a complaint about theft filed with internal affairs agencies and (or) a copy of an announcement of its loss published in periodicals distributed throughout the territory of the Republic of Kazakhstan;

      7) other cases that are not inconsistent with the tax legislation of the Republic of Kazakhstan.

      2. To deregister a cash register, except for hardware-software complexes, a tax authority at the place of its use shall receive:

      1) a tax application for deregistering a cash register;

      2) a cash register;

      3) a cash book that is numbered, bound, signed by an official and sealed by a tax authority;

      4) a sales receipt book that is numbered, bound, signed by an official and sealed by a tax authority;

      5) the registration card of a cash register.

      The provision of subparagraph 3) of part one of this paragraph does not apply to cash registers with the function of data recording and (or) transfer.

      3. To deregister a cash register that is a hardware-software complex, a taxpayer submits a tax application for deregistering such a cash register, the registration card of the cash register to a tax authority and provides access to the “Tax Inspector Workplace” module.

      4. A tax authority shall deregister a cash register within three business days from the receipt of a tax application for deregistering the cash register.

Article 170. The state register

      1. The authorized body shall maintain the state register by entering (removing) models of cash registers into (from) the state register.

      2. The procedure for entering (removing) models of cash registers into (from) the state register shall be determined by the authorized body.

Article 171. Procedure for the receipt, storage of information on monetary transactions performed in the sales of goods, works, services and its transmission to tax authorities

      In accordance with the procedure established by the authorized body, a fiscal data operator receives and stores information on monetary transactions performed in the sales of goods, performance of works, rendering of services from cash registers with the function of data recording and (or) transfer, and also transmits it to tax authorities.

Chapter 20. OTHER FORMS OF TAX CONTROL

Article 172. Control over excisable goods produced in the Republic of Kazakhstan or imported into the Republic of Kazakhstan

      1. Tax authorities exercise control over excisable goods in terms of observance of the procedure for marking certain types of excisable goods specified in this article, the movement of excisable goods in the territory of the Republic of Kazakhstan by producers, persons engaged in the turnover of excisable goods, bankrupt and rehabilitation managers selling the property (assets) of a debtor, and also by establishing excise posts.

      2. Alcohol products, except for wine materials, beer and beer-based beverages, are subject to marking with inventory-control stamps, tobacco products – with excise stamps.

      3. The marking is made by producers and importers of excisable goods, bankrupt and rehabilitation managers selling the property (assets) of a debtor.

      4. Alcohol products are not subject to mandatory marking with inventory-control stamps and tobacco products – with excise stamp, if:

      1) they are exported outside the Republic of Kazakhstan;

      2) they are imported into the territory of the Republic of Kazakhstan by duty-free store owners, are intended for placement under the customs procedure for duty-free trade;

      3) they are imported into the customs territory of the Eurasian Economic Union under customs procedures for temporary importation (admission) and temporary exportation, including those temporarily imported into the territory of the Republic of Kazakhstan from the territory of the member states of the Eurasian Economic Union for advertising and (or) demonstration purposes in single copies;

      4) they are moved across the customs territory of the Eurasian Economic Union under the customs procedure for customs transit, including those transited through the territory of the Republic of Kazakhstan from the member states of the Eurasian Economic Union;

      5) these are not more than three liters of alcohol products imported (sent) into the territory of the Republic of Kazakhstan by an individual who has reached the age of twenty one and also not more than two hundred cigarettes or fifty cigars (cigarillos) or two hundred and fifty grams of tobacco or varieties of tobacco products, the total weight of which is two hundred and fifty grams, by an individual who has reached the age of eighteen.

      5. The turnover of excisable goods, subject to marking with excise and (or) inventory-control stamps, is forbidden in the form of storage, sale and (or) transportation of excisable products without excise and (or) inventory-control stamps, as well as with unidentified and (or) not identifiable stamps, except for cases provided for in paragraph 4 of this article.

      6. The remarking of excisable goods specified in paragraph 2 of this article with new inventory-control or excise stamps shall be made within the time limits established by the authorized body.

      7. A person importing alcohol products into the Republic of Kazakhstan presents an obligation for the designated use of inventory-control stamps when importing alcoholic beverages to the Republic of Kazakhstan.

      8. The importer’s obligation for the designated use of inventory-control stamps when importing alcoholic beverages to the Republic of Kazakhstan shall be submitted to the territorial subdivision of the authorized body in oblasts, the cities of Astana and Almaty prior to the receipt of inventory-control stamps.

      9. If an importer fails to produce an obligation for the designated use of inventory-control stamps when importing alcohol products to the Republic of Kazakhstan, inventory-control stamps are not given to the importer.

      10. Importers guarantee their obligation for the designated use of inventory-control stamps when importing alcohol products into the Republic of Kazakhstan by depositing money into the account for temporary placement of money of the territorial subdivision of the authorized body in oblasts, the cities of Astana and Almaty, as well as by any of the following ways at their choice:

      1) a bank guarantee;

      2) surety;

      3) pledge of property.

      11. The central authorized body for budget execution opens an account for temporary placement of money for territorial subdivisions of the authorized body in oblasts, the cities of Astana and Almaty.

      12. An account for temporary placement of money of the authorized body in oblasts, the cities of Astana and Almaty is opened for depositing money by a person who imports alcohol products into the Republic of Kazakhstan.

      Money is deposited into the account for temporary placement of money in the national currency of the Republic of Kazakhstan.

      13. If an importer, when importing alcohol products into the Republic of Kazakhstan, fails to fulfill the obligation for the designated use of inventory-control stamps, which is secured with money, the territorial subdivision of the authorized body in oblasts, the cities of Astana and Almaty, transfers money from the account for temporary placement of money to the budget revenue upon expiration of five business days.

      14. The money deposited into the account for temporary placement of money of the authorized body in oblasts, the cities of Astana and Almaty is refunded (offset) within ten business days after the submission of a report on the fulfillment of the importer’s obligation for the designated use of inventory-control stamps when importing alcohol products into the Republic of Kazakhstan.

      15. In accordance with this article:

      1) the rules for marking (remarking) of alcohol products, except for wine materials, beer and beer-based beverage, with inventory-control stamps and tobacco products with excise stamps, as well as the forms, contents and security features of excise and inventory-control stamps are approved by the authorized body;

      2) the rules for obtaining, recording, storing, delivering excise and inventory-control stamps and presenting an obligation, an importers’ report on the designated use of inventory-control stamps when importing alcohol products into the Republic of Kazakhstan, and also the accounting procedure and the amount of security for such an obligation are approved by the authorized body;

      3) the procedure for organizing the activity of the excise post is approved by the authorized body;

      Note of the RCLI!
      This wording of subparagraph 4) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      4) the rules for issuing accompanying notes for certain types of excisable goods are established in accordance with the laws of the Republic of Kazakhstan governing the production and turnover of certain types of excisable goods.

      16. Tax authorities set up excise posts in the premises of a taxpayer engaged in the production of ethyl alcohol and alcohol products (except for beer and beer-based beverage), gasoline (except for aviation fuel), diesel fuel and tobacco products.

      17. The location and staff of an excise post, its work schedule are approved by a tax authority.

      The staff of an excise post is formed from tax officials.

      18. A tax official working at an excise post shall monitor:

      1) the taxpayer’s compliance with the requirements of the legislation of the Republic of Kazakhstan governing the production and turnover of excisable goods;

      2) the dispensing and (or) release of excisable goods only through measuring devices or the sale (bottling) through metering devices, and the operation of sealed metering devices;

      3) the taxpayer’s compliance with the procedure for marking certain types of excisable goods;

      4) the movement of finished products, inventory-control stamps or excise stamps.

      19. A tax official working at an excise post is entitled:

      1) to inspect administrative, production, warehousing, trading, subsidiary premises of the taxpayer used for the production, storage and sale of excisable goods in compliance with the requirements of the legislation of the Republic of Kazakhstan;

      2) to be present at the sale of excisable goods;

      3) to inspect cargo vehicles leaving (entering) the taxpayer’s premises.

      20. A tax official working at an excise post has other rights established by the procedure for organizing the work of an excise post.

Article 173. Control over transfer pricing

      Tax authorities exercise control over transfer pricing for transactions in accordance with the procedure and in the cases provided for by the legislation of the Republic of Kazakhstan on transfer pricing.

Article 174. Control over compliance with the procedure for recording, storing, valuing, further use and sale of property converted (received) into state ownership

      1. A tax authority exercises control over compliance with the procedure for recording, storing, valuing, further use and sale of property converted (received) into state ownership, over full and timely receipt of money by the budget in the event of its sale, as well as the procedure for transferring property converted (received) into state ownership in accordance with the procedure and within the time limits established by the Government of the Republic of Kazakhstan.

      2. The procedure for recording, storing, valuing, further use and sale of property converted (received) into state ownership is approved by the Government of the Republic of Kazakhstan.

Article 175. Control over activities of authorized state and local executive bodies

      1. Tax authorities exercise control over activities of authorized state and local executive bodies in accordance with the procedure specified in this article.

      Activities of authorized state bodies are controlled in terms of their correct calculation, full collection and timely transfer of payments to the budget, as well as timely submission of reliable information to tax authorities.

      Activities of local executive bodies are controlled in terms of their correct calculation, full collection and timely transfer of payments to the budget, timely submission of reliable information on property tax, vehicle tax, land tax and payments to tax authorities.

      A ground for exercising control over activities of authorized state and local executive bodies (hereinafter referred to as authorized state bodies, for the purposes of this article) is a decision of tax authorities on taking control measures (hereinafter referred to as the decision) in the form established by the authorized body, containing the following details:

      1) the decision’s date and registration number by tax authorities;

      2) the name and identification number of the authorized state body;

      3) the ground for taking control measures;

      4) the positions, last names, first names, patronymics (if they are indicated in identity documents) of tax officials exercising control, as well as specialists of other state bodies involved in control activity in accordance with this article;

      5) the time frame of control;

      6) period of control;

      7) issues of control;

      8) a note made by the authorized state body of its familiarization with and receipt of the decision.

      The decision is subject to state registration by a state body that carries out statistical activities in the field of legal statistics and special accounts within its competence, prior to the commencement of control.

      2. Tax officials indicated in the decision, other persons involved in carrying out control in accordance with this article, and authorized state bodies are control participants.

      When exercising control, authorized state bodies assist tax authorities in obtaining documents and information required for exercising control, in tax officials’ access to taxable items for inspection.

      Authorized state bodies may be checked for one and several types of taxes and payments to the budget at the same time.

      In case of a hindrance to obtaining documents and information and also to inspecting taxable items, an act on denial of entry to tax officials for exercising control shall be drawn up.

      The act on denial of entry to tax officials for exercising control is signed by tax officials exercising control and the authorized state body. In case of refusal to sign this act, the authorized state body is obliged to give written explanations of a reason for the refusal.

      The control is deemed to begin on the date of the authorized state body’s receipt of a copy of the decision or the date of drawing up an act on the authorized state body’s refusal to sign a copy of the decision.

      In case of the authorized state body’s refusal to sign a copy of the decision, a tax official carrying out a control activity draws up an act on the refusal to sign, in the presence of (at least two) witnesses. The act on the refusal to sign shall specify:

      1) the place and date of its compilation;

      2) the last name, first name and patronymic (if it is indicated in an identity document) of the tax official that drew up the act;

      3) the last name, first name and patronymic (if it is indicated in an identity document), identity card number, address of the place of residence of the witnesses;

      4) the number, date of decision, name of the authorized state body, its identification number;

      5) the circumstances of the refusal to sign the copy of the decision.

      The authorized state body’s refusal to receive the decision is not a ground for the abolition of tax control.

      3. The time frame of control shall not exceed thirty business days from the delivery of the decision on control to the authorized state body. The specified period can be extended up to fifty business days by the tax authority that scheduled the control.

      Control over activities of authorized state bodies may not be carried out more often than once a year.

      4. The time frame of control shall be suspended for time periods beginning on the date of delivery of the tax authority’s requests for submitting documents to the authorized state body and ending on the date of the authorized state body’s submission of the documents requested for control, as well as for those beginning on the date of sending the tax authority’s request to other territorial tax authorities, state-run banks and organizations carrying out certain types of banking operations, and other organizations operating in the territory of the Republic of Kazakhstan, and ending on the date of receipt of information and documents following the request.

      5. In case of suspension (resumption) of the time frame of control, tax authorities shall send to the authorized state bodies a notification with the following details:

      1) the date and registration number in the tax authority of a notification of suspension (resumption) of the time frame of control;

      2) the name of the tax authority;

      3) the name and identification number of the audited authorized state body;

      4) the date and registration number of the suspended (resumed) order;

      5) the ground for suspending (resuming) control;

      6) the date of delivery and receipt of the notification of suspension (resumption) of the time frame of control.

      When extending, suspending the time frame, period and (or) altering the list of control participants, a new decision is issued in the form established by the authorized body in addition to the one issued earlier.

      6. After completing control measures, a tax official shall draw up a control act specifying:

      1) the place of control, the date of drawing up the control act;

      2) the name of the tax authority;

      3) the positions, last names, first names, patronymics (if they are indicated in identity documents) of the tax officials hat conducted the control activity;

      4) the name, identification number and address of the authorized state body;

      5) the last names, first names, patronymics (if they are indicated in identity documents) of the head and officials of the authorized state body;

      6) the positions, last names, first names, patronymics (if they are indicated in identity documents) of officials of the authorized state body, with whose knowledge and in whose presence control was exercised;

      7) information on the previous control and measures taken to eliminate earlier revealed violations;

      8) the results of the conducted control;

      9) the positions, last names, first names, patronymics (if they are indicated in identity documents) of specialists of other state bodies involved in the exercise of control.

      7. If an official of the authorized state body refuses to sign a copy of the control act, the tax official exercising control shall draw up an act on refusal to sign in the presence of (at least two) witnesses. The act on refusal to sign shall specify:

      1) the place and date of its drawing up;

      2) the last name, first name and patronymic (if it is indicated in an identity document) of the tax official that drew up the act;

      3) the last name, first name and patronymic (if it is indicated in an identity document), the number of the identity document, the place of residence of the witnesses;

      4) the number, date of decision, the name of the authorized state body, its identification number;

      5) the circumstances of the refusal to sign a copy of the decision.

      8. In case of violations revealed as a result of control measures, tax authorities shall issue a request for elimination of violations of the tax legislation of the Republic of Kazakhstan.

      The request to eliminate violations of the tax legislation of the Republic of Kazakhstan (hereinafter referred to as the request) is a tax authority’s notification sent to the authorized state body in hard copy requiring it to eliminate the violations specified in the control act by the state body. The form of the request is established by the authorized body.

      The request shall specify:

      the name of the authorized state body;

      the identification number;

      the ground for for the request;

      the date of the request;

      the amount to be collected to the budget by the authorized state body.

      The request shall be sent within five business days from the delivery of the control act to the head (the person acting as head) of the audited authorized state body by hand against signature or in any other way confirming its dispatch and receipt.

      The request is subject to execution by the authorized state body within thirty business days from its delivery (receipt).

      9. Collection of tax debts discovered as a result of control is carried out by authorized state bodies responsible for correct calculation, full collection and timely transfer of taxes and payments to the budget.

      10. The authorized state bodies are responsible for correct calculation, full collection and timely transfer of taxes and payments to the budget, as well as for reliable information and its timely submission to tax authorities in accordance with the laws of the Republic of Kazakhstan.

      Note of the RCLI!
      Article 176 takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

Article 176. Control over compliance with the procedure for issuing accompanying notes for goods

SECTION 4. APPEAL AGAINST AUDIT FINDINGS AND ACTIONS (INACTION) OF TAX OFFICIALS CHAPTER 21. PROCEDURE FOR FILING AN APPEAL AGAINST AN AUDIT FINDINGS REPORT

Article 177. General provisions

      1. An appeal against an audit findings report shall be filed and considered in accordance with the procedure set forth in Articles 178-186 of this Code.

      2. A taxpayer (tax agent) has the right to appeal an audit findings report to a court.

Article 178. The procedure for filing an appeal by a taxpayer (tax agent)

      1. A taxpayer (tax agent) files an appeal against an audit findings report with the authorized body within thirty business days from the day following the delivery of the report to the taxpayer (tax agent).

      In this case, a taxpayer (tax agent) shall send a copy of the appeal to the tax authorities that conducted the tax audit and considered the taxpayer’s (tax agent’s) objections to a preliminary tax audit act.

      The date of filing an appeal with the authorized body, depending on the method of filing, is:

      1) the date of the appeal’s registration by the authorized body – in person without prior arrangement;

      2) the date of receipt by a postal or other communications organization - by mail.

      2. Given a good reason for missing the deadline set forth in paragraph 1 of this article, this deadline can be restored by the authorized body considering the complaint, at the request of a taxpayer (tax agent) submitting the complaint.

      3. For the purposes of restoring the missed deadline for submitting a complaint, the authorized body recognizes a reason to be good if this is temporary incapacity for work of an individual in whose respect a tax audit has been conducted as well as of the head and (or) the chief accountant (if any) of the taxpayer (tax agent).

      The provisions of this paragraph apply to individuals in whose respect a tax audit was conducted, as well as to taxpayers (tax agents) whose organizational structure does not provide for persons acting as above-mentioned persons during their absence.

      In this case, a document confirming the period of temporary incapacity for work of the persons specified in part one of this paragraph and a document establishing the organizational structure of such a taxpayer (tax agent) must be attached to the request for restoring the missed deadline for submitting a complaint by the taxpayer (tax agent).

      4. The authorized body meets a taxpayer’s (tax agent’s) request to restore the missed deadline for submitting a complaint if the complaint and request are submitted by the taxpayer (tax agent) within ten business days from the last day of temporary incapacity for work of the persons specified in part one of paragraph 3 of this article.

      5. A taxpayer (tax agent), who submitted a complaint to the authorized body, may withdraw it in his/her written application prior to a decision on this complaint. The withdrawal of a complaint by a taxpayer (tax agent) does not deprive him/her of the right to file a second complaint, provided that the deadlines set forth in paragraph 1 of this article are observed.

      A taxpayer (tax agent) is not entitled to withdraw the complaint within the period running from the date of scheduling a thematic audit until its completion.

Article 179. The form and content of a taxpayer’s (tax agent’s) complaint

      1. A taxpayer (tax agent) shall file a complaint in writing.

      2. The complaint must contain:

      1) the name of the authorized body to which the complaint is submitted;

      2) the last name, first name and patronymic (if it is indicated in an identity document) or full name of the person filing the complaint, his/her/its place of residence (location);

      3) identification number;

      4) the name of the tax authority that conducted a tax audit;

      5) circumstances, on which a person submitting a complaint grounds his/her claims, and evidence supporting these circumstances;

      6) the date of signing the complaint by the taxpayer (tax agent);

      7) the list of attached documents.

      3. The complaint may contain other information relevant to the resolution of the dispute.

      4. The complaint is signed by a taxpayer (tax agent) or by a person who is his/her representative.

      5. The following documents shall be attached to the complaint:

      1) documents confirming circumstances, on which the taxpayer (tax agent) grounds his/her claims;

      2) other documents relevant to the case.

Article 180. Refusal to consider a complaint

      1. The authorized body refuses to consider a taxpayer’s (tax agent’s) complaint in case:

      1) the taxpayer (tax agent) submits a complaint after the appeal period established by part one of paragraph 1 of Article 178 of this Code has expired;

      2) of non-compliance of the taxpayer’s (tax agent’s) complaint with the requirements established by Article 179 of this Code;

      3) a complaint is filed by a person who is not the taxpayer’s (tax agent’s) representative;

      4) the taxpayer (tax agent) has filed a statement of claim on the issues set out in the complaint with court.

      2. In the cases provided for in subparagraphs 1), 2) and 3) of paragraph 1 of this article, the authorized body shall notify the taxpayer (tax agent) in writing of its refusal to consider the complaint within ten business days from the registration of the complaint.

      The authorized body shall notify the taxpayer (tax agent) of the refusal to consider the complaint in the case provided for in subparagraph 4) of paragraph 1 of this article, in writing, specifying a reason for such a refusal within ten business days from establishing the fact of the taxpayer’s (tax agent’s) appeal to the court.

      3. In the cases provided for by subparagraphs 2) and 3) of paragraph 1 of this article, the authorized body’s refusal to consider the complaint does not deprive the taxpayer (tax agent) of the right to reappeal within the period established by part one of paragraph 1 of Article 178 of this Code, if he/she/it eliminates violations.

Article 181. Procedure for considering a complaint submitted to the authorized body

      1. A reasoned decision on a taxpayer’s (tax agent’s) complaint shall be made within thirty business days from the complaint’s registration, and on complaints of taxpayers subject to tax monitoring - within forty-five business days from the complaint’s registration, except for cases of extension and suspension of the terms of consideration of the complaint in accordance with Article 183 of this Code.

      2. The authorized body, when considering a taxpayer’s (tax agent’s) complaint, has the right to schedule a thematic audit, as well as a repeat thematic audit in accordance with the procedure set forth in Article 186 of this Code.

      3. Consideration of a complaint is limited to the issues complained of by the taxpayer (tax agent).

      4. If, for consideration of his/her/its complaint, a taxpayer (tax agent) submits documents not produced during a tax audit, the authorized body is entitled to verify such documents during thematic and (or) repeat thematic audits fixed in accordance with the procedure set forth in Article 186 of this Code.

      5. When considering a taxpayer’s (tax agent’s) complaint, the authorized body, if necessary, has the right:

      1) to send written requests to the taxpayer (tax agent) and (or) to the tax authorities that conducted the tax audit and considered the taxpayer’s (tax agent’s) objections to a preliminary tax audit act, for additional information or explanations on the issues specified in the complaint;

      2) to send inquiries to state bodies, relevant bodies of foreign states and other organizations about issues within the competence of such bodies and organizations;

      3) to meet with the taxpayer (tax agent) for discussing issues specified in the complaint;

      4) to ask tax officials that participated in the tax audit and considered the taxpayer’s (tax agent’s) objections to the preliminary tax audit act, for additional information and (or) explanations on arising issues.

      6. It is prohibited to interfere with activities of the authorized body exercising its powers to consider the complaint and to exert influence on the persons involved in the complaint’s consideration.

Article 182. Issuance of a decision pursuant to consideration of a complaint

      1. The authorized body sets up an appeals commission for the consideration of complaints about audit findings reports.

      The composition and status of the appeals commission are determined by the authorized body.

      Having considered a complaint, the authorized body shall issue a reasoned decision taking into account the appeals commission’s decision.

      2. As a result of consideration of a taxpayer’s (tax agent’s) complaint about an audit findings report, the authorized body makes one of the following decisions:

      1) to leave unchanged the audit findings report complained of and to reject the complaint;

      2) to cancel the complained audit findings report in full or in part.

      3. A written decision on the complaint shall be sent by registered mail with return receipt or delivered to the taxpayer (tax agent) by hand against signature, and its copy - to the tax authorities that conducted the tax audit and considered the taxpayer’s (tax agent’s) objections to a preliminary tax audit act.

      4. In case of partial cancellation of the report complained of pursuant to the consideration of the complaint, the tax authority that conducted the tax audit shall issue a notification of the results of consideration of the taxpayer’s (tax agent’s) complaint about the audit findings report and send it to the taxpayer (tax agent) within the time limits specified in subparagraph 11) of paragraph 2 of Article 114 of this Code.

      5. The decision of the authorized body made on the ground and in accordance with the procedure set forth in this Code is mandatory for execution by tax authorities.

Article 183. Suspension and (or) extension of the time period for consideration of a complaint

      1. The period for consideration of a complaint set forth in paragraph 1 of Article 181 of this Code shall be suspended in case of:

      1) conducting thematic and repeat thematic audits - for a time period from the date of such audits, in accordance with the procedure set forth in Article 186 of this Code, until the expiration of fifteen business days after the authorized body’s receipt of an audit act;

      2) sending inquiries to state bodies, relevant bodies of foreign states and other organizations about issues within the competence of such bodies and organizations - for a time period from the date of sending such an inquiry until the receipt of a reply.

      2. The authorized body shall notify the taxpayer (tax agent) of suspension of the period for consideration of the complaint in writing, specifying reasons for the suspension within three business days from the date of fixing an audit and (or) sending an inquiry.

      3. The period for consideration of a complaint set forth in paragraph 1 of Article 181 of this Code shall be extended in case of:

      1) the taxpayer’s (tax agent’s) submission of annex (annexes) to the complaint - for fifteen business days.

      In this case, the period set forth in paragraph 1 of Article 181 of this Code shall be extended for the period indicated in this subparagraph in each case of subsequent submission of annexes to the complaint;

      2) additional consideration of the complaint by the authorized body, if necessary, - up to ninety business days.

      In case of extending the period for considering the complaint in accordance with this subparagraph, the authorized body shall send a notification to the taxpayer (tax agent) within three business days from the extension of the period for consideration of the complaint.

Article 184. The form and content of the authorized body’s decision

      A decision of the authorized body on the results of consideration of a complaint shall indicate:

      1) the date of the decision;

      2) the name of the authorized body to which the taxpayer’s (tax agent’s) complaint was submitted;

      3) the last name, first name, patronymic (if it is indicated in an identity document) or full name of the taxpayer (tax agent) who filed the complaint;

      4) identification number of the taxpayer (tax agent);

      5) a summary of the audit findings report complained of;

      6) the subject-matter of the complaint;

      7) the justification with reference to the rules of international treaties ratified by the Republic of Kazakhstan and (or) the legislation of the Republic of Kazakhstan in accordance with which the authorized body made a decision on the complaint.

Article 185. The effect of submitting a complaint (application) to the authorized body or a court

      The taxpayer’s (tax agent’s) submission of a complaint (application) to the authorized body or a court shall suspend the execution of an audit findings report in the part complained of.

      When filing a complaint with an authorized body, the execution of an audit findings report in the part complained of shall be suspended pending a decision on the complaint.

      If a taxpayer (tax agent) submits an application to a court, the execution of an audit findings report in the part complained of is suspended from the day the court initiated proceedings in the application until the judicial act enters into force.

Article 186. Procedure for fixing and conducting a thematic audit

      1. The authorized body, when considering a taxpayer’s (tax agent’s), may, if necessary, fix a thematic audit.

      2. A document on fixing a thematic audit shall be made in writing specifying issues to be audited.

      In this case, a tax authority that conducted the tax audit, the results of which are being complained of, shall not be charged with carrying out a thematic audit, except for the case when the tax audit complained of was conducted by the authorized tax authority.

      3. A thematic audit shall be carried out in accordance with the procedure and within the time limits established by this Code. A thematic audit shall commence within ten business days from the tax authority’s receipt of a document on carrying out such an audit.

      4. The authorized body may fix a thematic audit again, in case of insufficient clarity or fullness of the data and also if new issues have arisen with respect to the circumstances and documents previously checked in a thematic audit.

      5. A decision on the results of consideration of the complaint shall be made with account of results of thematic and (or) repeat thematic audits. However, in case of the authorized body’s disagreement with the results of such audits, it has the right not to take them into account when issuing a decision on the complaint, but such disagreement shall be reasoned.

Chapter 22. PROCEDURE FOR THE APPEAL OF ACTIONS (INACTION) OF TAX OFFICIALS

Article 187. The right to appeal

      A taxpayer and a tax agent have the right to appeal against actions (inaction) of tax officials to a higher-level tax authority or a court.

Article 188. Procedure for appeal

      Actions (inaction) of tax officials are appealed in accordance with the procedure established by the laws of the Republic of Kazakhstan.

2. SPECIAL PART SECTION 5. GENERAL PROVISIONS

Article 189. Types of taxes, payments to the budget

      1. The Republic of Kazakhstan has the following:

      1) taxes:

      corporate income tax;

      individual income tax;

      value-added tax;

      excise duties;

      export rent tax;

      special payments and taxes of subsoil users;

      social tax;

      tax on vehicles;

      land tax;

      property tax;

      tax on gambling business;

      Note of the RCLI!
      Item thirteen of subparagraph 1) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      fixed tax;

      uniform land tax;

      2) payments to the budget:

      state duty;

      levies;

      payment for:

      use of licenses for certain types of activities;

      use of land plots;

      use of surface water resources;

      emissions into the environment;

      use of wildlife;

      forest use;

      use of specially protected natural areas;

      use of the radio-frequency spectrum;

      provision of long-distance and (or) international telephone communication, as well as cellular communication;

      placement of outdoor (visual) advertisements.

      2. For the purposes of application of international treaties, VAT and excise duties are indirect taxes.

      3. The amounts of taxes and payments to the budget are transferred to relevant budgets in accordance with the procedure set forth in the Budget Code of the Republic of Kazakhstan and the law on the republican budget.

Chapter 23. TAX ACCOUNTING

Article 190. Tax accounting and accounting records

      1. Tax accounting is the process of maintenance of accounting records by a taxpayer (tax agent) in accordance with the requirements of this Code for the purposes of collating and systematizing information on taxable and (or) tax-related items, as well as calculating taxes and payments to the budget and drawing up tax returns.

      Consolidated tax accounting is tax accounting carried out by an authorized representative of parties to a joint activity agreement in the form of a simple partnership, both for the activity as a whole, and for participatory interest of each party to the joint activity agreement.

      2. Accounting records include:

      1) accounting documents - for persons who are responsible for their maintenance, in accordance with the Law of the Republic of Kazakhstan “On Accounting and Financial Reporting”;

      2) takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      3) accounting source documents - for persons specified in paragraph 4 of this article;

      4) tax forms;

      5) tax accounting policy;

      6) other documents that are the basis for identifying taxable and tax-related items, as well as for calculating a tax obligation.

      3. Unless otherwise specified in paragraph 4 of this article, tax accounting is based on accounting data. The procedure for maintaining accounting records is established by the legislation of the Republic of Kazakhstan on accounting and financial reporting.

      4. Persons who are not required to maintain accounting records and draw up financial statements by the Law of the Republic of Kazakhstan “On Accounting and Financial Reporting”, organize and maintain tax accounting in accordance with this chapter, Chapter 24 of this Code and the rules approved by the authorized body.

      5. A taxpayer (tax agent), independently and (or) through an authorized representative of parties to a joint activity agreement responsible for the consolidated tax accounting, organizes tax accounting and determines the forms of collation and systematization of information in the form of tax registers so as to ensure:

      1) the collection of full and reliable information on the accounting procedure, for tax purposes, for transactions carried out by a taxpayer (tax agent) during a taxable period;

      2) decoding of each line of tax return forms;

      3) the drawing up of reliable tax returns;

      4) provision of information to tax authorities for tax control.

      6. The procedure for maintaining tax accounting is established by the tax accounting policy - a document approved by the taxpayer (tax agent) independently with account of the requirements of this Code.

      The tax accounting policy, except for the tax accounting policy of the taxpayer, who is not responsible for maintaining accounting records and drawing up financial statements in accordance with the Law of the Republic of Kazakhstan “On Accounting and Financial Reporting”, can be included as a separate section in the accounting policy developed in accordance with international standards of financial reporting and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

      7. Individual entrepreneurs applying special tax regimes on the basis of a patent or a simplified declaration, approve the tax accounting policy in the form established by the authorized body.

Article 191. Requirements to the tax accounting policy

      1. The tax accounting policy shall stipulate the following provisions:

      1) the forms and procedure for drawing up tax registers developed by the taxpayer (tax agent) independently;

      2) the names of the positions of persons responsible for compliance with the tax accounting policy;

      3) the procedure for maintaining separate tax accounting records in cases when this Code provides for an obligation to maintain such accounting;

      4) the procedure for maintaining separate tax accounting records in case of subsoil use operations;

      5) the methods chosen by the taxpayer to include expenses into deductibles for the purpose of calculating corporate income tax, as well as for offsetting VAT;

      6) the policy for identifying hedged risks, hedged items and hedging instruments used with respect to them, the method of assessing the degree of hedge effectiveness in case of hedging transactions;

      7) the policy for recording income on Islamic securities in case of transactions with Islamic securities;

      8) depreciation rates for each subgroup, a group of fixed assets with account of the provisions of paragraph 2 of Article 271 of this Code;

      9) in case of issuance of invoices in accordance with this Code by structural units of a resident legal entity that is a VAT payer, the code of each of these structural units used in the numbering of invoices to identify such a structural unit;

      10) the maximum number of digits used in the numbering of invoices being issued.

      The provisions of subparagraphs 4), 8), 9) and 10) of part one of this paragraph shall not apply to persons that are not responsible for maintaining accounting records and drawing up financial statements in accordance with the legislation of the Republic of Kazakhstan.

      2. The tax accounting policy for joint activities is approved by parties to a joint activity agreement in accordance with the procedure and on the grounds established by this Code.

      3. When carrying out a subsoil use activity within the framework of a simple partnership (consortium) under a production sharing agreement (contract), the tax accounting policy, along with the requirements of paragraph 1 of this article, shall include the method of fulfilling a tax obligation for each type of taxes and payments to the budget provided for by the tax legislation of the Republic of Kazakhstan by partners of a simple partnership and (or) operator, which is selected in accordance with paragraph 3 of Article 722 of this Code.

      4. The following provisions of the tax accounting policy shall be in effect for at least one calendar year:

      the procedure for maintaining separate tax accounting records;

      the methods chosen by the taxpayer to include expenses into deductibles for the purposes of calculating corporate income tax.

      The methods chosen by the taxpayer for offsetting VAT shall be valid for:

      at least one taxable period established for the purposes of VAT calculation - in the case provided for by subparagraph 6) of paragraph 2 of Article 407 and (or) paragraph 3 of Article 407 of this Code;

      at least one calendar year - in other cases.

      5. The taxpayer (tax agent) alters and (or) supplements the tax accounting policy either by:

      1) approving a new tax accounting policy or its new section developed in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

      2) introducing amendments and (or) additions to the current tax accounting policy or to a section of the current accounting policy developed in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

      6. A taxpayer (tax agent) is not allowed to introduce amendments and (or) additions to the tax accounting policy:

      1) for an audited taxable period - during the period of comprehensive and thematic audits;

      2) for a taxable period complained of - during the period of filing and consideration of a complaint about an audit findings report, taking into account the renewed period for filing a complaint;

      3) for taxable periods with respect to which a tax audit was conducted.

      7. A subsoil user is obliged to indicate a decision on application of the provisions of Article 259 of this Code in his/her/its tax accounting policy.

Article 192. Tax accounting rules

      1. Unless otherwise established by this Code, a taxpayer (tax agent) shall maintain tax accounting records in tenge by the accrual method in accordance with the procedure and under the conditions established by this Code.

      2. The accrual method is an accounting method, according to which the results of operations and other events are recognized after they are committed, also from the day of performance of works, rendering of services, shipment and transfer of goods to the buyer or his/her/its authorized person for the purpose of selling or registering property, and not from the date of receipt or payment of money or its equivalent.

      3. On the basis of tax accounting for the results of a taxable period, a taxpayer (tax agent) identifies taxable and tax-related items and calculates taxes and payments to the budget.

      4. For tax purposes, foreign exchange differences, including determination of the amount of exchange differences, are taken into account in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

      5. Inventory accounting is carried out in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting. For tax purposes, the value of inventories is determined without taking into account the change in the value of inventories by its write-off to a possible net realizable value and recovery value in respect of the previous inventory write-off caused by an increase in the possible net realizable value.

Article 193. Requirements to the compilation and retention of accounting records

      1. Accounting records are drawn up by a taxpayer (tax agent) in hard and (or) soft copy in the Kazakh and (or) Russian languages.

      If individual documents are drawn up in foreign languages, a tax authority has the right to require a taxpayer (tax agent) to translate them into Kazakh or Russian.

      2. When creating accounting records in electronic form, a taxpayer (tax agent) is obliged to submit hard copies of such records at the request of tax officials, except for invoices registered in the electronic invoice information system.

      3. A taxpayer (tax agent) shall retain accounting records for taxable or tax-related items until the end of the limitation period established by Article 48 of this Code for each type of tax or payment to the budget, at least for five years anyway.

      The running of the retention period for accounting records begins from a taxable period following the period in which a tax obligation was calculated on the basis of such accounting records, except for cases provided for by paragraphs 4 and 5 of this article, if the retention period established by them exceeds the period established by this paragraph.

      4. Accounting records confirming the value of a fixed asset of Group I, certain groups of depreciable assets created in accordance with Articles 258, 259 and 260 of this Code, also those for a fixed asset transferred (received) under a property lease (rent) contract, are retained by a taxpayer until the expiry of a five-year period, the running of which begins from a taxable period following the latest taxable period in which depreciation deductions for such an asset were calculated.

      Accounting records confirming the value of a fixed asset of Group II, III and IV, also those for a fixed asset transferred (received) under a property lease (rent) contract, are retained by a taxpayer within the limitation period established by Article 48 of this Code, but not less than for a five-year period, the running of which begins from a taxable period following the taxable period in which such an asset was added to the transaction table of the group of fixed assets.

      5. Accounting records confirming the value of assets that are not depreciable for tax purposes are retained by a taxpayer for a five-year period, the running of which begins from a taxable period following the taxable period in which the taxpayer disposed of an asset that is not subject to depreciation.

      6. If a taxpayer was reorganized, the obligation for the retention of accounting records of the reorganized person is assigned to its successor (successors).

Article 194. Rules for the maintenance of separate tax accounting

      1. Separate tax accounting is tax accounting for taxable and (or) tax-related items for the purposes of calculating tax obligations for certain types of taxes separately for distinguished categories, for which this Code provides for terms of taxation other than standard ones, that are mentioned below:

      a type of activity or a set of types of activities;

      a subsoil use contract;

      a deposit (group of deposits, part of a deposit) classified as low-profit, high-viscosity, watered, marginal, worked-out;

      a trust management agreement or another case of trust management;

      a joint activity agreement;

      turnover of sale of goods, works, services;

      type of income;

      a construction object.

      Terms of taxation other than standard ones also include an abatement of tax, exemption from taxation, application of a special tax regime.

      A taxpayer (tax agent) is not entitled to combine taxable and (or) tax-related items for the purposes of calculating tax obligations for the distinguished categories for which this Code establishes requirements to maintain separate tax accounting.

      2. A taxpayer (tax agent) is obliged to maintain separate tax accounting in cases provided for by this Code.

      Separate tax accounting of taxable and (or) tax-related items shall be maintained by:

      an authorized representative of parties to a joint activity agreement with respect to the joint activity agreement;

      a trust management founder or trust manager.

      3. A taxpayer applying a special tax regime for small business entities in case of generation of income subject to taxation in accordance with a standard procedure is obliged to maintain separate tax accounting of taxable and (or) tax-related items in order to calculate tax obligations under the standard procedure separately from tax obligations under a special tax regime for small business entities.

      4. A taxpayer (tax agent) independently establishes the procedure for maintaining separate tax accounting in the tax accounting policy, including a list of types of total income and expenses, methods for distributing such income and expenses among the distinguished categories and other activities for which this Code establishes different terms of taxation.

      5. A subsoil user is obliged to maintain separate tax accounting of taxable and (or) tax-related items for the purposes of calculating tax obligations for contractual activities separately from non-contractual ones in accordance with the procedure set forth in Article 723 of this Code.

      6. Transactions with derivative financial instruments shall not be treated as subsoil operations (contractual activity).

      7. Separate tax accounting is maintained by taxpayers (tax agents) on the basis of accounting records in accordance with the approved tax accounting policy and with account of the provisions established by this article.

      8. When conducting separate tax accounting for the calculation of a tax obligation, a taxpayer (tax agent) is obliged to ensure:

      1) the entry of taxable and (or) tax-related items in tax accounting for the calculation of taxes for which this Code establishes the requirement for separate tax accounting - for each distinguished category separately from other activities;

      2) the calculation of taxes and payments to the budget for which separate tax accounting is not required by this Code - for all activities as a whole;

      3) the filing of tax returns on taxes and payments to the budget - for all activities as a whole, except for:

      corporate income tax declarations;

      individual income tax declarations;

      4) separate presentation of:

      a simplified declaration - for types of income to which a special tax regime on the basis of a simplified declaration is applied;

      declarations with a fixed deduction - for types of income, to which a special tax regime with a fixed deduction is applied;

      declarations for payers of a uniform land tax – for income from activity subject to a special tax regime for peasant or farming enterprises;

      declaration on corporate or individual income tax - for other types of income;

      5) the submission of a single declaration on corporate or individual income tax as a whole for all activities and relevant annexes thereto for each distinguished category in cases not specified in subparagraph 4) of this paragraph.

Article 195. General principles of separate tax accounting for corporate income tax

      1. For the purposes of this article, the following definitions apply:

      1) total income and expenses - income and expenses in a reporting taxable period, including those related to general fixed assets, that are connected both with the performance of an activity on an allocated category and other activities and are subject to distribution between them;

      2) general fixed assets - fixed assets related both to the performance of an activity on an allocated category and other activities and, due to specific nature of their use, having no direct causal link to a specified allocated category or other activities;

      3) indirect income and expenses - income and expenses in a reporting taxable period, including those related to fixed assets, that have a direct causal link to several allocated categories and are subject to distribution only among such categories;

      4) implied fixed assets - fixed assets that, due to specific nature of their use, have a direct causal link to several allocated categories;

      5) direct income and expenses - income and expenses in a reporting taxable period, including those related to fixed assets, having a direct causal link to a specified allocated category or other activities.

      2. For the purposes of separate tax accounting, all income and expenses of a taxpayer are divided into direct, indirect and total ones.

      A taxpayer (tax agent) classifies incomes and expenses as direct, indirect and total on his/her own on the basis of the nature of his/her activity.

      Direct income and expenses shall be attributed in full only tothatallocated category or other activities, to which they have a direct causal link.

      Total income and expenses are subject to distribution among an allocated category and other activities and pro rata relate to income and expenses of the allocated category and other activities, to which they have a direct causal link.

      Indirect income and expenses are subject to distribution only among allocated categories and pro rata relate to income and expenses of that category, to which they have a direct causal link.

      Total and indirect income and expenses are distributed in accordance with the methods established by paragraph 4 of this article and with regard to the provisions of paragraph 3 of this article.

      3. As to general and implied fixed assets, expenses incurred by a taxpayer on these fixed assets, including depreciation and subsequent expenses, are subject to distribution among an allocated category and other activities.

      As to total and indirect expenses for remuneration, total amount of deductions of such remuneration, determined in accordance with Article 246 of this Code, is subject to distribution.

      If an exchange rate difference cannot be attributed toa taxpayer’s allocated category and other activities by a direct causal link, the final (balanced) financial result for a taxable period shall be subject to distribution in the form of excess amount of a positive exchange rate difference over the amount of a negative exchange rate difference or excess amount of a negative exchange rate difference over the amount of a positive exchange rate difference.

      Taxes to be allocated to deductibles as general or indirect expenses are subject to distribution in accordance with the methods established in paragraph 4 of this article, without the distribution of their relevant taxable and (or) tax-related items.

      4. A taxpayer (tax agent) distributes total and indirect income and expenses for each allocated category and other activities on his/her/its own taking into consideration specific nature of an activity and using one or several methods of separate tax accounting, which is customary for tax accounting policy, including that:

      1) by the ratio of direct income, attributable to each allocated category and other activities, in the total amount of direct income received by the taxpayer (tax agent) in a taxable period;

      2) by the ratio of direct expenses, attributable to each allocated category and other activities, in the total amount of direct expenses incurred by the taxpayer (tax agent) in a taxable period;

      3) by the ratio of expenses incurred on one of the following items - direct production expenses, payroll or the value of fixed assets, attributable to each allocated category and other activities, in the total amount of expenses for this item incurred by the taxpayer (tax agent) in a taxable period;

      4) by the ratio of the average number of employees engaged in an activity on an allocated category and other activities, to the total average number of employees of the taxpayer (tax agent);

      5) other methods.

      The taxpayer (tax agent) can apply various methods of distribution, which he/she/it chooses independently, to different types of total and indirect income and expenses.

      For more accurate distribution of total and (or) indirect income and expenses, the taxpayer (tax agent) determines the value of the ratio, obtained as a result of applying one of the above methods, in percentage points up to one-hundredth (0.01%).

      If a tax accounting policy has no method for distributing total income and expenses, tax authorities shall distribute such income and expenses in the course of a tax audit using a method provided for in subparagraph 1) of part one of this paragraph.

      5. When calculating corporate income tax on a taxpayer’s activity as a whole, expenses incurred on any allocated category, which the taxpayer may compensate for using only income received from the activity on such an allocated category in subsequent taxable periods, shall be ignored as provided for by Article 300 of this Code.

Article 196. Financial lease

      1. Financial lease is the transfer of property under a lease agreement concluded in accordance with the legislation of the Republic of Kazakhstan and also the provision of a leased asset for secondary lease or sublease.

      2. If a lessee may extend the term of financial lease under a lease agreement, the term of financial lease is determined with account of actual period of extension.

      3. Property transferred for financial lease is leased assets to be received by a lessee under a lease agreement.

      For tax accounting purposes, the lessee is treated as the buyer of a leased asset.

      The value at which a leased asset is transferred (received) is the value of the leased asset determined on the basis of a lease agreement. If the lease agreement does not specify the value at which the leased asset is transferred (to be received), then the said value is determined as the sum of all the lease payments payable for the entire lease period, exclusive of VAT.

      For tax accounting purposes, the transfer of property under a property lease agreement, which is at variance with a lease agreement concluded in accordance with the legislation of the Republic of Kazakhstan, is treated as rendering of services, and lease payments payable, exclusive of VAT, - as a payment for services rendered, respectively.

Article 197. Requirements to the transfer of property into financial lease for the purposes of applying tax reliefs

      1. For the purposes of applying subparagraph 1) of paragraph 2 of Article 288, Article 398, paragraph 6 of Article 427 and paragraph 6 of Article 428 of this Code, the transfer of property into financial lease shall meet the requirements provided for in this article.

      2. Unless otherwise established by this paragraph and paragraph 3 of this article, financial lease is the transfer of property under a lease agreement concluded in accordance with the legislation of the Republic of Kazakhstan for a period over three years if it meets one of the following requirements:

      1) transfer of property into the ownership of a lessee and (or) granting of the right to purchase the property at a fixed price to a lessee are specified in a lease agreement;

      2) the financial lease term exceeds 75 percent of the useful life of the property transferred into financial lease;

      3) current (discounted) value of lease payments for the entire term of financial lease exceeds 90 percent of the value of property transferred into financial lease.

      Secondary lease is the provision of leased assets left in the ownership of a lessor to another lessee (lessees) in case of termination, cancellation of a lease agreement or its modification caused by a change in the number of leased assets (for the purposes of this article, hereinafter referred to as a primary lease agreement), provided all of the following requirements are met:

      a primary lease agreement is canceled, terminated or modified and a secondary lease agreement (agreements) is (are) concluded within one taxable period established by Article 423 of this Code;

      conditions provided for in a primary lease agreement remain in a secondary lease agreement (agreements), except for those concerning the number of leased assets, lease payments and a lease term;

      the number of leased assets provided for secondary lease shall not exceed their total number under a primary lease agreement;

      the value of a leased asset transferred into secondary lease does not exceed the value of the leased asset under a primary lease agreement, reduced by the amount of lease payments paid as of the date of cancellation of the lease agreement, the rate of interest under the secondary lease agreement (agreements) does not exceed the rate of interest under the primary lease agreement;

      leased assets are provided for secondary lease for at least three years.

      3. For the purposes of applying subparagraph 1) of paragraph 2 of Article 288, Article 398, paragraph 6 of Article 427 and paragraph 6 of Article 428 of this Code, none of the following is financial lease:

      1) leasing transactions in case of cancellation of lease agreements on them (termination of obligations under a lease agreement) prior to expiration of three years from the conclusion of such agreements, except for the case of:

      declaring a lessee bankrupt in accordance with the legislation of the Republic of Kazakhstan on rehabilitation and bankruptcy and its removal from the National Register of Business Identification Numbers;

      declaring a lessee, that is an individual, missing or deceased, incapacitated or partially incapacitated by a final and binding court judgment, categorizing him/her as a I, II disability group member, and also in case of death of a lessee that is an individual;

      entry into legal force of a law enforcement officer’s decision to return a writ of execution to a lessor becausea lessee has no property, including money, securities or income, which can be seized and sold, and (or) in case of unsuccessful measures taken by the law enforcement officer to identify his/her property, including money, securities or income as provided for by the legislation of the Republic of Kazakhstan on enforcement proceedings and the status of law enforcement agents;

      entry into legal force of a court judgment to reject the lessor’s claim for foreclosing on the lessee’s property, including money, securities or income;

      provision of leased assets for secondary lease;

      2) leasing transactions for which the amount of lease payments (that under an agreement and (or) actual one) exclusive of remuneration for the first year of the lease agreement is more than 50 percent of the leased asset’s value;

      3) leasing transactions with respect to which, prior to expiration of three years from the conclusion of the lease agreement, the lessee changed due to the change of persons in the liability, except for its reorganization;

      4) leasing transactions with respect to which the lessor changed due to the change of persons in the liability, except for its reorganization through transformation;

      5) transactions for the transfer of property into sublease.

Article 198. Features of fulfillment of tax obligations by a joint enterprise

      1. Unless otherwise established by this paragraph, in case of a joint individual enterprise, taxable and (or) tax-related items are accounted for and taxed in the manner specified in this article.

      In case of a joint individual enterprise under a joint activity agreement (in the form of a simple partnership), taxable and (or) tax-related items are accounted for and taxed in the manner specified in article 199 of this Code.

      Special part of this Code may establish special tax regimes with respect to peasant and farm enterprises, whichprovide for a different procedure for accounting and taxing taxable and (or) tax-related items.

      2. Tax obligations for activities within the framework of a joint individual enterprise, as well as with respect to jointly owned property used in a joint individual enterprise, are fulfilled by:

      1) the head of a peasant enterprise - if a joint individual enterprise is in the form of a peasant enterprise;

      2) an authorized person of a joint individual enterprise - in other cases.

      3. If after application of methods for ensuring the fulfillment of an overdue tax obligation and measures of enforced collection of tax debts from a person specified in subparagraph 2) of paragraph 2 of this article, this person still has tax debts related to a joint individual enterprise, the obligation to pay such debts is imposed in equal shares on all members of the joint individual enterprise.

      In this case, the person indicated in subparagraph 2) of paragraph 2 of this article is obliged to notify all members of a joint individual enterprise of the existence of tax debts of the joint individual enterprise and the amount of such debts within three business days from the application of measures of enforced collection of tax debts.

Article 199. Implementation of joint activities

      1. Unless otherwise established by this Code, in case of an agreement on joint activities or another agreement involving two or more parties to a joint activity agreement without setting up a legal entity (hereinafter referred to as a joint activity agreement), taxable and (or) tax-related items are accounted for and taxed with respect to each party to the joint activity agreement in accordance with the procedure established by this Code.

      2. Each party to a joint activity agreement independently keeps record of assets, liabilities, income and expenses for joint activity with respect to his/her participatory interest in order to identify taxable and (or) tax-related items, unless otherwise established by this Code.

      3. If a joint activity agreement does not provide for a procedure for distributing assets, liabilities, income and expenses for joint activity in order to identify taxable and (or) tax-related items, the parties to the joint activity agreement shall develop and approve a tax accounting policy for joint activity prior to the filing of first tax returns that set forth such a procedure and a tax obligation arising as a result of joint activity.

      4. A joint activity agreement may appoint an authorized representative of parties thereto, responsible for maintaining tax accounting for such an activity or part thereof, unless otherwise established by this Code.

      5. For tax purposes, an authorized representative of parties to a joint activity agreement accounts for assets, liabilities, income and expenses for a joint activity or part thereof separately from his/her/its assets, liabilities, income and expenses for other activities.

      6. The distribution of assets, liabilities, income and expenses for joint activity, in order to identify taxable and (or) tax-related items, between parties to a joint activity agreement is carried out by parties thereto and (or) their authorized representative, if any, pursuant to the results of each taxable period in the manner determined by the joint activity agreement.

      If conditions of a joint activity agreement and (or) tax accounting policy for joint activity do not establish a procedure for distributing assets, liabilities, income and expenses in order to identify taxable and (or) tax-related items, parties to the joint activity agreement and (or) their authorized representative, if any, shall carry out this distribution in proportion to participatory shares under the joint activity agreement.

      The outcome of distribution of assets, liabilities, income and expenses in order to identify taxable and (or) tax-related items between parties to a joint activity agreement must be documented in writing, signed by all the parties to the joint activity agreement and (or) their authorized representative, if any, and also bear aseal (if any, in the cases established by the legislation of the Republic of Kazakhstan). In the course of a tax audit, each party to the joint activity agreement submits a document,containing the results of distribution of assets, liabilities, income and expenses, to tax authorities.

      The authorized representative of parties to a joint activity agreement must have copies of all documents underlying the distribution of assets, liabilities, income and expenses, unless otherwise established by this Code.

Article 200. Features of subsoil users’ joint activity

      1. If the subsoil use right under one subsoil use contract belongs to several individuals and (or) legal entities within a simple partnership (consortium), each member of a simple partnership (consortium) shall be a taxpayer of taxes and payments to the budget established by the tax legislation of the Republic of Kazakhstan.

      2. If the subsoil use right under one subsoil use contract belongs to several individuals and (or) legal entities within a simple partnership (consortium), members of a simple partnership (consortium) are obliged to appointtheir authorized representative responsible for maintaining consolidated tax accounting for an activity carried out under such a subsoil use contract.

      The authorized representative of members of a simple partnership (consortium) is obliged to maintain consolidated tax accounting for the activity carried out under the subsoil use contract in accordance with the requirements of this Code.

      In case of subsoil operations carried out under a production sharing agreement (contract), the operator acts as such an authorized representative.

      Powers of the authorized representative of members of a simple partnership (consortium), including the operator, must be confirmed in accordance with the requirements of Articles 16 or 17 of this Code.

      3. Tax obligations for a subsoil use agreement shall be fulfilled in the manner determined by this Code by a member (members) of a simple partnership (consortium) and (or) by an authorized representative of members of a simple partnership (consortium), responsible for maintaining consolidated tax accounting for such an activity, on the basis of consolidated tax accounting data. In this case, members of a simple partnership (consortium) independently fulfill tax obligations for filing tax returns, except for the cases provided for in subparagraph 2) of paragraph 3 of Article 722 of this Code.

Chapter 24. FEATURES OF MAINTAINING TAX ACCOUNTING BY INDIVIDUAL ENTREPRENEURS NOT MAINTAINING ACCOUNTING RECORDS AND NOT COMPILING FINANCIAL STATEMENTS UNDER THE LAW OF THE REPUBLIC OF KAZAKHSTAN “ON ACCOUNTING AND FINANCIAL STATEMENTS”

Article 201. General provisions

      For the purposes of applying the provisions of this Code in terms of maintaining tax accounting and procedure for determining and fulfilling tax obligations by individual entrepreneurs not maintaining accounting records and not compiling financial statements in accordance with the Law of the Republic of Kazakhstan “On Accounting and Financial Statements”, the following definitions are used:

      1) assets – property, controlled by an individual entrepreneur, which is expected to bring economic benefit in the future;

      2) accounting source documents - documentary evidence, both in hard and soft copy, of the fact of a transaction or event and the right to perform it, on the basis of which tax accounting is maintained;

      3) biological asset - an animal or a plant to be used in agricultural activity;

      4) inventories - assets held for sale, as well as for use in the process of production, for administrative purposes or in performance of works, rendering of services;

      5) equity - a share in the assets of an individual entrepreneur, remaining after deducting all the obligations;

      6) income - an increase in economic benefit during areporting period in the form of asset inflows or asset enhancement or a decrease in liabilities that results in an equity increase other than that related to equity participant contributions;

      7) intangible asset - an identifiable non-monetary asset that is not physical in nature and intended for the use in production or for administrative purposes, also for property lease (rent) to other persons;

      8) liability - current obligation of an individual entrepreneur, the settlement of which will result in the disposal of resources with economic benefit;

      9) fixed assets - tangible assets that:

      are intended for the use in production or for administrative purposes when selling goods, performing works, rendering services, also for property lease (rent) to other persons;

      are expected to be used for more than one year.

Article 202. Forms of accounting source documents and requirements to their drawing up

      1. Individual entrepreneurs, who do not maintain accounting records and do not compile financial statements in accordance with the Law of the Republic of Kazakhstan “On Accounting and Financial Reporting”,use accounting source documents, the forms of which are approved by the authorized body, as well as requirements to their drawing up.

      2. Entries into tax registers shall be made on the basis of source documents.

Article 203. Features of tax accounting

      1. Individual entrepreneurs recalculate foreign currency transactions in tenge using the market exchange rate set on the last business day preceding the date of transaction. An exchange rate difference is not taken into account for tax purposes.

      2. In tax accounting, inventories are recognized at their production cost when they are received by an individual entrepreneur or his/her authorized person, also after their production by an individual entrepreneur, as a result of disassembly of fixed assets by transferring them from other assets.

      The production cost of inventories includes the costs of acquisition, processing, other costs incurred to bring the inventories to their current condition and deliver them to their current location.

      Acquisition costs include import duties, taxes (except for reimbursable ones), transportation, manufacturing and other costs directly related to the acquisition. Trade discounts provided by a supplier, the supplier’s refunds and other similar discounts and refunds are deducted in cost determination.

      Costs of processing inventories include costs directly related to the processing of raw materials into finished products, including direct labor costs, as well as manufacturing overhead costs.

      For tax accounting purposes, the production cost of a unit of inventories is determined with account of actual costs provided for in part two of this paragraph for such a unit of inventories.

      An individual entrepreneur has the right to determine, for tax accounting purposes, the cost of a unit of inventories using the weighted average cost method. The weighted average cost method determines the production cost of inventories as the average value of the production cost of inventories at the beginning of a period and of similar inventories acquired (produced) during a period. The individual entrepreneur chooses this method by indicating it in his/her tax accounting policy.

      Individual entrepreneurs engaged in production of goods, as well as individual entrepreneurs that chose the weighted average cost method, record inventories at their arrival and disposal in tax registers, the form of which is developed by individual entrepreneurs on their own.

      The arrival of inventories by way of their internal movement is not an individual entrepreneur’s income. Internal movement of inventories means their movement from one financially liable person appointed by an individual entrepreneur to another financially liable person appointed by the same individual entrepreneur.

      For the purposes of tax accounting of an individual entrepreneur, transfer of inventories for storage or as a customer-supplied raw material is not the disposal of inventories.

      An individual entrepreneur receives inventories for storage on the basis of a storage agreement or an application to refuse acceptance in case the individual entrepreneur received inventories and legitimately refused to accept invoices of these inventories’ suppliers and to pay them. The value of such inventories is not the income of an individual entrepreneur.

      The disposal of inventories is:

      1) termination of their recognition as an asset, also as a resultof external sale of inventories, their transfer free of charge, their use in production process, in performance of works, rendering of services and for other purposes, when they are transferred as a contribution to the authorized capital, in case of their exchange, shortage discovered when taking an inventory, a theft, property damage, expiration of storage periods, obsolescence and other cases of loss of marketability;

      2) reclassification of an asset, including transfer to fixed assets, other assets.

Chapter 25. TAX FORMS

Article 204. Tax forms

      1. Tax forms include a tax application, tax returns and tax registers.

      Note of the RCLI!
      This wording of paragraph 2 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      2. Tax forms are compiled, signed, certified (by a seal in cases established by the legislation of the Republic of Kazakhstan or by electronic digital signature) by a taxpayer (tax agent) in hard and (or) soft copy in Kazakh and (or) Russian.

Article 205. The retention period for tax forms

      1. Tax forms are retained by a taxpayer (tax agent) during the limitation period established by Article 48 of this Code, at least for five years.

      2. In case of reorganization of a taxpayer, a tax agent, an operator that is a legal entity, an obligation to retain tax forms of a reorganized person is assigned to its successor (successors).

Subchapter 1. Tax application, tax returns

Article 206. General provisions

      1. A tax application is a document of a taxpayer (tax agent) submitted to a tax authority for the purpose of exercising his/her/its rights and performing duties in the cases established by this Code. The forms of tax applications are approved by the authorized body.

      2. A tax return is a document of a taxpayer (tax agent) filed in accordance with the procedure established by this Code, which contains information on the taxpayer (tax agent), taxable and (or) tax-related items, assets and liabilities, and also on the calculation of tax obligations and social welfare payments.

      Tax returns include tax declarations, calculations, annexes thereto by types of taxes, payments to the budget, social welfare payments, a declaration on indirect taxes on imported goods, an application for importation of goods and payment of indirect taxes, a register of rental (use) agreements. The forms of tax returns and rules for their drawing up are approved by the authorized body.

      Note of the RCLI!
      This wording of item one of paragraph 3 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      3. Tax returns, except for a declaration on indirect taxes on imported goods, an application for importation of goods and payment of indirect taxes, are divided into the following types:

      1) initial - tax returns filed for a taxable period in which the taxpayer (tax agent) was registered as a taxpayer and (or) a tax obligation arose, for the first time, for certain types of taxes and payments to the budget, as well as the obligation to calculate, withhold and transfer social welfare payments;

      2) regular - tax returns filed for subsequent taxable periods after the filing of initial tax returns.

      For the purposes of Chapter 50 of this Code, a regular declaration on indirect taxes on imported goods is a tax return filed by a person, who imported goods, for a taxable period in which such goods were recorded;

      3) additional - tax returns filed when making alterations and (or) additions to earlier filed tax returns for a taxable period to which these alterations and (or) additions relate;

      4) additional upon a notice - tax returns filed when making alterations and (or) additions to earlier filed tax returns for a taxable period in which a tax authority revealed violations pursuant to the results of an in-house audit;

      5) liquidation - tax returns filed by a taxpayer (tax agent) terminating activity, being in liquidation or under reorganization, and also after deregistration for VAT.

Article 207. Features of drawing up tax returns, including the register of rental (use) agreements

      1. In cases provided for by this Code, a taxpayer (tax agent), carrying out types of activities subject to different terms of taxation, compiles tax returns separately for each activity.

      In case of switching, within a calendar year, from special tax regime for producers of agricultural products and agricultural cooperatives to the standard procedure, tax returns shall be compiled separately for the period of application in the specified calendar year of:

      special tax regime;

      standard procedure.

      2. Subsoil users, for whom this Code sets forth the requirement for separate tax accounting, shall compile tax returns in the manner prescribed by this Code.

      3. The register of rental (use) agreements is drawn up by persons providing retail facilities, trading places in retail facilities, also at open-air markets, for temporary possession and use.

      The register of rental (use) agreements is drawn up and submitted to the tax authority at the location of the taxpayer providing retail facilities, trading places in retail facilities, also at open-air markets, for rent (use) on or before March 31 of a year following the reporting one.

Article 208. The order for submitting a tax application, tax returns

      1. A tax application and a tax return shall be submitted to tax authorities in accordance with the procedure and within the time limits established by this Code.

      2. If a taxpayer (tax agent) belongs to the categories for which the authorized body established different forms of tax returns, in this case, tax returns are filed in the forms provided for each category to which the taxpayer (tax agent) belongs.

      3. Unless otherwise provided for by this article, a tax application and tax returns shall be submitted to relevant tax authorities, at the taxpayer’s choice:

      1) in hard copy, also through the “Government for Citizens” State Corporation (except for VAT returns), -when filed in person without prior arrangement;

      2) in hard copy – when submitted by registered mail with return receipt;

      3) in soft copy allowing computer processing of information.

      The list of tax applications submitted through the “Government for Citizens” State Corporation is approved by the authorized body together with the authorized body in the field of informatization.

      4. After deregistration for VAT by the decision of a tax authority, VAT returns shall be filed in person without prior arrangement.

      5. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      6. If filed in person without prior arrangement, a tax application and (or) a tax return shall be at least in two copies, one of which shall be returned to a taxpayer (tax agent) with a note put by a tax authority.

      7. The authorized body posts on its Internet resource the electronic form structure, the software for electronic compiling and submitting and update of this software for:

      1) a tax application – on or before January 1 of a current year;

      2) tax returns – at least thirty business days before the deadline for filing tax returns.

      8. After filing liquidation tax returns, a taxpayer (tax agent) has no right to file next scheduled tax returns with a tax authority, except for additional and (or) additional upon notice ones, unless otherwise provided for by this paragraph.

      Liquidation tax returns filed for an unfinished taxable period are equated to regular tax returns for a taxable period in case:

      1) a taxpayer (tax agent) reverses his/her/its resolution to liquidate, to reorganize through separation after the completion of a tax audit;

      2) a taxpayer(tax agent) reverses his/her/its resolution to terminate entrepreneurial activity before deregistration as an individual entrepreneur;

      3) of a decision to refuse to deregister as an individual entrepreneur.

      Tax returns for subsequent taxable periods from the date of filing liquidation tax returns shall be filed with relevant tax authorities in accordance with the procedure and within the time limits established by this Code.

      9. Given no taxable items, no tax returns shall be filed on:

      property tax;

      land tax;

      vehicle tax;

      export rent tax;

      special payments and taxes of subsoil users;

      payments to the budget.

      10. The obligation to file tax returns on excise duties applies to taxpayers (tax agents) carrying out activities such as:

      production of gasoline (except for aviation one), diesel fuel;

      wholesale and (or) retail sales of gasoline (except for aviation one), diesel fuel;

      production of ethyl alcohol and (or) alcohol products;

      manufacture of tobacco products;

      production, assembly (packaging) of excisable goods, provided for by subparagraph 6) of Article 462 of this Code.

      The obligation to file tax returns on excise duties applies to taxpayers (tax agents) carrying out taxable transactions for crude oil, gas condensate (except for crude oil and gas condensate sold for export).

      The obligation to file tax returns on excise duties does not apply to taxpayers (tax agents) engaged in the wholesale of tobacco products, heated tobacco products, nicotine-containing liquid for electronic cigarettes.

      11. Annexes to declarations, calculations are not submitted if there are no data to be stated in them.

Article 209. Acceptance of tax forms, except for tax registers

      1. Tax forms shall be submitted to tax authorities within the time limits established by this Code and standards of public services approved by the authorized body.

      2. Depending on the method of submitting tax forms to tax authorities, the date of their submission is that:

      1) of receipt by tax authorities or by the “Government for Citizens” State Corporation - if submitted in person without prior arrangement;

      2) of the receipt note by a postal or other communications organization – if submitted by registered mail with return receipt;

      3) of their receipt by the central processing unit of the system for receiving and processing tax returns, which is indicated in an electronic notification sent to a taxpayer (tax agent) within at least one day of their receipt by the system - if submitted in electronic form.

      3. When receiving and processing tax forms, the tax authorities’ system performs a format-logical control, which consists in verifying the completeness and correctness of their filling.

      4. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      5. Tax forms are not considered to have been submitted to tax authorities given any of the cases below:

      1) tax forms do not correspond to forms established by the authorized body;

      2) a tax authority’s code is not indicated in a tax form;

      3) taxpayer’s (tax agent’s) tax identification number is not indicated or incorrectly indicated in a tax form;

      4) a tax form does not specify a taxable period;

      5) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      6) the type of tax returns is not indicated in a tax form;

      7) tax returns are not signed and (or) not certified with a seal bearing a taxpayer’s name;

      8) tax returns have the “Denial of processing” processing status if the system for receiving and processing tax returns rejects format-logical control;

      9) the requirements of paragraph 1 of Article 212 of this Code were violated regarding the method of filing tax returns in case of extension of the deadline for their filing;

      10) registers of invoices for goods, works and services purchased and sold during a taxable period were not submitted concurrently with VAT declaration – if invoices were received or issued in paper form;

      11) VAT return was not submitted in person without prior arrangement after deregistration for the specified tax upon the decision of a tax authority.

Article 210. The order for withdrawing tax returns

      1. To withdraw his/her/its tax returns, a taxpayer (tax agent) shall submit to atax authority:

      1) a tax application - at the place of his/her/its registration.

      Iftax returns are withdrawn by way of their altering because of incorrect indication of a tax authority’s code, a tax application shall be submitted at the place of filing such returns;

      2) tax returns - in case of withdrawal of tax returns by deleting those filed with violation of the requirements of paragraph 2 of Article 208 of this Code.

      A tax authority withdraws tax returns from the system for receiving and processing tax returns with account of all additional forms of tax returns filed for the specified taxable period.

      Tax returns can be withdrawn using such methods as:

      1) deletion, when a tax return to be withdrawn is deleted from the central processing unit of the system for receiving and processing tax returns;

      2) alteration, when alterations and (or) additions declared by a taxpayer (tax agent) are entered in earlier filed tax returns.

      2. The method of deletion is used to withdraw the following tax returns:

      1) liquidation tax returns if a decision to resume operations was made before a tax audit;

      2) those submitted with violation of the requirements of paragraph 2 of Article 208 and paragraph 5 of Article 211 of this Code;

      3) those submitted with no obligation for filing such a tax return;

      4) those considered not to have been submitted in accordance with paragraph 5 of Article 209 of this Code;

      5) those submitted after expiration of the limitation period, except for tax returns upon notices of elimination of violations identified by a tax authority pursuant to the results of an in-house audit.

      Withdrawing tax returns bythe application of the deletion method to personal accounts of a taxpayer (tax agent), the tax authority at the place of registration reverses calculated (reduced) amounts of taxes, payments to the budget and social welfare payments with respect to tax returns being withdrawn.

      In case of failure to submit a tax application for withdrawing tax returns specified in subparagraphs 2), 3), 4) and 5) of part one of this paragraph, the tax authority shall notify the taxpayer (tax agent) of the elimination of violations of the tax legislation of the Republic of Kazakhstan within five business days from the day the failure to submit was found out.

      In case of failure to execute the notice, the tax authority shall withdraw tax returns without a tax application using the deletion method. Towithdraw tax returns, the tax authority issues a decision to withdraw them in the form established by the authorized body.

      3. The method of alteration is used to withdraw tax returns:

      1) in which a currency code is not indicated or is incorrectly indicated;

      2) in which the number and (or) date of a subsoil use contract are not indicated or incorrectly indicated;

      3) in which the residency status is not indicated or incorrectly indicated;

      4) in which the tax authority’s code is incorrectly indicated;

      5) in which a taxable period is incorrectly indicated;

      6) in which the type of tax returns is incorrectly indicated;

      7) that are liquidation tax returns if a decision to resume operations was made after a tax audit or after the completion of an in-house audit.

      Withdrawing tax returns applying the alteration method to personal accounts of a taxpayer (tax agent), the tax authority at the place of registration reverses amounts stated in tax returns being withdrawn and subsequently states tax returns data in the personal account, inclusive of declared alterations and (or) additions.

      4. It is not allowed to withdraw filed tax returns:

      1) for a taxable period being audited – in the course of comprehensive and thematic audits by types of taxes and payments to the budget and social welfare payments specified in a prescription for conducting an audit;

      2) for a taxable period complained of - during the period of submission and consideration of the complaint about an audit findings report with account of the renewed period for submitting the complaint;

      3) on notices of elimination of violations identified by a tax authority pursuant to the results of an in-house audit.

      5. Information on withdrawal shall be published on the Internet resource of the authorized body within:

      1) five business days from the submission of a tax application specified in paragraph 1 of this article - in case of withdrawal of tax returns on the basis of such an application;

      2) two business days from the expiration of the time period provided for the execution of a notice of elimination of violations of the tax legislation of the Republic of Kazakhstan - in case of withdrawal of tax returns on the basis of the tax authority’s decision specified in paragraph 2 of this article.

      6. This article does not apply to cases provided for in Article 458 of this Code.

Article 211. Introduction of alterations and additions to tax returns

      1. A taxpayer (tax agent) has the right to introduce alterations and additions to tax returns by compiling additional tax returns for a taxable period to which these alterations and additions relate.

      2. Additional tax returns indicate in relevant lines:

      1) a difference between amounts indicated in earlier filed tax returns and actual tax obligation for a taxable period - if the amounts have changed;

      2) a new value – if all the rest data have changed.

      3. When filing additional and (or) additional upon notice tax returns, the amounts of taxes and payments, found by a taxpayer (tax agent) or a tax authority pursuant to the results of an in-house audit, shall be paid to the state budget, and the amounts of social welfare payments shall be paid in accordance with the laws of the Republic of Kazakhstan – in this case the taxpayer (tax agent) is not held liable as established by the laws of the Republic of Kazakhstan.

      4. It is allowed to file additional tax returns prior to the commencement of a tax audit conducted by a tax authority pursuant to a taxpayer’s (tax agent’s) application for liquidation, reorganization through separation or termination of activity.

      5. It is not allowed to introduce alterations and additions to relevant tax returns:

      1) for the taxable period being audited – in the course of (with account of extension and suspension) comprehensive and thematic audits by types of taxes and payments to the budget, social welfare payments specified in a prescription for conducting a tax audit;

      2) for the taxable period complained of:

      during the period of submission and consideration of the complaint about an audit findings report with account of the renewed period for submitting the complaint by types of taxes and payments to the budget, as well as social welfare payments indicated in the taxpayer’s (tax agent’s) complaint;

      Note of the RCLI!
      Item three of subparagraph 2) takes effect on 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (text deleted).

      3) regarding the VAT refund claim;

      4) to adjust them downwards - on advance payments of corporate income tax for the months of the taxable period, for which advance payments have matured, except for the case provided for in subparagraph 5) of this paragraph;

      5) on or before January 20 of a current taxable period - on advance payments of corporate income tax payable for a period prior to the declaration on corporate income tax for previous taxable period;

      6) after December 31 of a current taxable period - on advance payments of corporate income tax payable for a period after the submission of the declaration on corporate income tax for previous taxable period;

      7) takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017;

      8) in terms of changing the method of allocating managerial and general administrative expenses of a non-resident legal entity to deductibles.

      6. After the liquidation of a legal entity or the termination of activity by an individual entrepreneur, a taxpayer, who was the counterparty of such a liquidated taxpayer (the one that terminated activity), is not allowed to make alterations and additions to tax returns on corporate income tax and VAT (also to the register of purchased goods, works, services) in terms of reflecting relevant amounts for transactions with such a liquidated taxpayer (the one that terminated activity) resulting in the reduction of tax obligations for corporate income tax and VAT.

Article 212. Extension of the deadline for filing tax returns

      1. A taxpayer (tax agent) has the right to extend the deadline for filing tax returns provided that they are submitted electronically, except for tax returns on indirect taxes when importing goods into the territory of the Republic of Kazakhstan from the territory of the member states of the Eurasian Economic Union.

      2. To extend the deadline for filing tax returns with a tax authority at the place of registration, a notification shall be sent in the form established by the authorized body in accordance with this article, also through the “Government for Citizens” State Corporation

      The notification shall be sent in hard or soft copy prior to expiration of the deadline for filing tax returns established by this Code.

      The extension applies to tax returns filed by the taxpayer (tax agent) during a calendar year in which a notification of extension has been sent to a tax authority.

      3. The deadline for filing tax returns, except for calculating the amounts of advance payments of corporate income tax, is extended for:

      1) not more than thirty calendar days from the date established for submitting a declaration of corporate income tax or individual income tax;

      2) not more than fifteen calendar days from the date established for submitting a declaration and (or) calculation of other types of taxes, payments to the budget, social welfare payments;

      3) not more than thirty calendar days from the date established for submitting a declaration on other types of taxes, payments to the budget, social welfare payments for low-risk taxpayers according to the risk management system.

      4. The extension does not change the period for payment of taxes, payments to the budget and social welfare payments.

      5. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      6. The deadline for filing tax returns is not extended with respect to a high-risk taxpayer (tax agent) according to the risk management system, except for an individual entrepreneur applying special tax regimes.

Article 213. The order for suspension (extension, renewal) of filing tax returns by a taxpayer (tax agent)

      1. A taxpayer (tax agent), in accordance with the procedure specified in this article, has the right, on the basis of a tax application, to:

      1) suspend the filing of tax returns;

      2) extend the period of suspension of filing tax returns;

      3) resume the filing of tax returns, unless otherwise provided for by this article.

      A taxpayer (tax agent) shall submit to the tax authority at the place of his/her/its location:

      1) a tax application - in case of a decision to suspend or resume activity or to extend the period of suspension of filing tax returns.

      A tax application is submitted:

      for the forthcoming period - in case of a decision to suspend the activity;

      before the end of the period of activity suspension - in case of a decision to resume operations or extend the suspension of filing tax returns;

      2) tax returns from the beginning of a taxable period until the date of activity suspension specified in the tax application - in case of a decision to suspend operations.

      If a deadline for filing next scheduled tax returns comes after the submission of a tax application, such returns shall be filed before the tax application’s submission;

      3) a tax application for VAT registration in order to deregister for VAT - in case of a decision to suspend activity by a taxpayer (tax agent) that is a VAT payer.

      The total period for the suspension of filing tax returns, with account of its extension, shall not exceed the limitation period established by Article 48 of this Code. The extension is granted for the period indicated in the tax application with account of the total period.

      2. A tax authority, within three business days from the receipt of a tax application, is obliged to suspend (extend, renew) the filing of tax returns or refuse to suspend the filing of tax returns.

      3. Information on the suspension (extension, renewal) shall be published on the Internet resource of the authorized body on the date of adoption of such a decision and is the basis for non-filing tax returns for the period indicated in the tax application.

      4. A taxpayer (tax agent) is refused the suspension of filing tax returns if he/she/it:

      1) has tax debts, arrears in social welfare payments as of the date of application;

      2) has failed to submit:

      tax returns specified in subparagraph 2) of part two of paragraph 1 of this article, with account of the limitation period;

      a tax application for VAT registration in the case established by subparagraph 3) of part two of paragraph 1 of this article;

      3) was recognized inactive by a tax authority in accordance with Article 91 of this Code;

      4) failed to execute notices sent by the tax authority.

      5. In case of refusal to suspend the filing of tax returns they shall be filed in accordance with the procedure established by this Code.

      6. If a tax authority finds out that a taxpayer (tax agent) has resumed activity during the suspension period, tax authorities, without informing the said person, recognize the suspension of filing tax returns as terminated from the date of the activity’s resumption.

      For the purposes of this paragraph, the resumption of activity by the taxpayer (tax agent), who suspended activity in accordance with this article, is recognized as the commencement of activity giving rise to the obligation for calculation, payment of taxes, payments to the budget and social welfare payments.

      7. The provisions of this article do not apply to:

      1) an individual entrepreneur applying special tax regimes on the basis of a uniform land tax, on the basis of a patent for small business entities;

      Note of the RCLI!
      This wording of subparagraph 2) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      2) a payer of the tax on gambling business and (or) the fixed tax;

      3) a taxpayer applying a special tax regime for producers of agricultural products and agricultural cooperatives;

      4) a high-risk taxpayer (tax agent) according to the risk management system, except for an individual entrepreneur applying special tax regimes;

      5) the procedure and time limits for filing tax returns on property, vehicle and land taxes, on payment for the use of land plots.

Article 214. The order for suspension (extension, renewal) of filing tax returns by an individual entrepreneur applying a special tax regime for small business entities on the basis of a patent

      1. An individual entrepreneur, in accordance with the procedure specified in this article, has the right, on the basis of a tax application, to:

      1) suspend the filing of tax returns;

      2) extend the deadline for suspending the filing of tax returns.

      If an individual entrepreneur makes a decision to suspend activity or extend the period of suspension of the patent value’s calculation, he/she shall submit a tax application to the tax authority at his/her location.

      A tax application is submitted:

      for the forthcoming period before the patent’s expiry - in case of a decision to suspend activity;

      before the expiration of the period of activity suspension - in case of a decision to extend the period of suspension of the calculation’ssubmission.

      The total period for suspension of the calculation’s submission, with account of its extension, shall not exceed three years from the date on which the running of the period of suspension of the calculation’s submission began.

      2. A tax authority shall suspend (extend, renew) the calculation’s submission or refuse to suspend thecalculation’s submission on the day a tax application is submitted.

      3. Information on the suspension (extension, renewal) of the calculation’s submission shall be published on the Internet resource of the authorized body on the date of adoption of such a decision and is a basis for non-submitting calculations for the period indicated in the tax application.

      4. An individual entrepreneur is refused the suspension of the calculation’s submission if he/she:

      1) has tax debts, arrears in social welfare payments as of the date of the tax application;

      2) failed to file tax returns with account of the limitation period;

      3) failed to execute notices sent by the tax authority.

      5. An individual entrepreneur shall be deemed to have renewed his/her activity after the expiration of the period of activity suspension, unless otherwise stipulated by this article.

      6. An individual entrepreneur has the right to resume activityprior to the expiration of the period of activity suspension by submitting to a tax authority the calculation for the forthcoming period from the day of activity resumption.

      7. An individual entrepreneur, submitting the calculation during the period of suspension of its submission, shall be deemed to have resumed activity from the day of commencement of activity specified in this calculation.

      8. In case of failure to submit an application or next scheduled calculation, within sixty calendar days from the patent’s expiry, an individual entrepreneur shall be deregistered as an individual entrepreneur in the manner prescribed by Article 67 of this Code.

      9. If a tax authority finds out that an individual entrepreneur has resumed activity during the suspension period, it recognizes the period of suspension of the calculation’s submission as terminated from the date of the activity’s resumption and notifies the individual entrepreneur thereof in writing.

      For the purposes of this paragraph, the resumption of activity by an individual entrepreneur, who suspended activity in accordance with this article, is recognized as the commencement of an activity giving rise to the obligation for the calculation, payment of taxes, payments to the budget and social welfare payments.

      10. The provisions of this article do not apply to the procedure and time limits for filing tax returns on property, vehicle and land taxes, on payment for the use of land plots.

Subchapter 2. Tax registers

Article 215. Tax registers

      1. A tax register is a taxpayer’s (tax agent’s) document containing information on taxable and (or) tax-related items, as well as on money and (or) property received from foreign states, international and foreign organizations, foreigners, stateless persons, and also on the expenditure on the said money and (or) other property in accordance with paragraph 1 of Article 29 of this Code.

      Tax registers are intended for generalization and systematization of information to ensure the fulfillment of tax accounting purposes specified in paragraph 5 of Article 190 of this Code.

      Tax accounting data are formed by stating information used for tax purposes in chronological order and by ensuring the continuity of tax accounting data between taxable periods (including those on transactions that are accounted for in several taxable periods and affect the size of a taxable item in subsequent taxable periods or are carried forward for a number of years).

      A taxpayer (tax agent) draws up tax registers as special forms. The forms of tax registers and the procedure for recording tax accounting data in them are developed by the taxpayer (tax agent) independently with account of the provisions of this article, except for the forms of tax registers established by the authorized body and approved in the tax accounting policy.

      Persons signing tax registers ensure correct statement of economic transactions in them.

      2. Tax registers include:

      1) tax registers compiled by a taxpayer (tax agent) independently by the forms approved by the taxpayer (tax agent) in the tax accounting policy, with account of the provisions of Article 190 of this Code;

      2) tax registers compiled by a taxpayer (tax agent) by the forms and rules of their drawing up that are approved by the authorized body.

      3. Tax registers shall contain the following details:

      1) the name of the register;

      2) the taxpayer’s (tax agent’s) identification number;

      3) the period for which the register is drawn up;

      4) the last name, first name, patronymic (if it is indicated in an identity document) of the person responsible for drawing up the register.

      4. The authorized body has the right to determine the forms of tax registers to reflect information on:

      1) exemption from taxation, reduction in taxable income with regard to corporate income tax, investment tax preferences;

      2) determination of value balances of groups (subgroups) of fixed assets and subsequent expenses for fixed assets;

      3) derivative financial instruments;

      4) the amounts of managerial and general administrative expenses of a non-resident legal entity that are allocated to deductibles by its permanent establishment in the Republic of Kazakhstan;

      5) property transferred under a lease agreement;

      6) consideration of reductions in the amount of claims to debtors provided for by subparagraphs 8) - 10) of paragraph 5 of Article 232 of this Code;

      Note of the RCLI!
      Subparagraph 7) is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      7) invoices issued and received by a VAT payer;

      8) record keeping of purchases of agricultural products from a private subsidiary farmer by a procurement organization in the field of agro-industrial complex, by an agricultural cooperative and (or) a legal person engaged in the processing of agricultural raw materials and their sale;

      9) tour operator services – broken down by outbound and inbound tourism;

      10) receiving money and (or) other property from foreign states, international and foreign organizations, foreigners, stateless persons, as well as on the expenditure on this money and (or) other property;

      11) the turnover in the form of stock on hand for the purposes of VAT calculation;

      12) VAT applied against the stock on hand;

      13) the sale of goods by an agricultural cooperative to its members in accordance with item six of subparagraph 2) of paragraph 2 of Article 698 of this Code, as well as on the provision of such goods for use, into trust management, for lease;

      14) the agricultural cooperative’s performance (rendering) of works (services) to its members in accordance with paragraph 5 of subparagraph 2) of paragraph 2 of Article 698 of this Code.

      The provisions of this paragraph shall not apply to individual entrepreneurs who, in accordance with the Law of the Republic of Kazakhstan “On Accounting and Financial Reporting”, do not maintain accounting records and do not compile financial statements, except for a tax register to reflect the information provided for in subparagraph 10) of part one of this paragraph.

      5. For individual entrepreneurs who, in accordance with the Law of the Republic of Kazakhstan “On Accounting and Financial Reporting”, do not maintain accounting records and do not compile financial statements, the authorized body may introduce the forms of tax registers to reflect information on record keeping of:

      1) income, including that received through non-cash settlements;

      2) purchased goods, works and services;

      3) items subject to imposition with individual income tax on the income of individuals to be taxed at the source of payment, as well as on social tax and social welfare payments;

      4) tax obligations for the payment for:

      emissions into the environment;

      the use of surface water resources.

      6. Takes effect on 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      7. For the disclosure of information on carriers and (or) suppliers of works, services provided under a freight forwarding agreement, and also on the cost of such works, services, a freight forwarder shall maintain a tax register indicating the following data:

      1) the serial number and date of issuance of an invoice of the carrier and (or) supplier of works, services that are VAT payers;

      2) the taxpayer identification number of the carrier and (or) supplier of works, services;

      3) the last name, first name, patronymic (if it is indicated in an identity document) or the name of the carrier and (or) supplier of works, services;

      4) the cost of works, services carried out by the carrier and (or) supplier of works and services that are VAT payers, which is included in the size of taxable (non-taxable) turnover specified in the invoice;

      5) the cost of works, services carried out by the carrier and (or) supplier that are not VAT payers, with “ex VAT” indication;

      6) the cost of works, services, which are the turnover of a freight forwarder for the acquisition of works, services from a non-resident.

      8. In case of maintaining tax registers, the correction of errors in such tax registers must be well-reasoned and confirmed by the signature of an authorized person that made the correction, indicating the date of and the reason for the corrections.

      9. Except for cases provided for in part two of this paragraph, tax registers shall be submitted to tax officials in the course of tax audits in paper form and (or) on electronic media - at the request of tax officials conducting the audit.

      Taxpayers, within the framework of tax monitoring, submit tax registers at the request of tax authorities or their officials.

      If tax registers are compiled in electronic form, at the request of tax authorities or their officials, a taxpayer (tax agent) is obliged to submit tax registers on electronic media and copies of such tax registers in paper form certified by signatures of the head and the person (persons) responsible for the compilation of tax registers’ data of the taxpayer (tax agent) as well as by the seal of the taxpayer (tax agent) in the course of a tax audit and within the framework of tax monitoring except for cases where the taxpayer (tax agent) has no seal on the grounds provided for by the legislation of the Republic of Kazakhstan.

      10. For individual entrepreneurs applying a special tax regime with a fixed deduction, the authorized body may establish forms of tax registers to reflect information on keeping record of:

      1) inventories;

      2) income;

      3) items subject to imposition with an individual income tax on individuals’ income to be taxed at the source of payment, as well as social tax and social welfare payments.

      11. Payers of the uniform land tax are obliged to maintain tax registers provided for in paragraph 5 of this article, except for a tax register for keeping record of tax obligations for the payment for emissions into the environment.

SECTION 6. GENERAL PROVISIONS ON TAXATION OF THE INCOME OF RESIDENTS AND NON-RESIDENTS Chapter 26. GENERAL PROVISIONS

Article 216. Basic principles of taxation of residents and non-residents

      1. Taxes on income from sources in the Republic of Kazakhstan and outside it shall be paid by a resident of the Republic of Kazakhstan in the Republic of Kazakhstan, in accordance with the provisions of this Code.

      2. A non-resident shall pay taxes on income from sources in the Republic of Kazakhstan in the Republic of Kazakhstan, in accordance with the provisions of this Code.

      A non-resident carrying out entrepreneurial activity in the Republic of Kazakhstan through a permanent establishment shall also pay taxes on income from sources outside the Republic of Kazakhstan related to the activity of such a permanent establishment, in accordance with the provisions of this Code, in Kazakhstan.

      3. Residents and non-residents also pay other taxes and payments to the budget in the Republic of Kazakhstan, as well as social welfare payments if such obligations arise.

Article 217. Residents

      1. For the purposes of this Code, a resident of the Republic of Kazakhstan is:

      1) an individual:

      permanently residing in the Republic of Kazakhstan;

      residing in the Republic of Kazakhstan not permanently, but whose center of vital interests is in the Republic of Kazakhstan;

      2) a legal entity:

      set up in accordance with the legislation of the Republic of Kazakhstan;

      set up in accordance with the legislation of a foreign state, whose place of effective management (the location of the actual management body) is in the Republic of Kazakhstan.

      The place of a meeting of the actual body (the board of directors or a similar body) exercising basic management and (or) control and adopting strategic commercial decisions necessary for conducting the entrepreneurial activity of a legal entity is recognized as the place of effective management (the location of the actual management body).

      2. An individual is recognized as permanently residing in the Republic of Kazakhstan for a current taxable period if he/she stays in Kazakhstan for at least one hundred and eighty-three calendar days (including days of arrival and departure) in any consecutive twelve-month period ending in a current taxable period.

      3. The center of vital interests of an individual is recognized to be in the Republic of Kazakhstan provided all of the following requirements are met:

      1) an individual has the citizenship of the Republic of Kazakhstan or a residence permit of the Republic of Kazakhstan;

      2) an individual’s spouse and (or) close relatives reside in the Republic of Kazakhstan;

      3) the existence of real estate in the Republic of Kazakhstan belonging to an individual and (or) his/her spouse and (or) his/her close relatives on the basis of the right of ownership or on other grounds, where an individual and (or) his/her spouse and (or) his/her close relatives can live at any time.

      4. An individual that is a citizen of the Republic of Kazakhstan, as well as an individual who has applied for citizenship of the Republic of Kazakhstan or for permission to reside permanently in the Republic of Kazakhstan without conferment of citizenship of the Republic of Kazakhstan, is recognized as a resident individual, regardless of the period of his/her residence in the Republic of Kazakhstan and any other criteria provided for in this article, who is:

      1) seconded abroad by government authorities, including employees of diplomatic, consular offices, international organizations, as well as family members of the said individuals;

      2) a crew member of a vehicle belonging to a legal entity or a citizen of the Republic of Kazakhstan carrying out regular international transportation;

      3) a serviceman and civilian personnel of military units or military formations of the Republic of Kazakhstan stationed outside the Republic of Kazakhstan;

      4) working at a facility outside the Republic of Kazakhstan that is the property of the Republic of Kazakhstan or of entities of the Republic of Kazakhstan (also under concession agreements);

      5) outside the Republic of Kazakhstan for the purpose of training, including probation or internship, medical treatment or health-improving and preventive care procedures, during the training period, including probation or internship, during medical treatment or health-improving and preventive care procedures;

      6) a teacher and (or) a scientific worker who are outside the Republic of Kazakhstan for the purpose of teaching, consulting or performing scientific research, during the period of rendering (performance) of the specified services (works).

Article 218. The order for confirming the residency of the Republic of Kazakhstan

      1. A resident carrying out activity in a foreign country with which the Republic of Kazakhstan has concluded an international treaty, provided that all the provisions of the relevant international treaty are met, has the right to apply the provisions of this international treaty in the specified country.

      2. To confirm the residency of the Republic of Kazakhstan for the purposes of applying the international treaty, and also for other purposes, a person shall submit a tax application for residency confirmation, unless otherwise specified by this paragraph, to a tax authority that is superior to the tax authority with which such a person is registered at the place of location, stay (residence).

      If a person is registered with a tax authority at the place of location, stay (residence), which is immediately subordinate to the authorized body, the tax application for residency confirmation shall be submitted to this tax authority.

      In this case, the below mentioned persons are obliged to submit the following documents to the tax authority together with the tax application for residency confirmation:

      1) a resident foreign legal entity on the grounds that its place of effective management is in the Republic of Kazakhstan - a notarized copy of the document confirming the existence in the Republic of Kazakhstan of the place of effective management (the location of the actual management body) of the legal entity (the minutes of the general meeting of the board of directors or a similar body with indication of the place of its holding or other documents confirming the place of basic management and (or) control, as well as that of adopting strategic commercial decisions necessary for conducting the entrepreneurial activity of a legal entity);

      2) a citizen of the Republic of Kazakhstan that is a resident - a copy of the identity card or passport of the Republic of Kazakhstan;

      3) a foreigner and stateless person that are residents - notarized copies of:

      a foreign passport or a certificate of identity of a stateless person;

      a residence permit of the Republic of Kazakhstan (if any);

      a document confirming the period of stay in the Republic of Kazakhstan (visa or other documents).

      3. Pursuant to the results of consideration of a tax application for residency confirmation, a tax authority within ten calendar days from the date of its submission:

      1) issues to the person a document confirming his/her residency in the form approved by the authorized body or confirms his/her residency in the form established by the competent authority of a foreign state.

      In case of issuing a document confirming residency in the form of an electronic document, the date of issuance is that of publishing such a document on the Internet resource of the authorized body;

      2) makes a well-reasoned decision to refuse to confirm the residency of a person.

      A person is refused the confirmation of residency if he/she does not meet the requirements established by Article 217 of this Code.

      4. The residency of a person is confirmed for each calendar year indicated in a tax application for residency confirmation within the limitation period established by Article 48 of this Code.

      5. In case of loss of a document confirming residency, a tax authority that issued such a document shall issue its duplicate within ten calendar days from the submission of a resident’s application.

Article 219. Non-residents

      For the purposes of this Code, a non-resident is:

      1) an individual or legal entity that is not a resident in accordance with the provisions of Article 217 of this Code;

      2) a foreigner or stateless person who is recognized as a non-resident in accordance with the provisions of the international treaty governing the avoidance of double taxation and the prevention of tax evasion despite the provisions of Article 217 of this Code.

Article 220. Permanent establishment of a non-resident

      1. Unless otherwise established by an international treaty, a permanent establishment of a non-resident in the Republic of Kazakhstan shall be one of the below indicated places of operation through which a non-resident conducts entrepreneurial activity in the territory of the Republic of Kazakhstan, regardless of the timing of such an activity:

      1) any place of goods’ production, processing, assembling, packaging, packing, and (or) delivery;

      2) any place of management;

      3) any place of geological study of subsoil resources, exploration, preparatory works for the extraction of minerals and (or) extraction of minerals and (or) performance of works, rendering of services for control and (or) monitoring of exploration and (or) extraction of minerals;

      4) any place for carrying out a pipeline-related activity (including control or monitoring);

      5) any place of an activity related to the installation, debugging and operation of gaming machines (including gaming consoles), computer networks and communication channels, rides, and also those related to transport or another infrastructure;

      6) the place of sale of goods in the territory of the Republic of Kazakhstan, except for the sale of goods at exhibitions and fairs, unless otherwise established by paragraph 5 of this article;

      7) any place of construction activities and (or) construction and installation works, as well as rendering of services for monitoring the performance of these works;

      8) the location of a structural unit of a non-resident legal entity, except for a representative office carrying out the activity specified in paragraph 6 of this article;

      9) the location of a person carrying out intermediary activity in the Republic of Kazakhstan on behalf of a non-resident in accordance with the Law of the Republic of Kazakhstan “On Insurance Activity”;

      10) the location of a resident that is a party to a joint activity agreement concluded with a non-resident in accordance with the legislation of a foreign country or the Republic of Kazakhstan, if such a joint activity is carried out in the territory of the Republic of Kazakhstan.

      2. A permanent establishment of a non-resident is the place of rendering services, performing works in the territory of the Republic of Kazakhstan not provided for in paragraph 1 of this article, through employees or other personnel hired by a non-resident for such purposes, if such an activity is carried out in the territory of the Republic of Kazakhstan for more than one hundred and eighty-three calendar days within any consecutive twelve-month period from the date of commencement of business within a single project or related projects.

      For the purposes of this Section, interrelated or interdependent contracts (agreements) are recognized as related projects.

      Interrelated contracts (agreements) are contracts (agreements) that simultaneously meet the following requirements:

      1) under such contracts (agreements) a non-resident or its related party renders (performs) identical or homogeneous services (works) to one and the same tax agent or its related party;

      2) the time period between the completion of services’ provision (works’ performance) under one contract (agreement) and the conclusion of another contract (agreement) does not exceed twelve consecutive months.

      Contracts (agreements) concluded by a non-resident or its related party with a tax agent or its related party are recognized as interdependent if a failure to fulfill obligations for one of them by a non-resident or its related party affects the performance of obligations under another contract (agreement) by such a non-resident or its related party.

      3. Notwithstanding the provisions of paragraphs 1 and 2 of this article, in case a non-resident carries out entrepreneurial activity in the territory of the Republic of Kazakhstan through a dependent agent, such a non-resident will be deemed as having a permanent establishment in connection with any activityconducted by the dependent agent for this non-resident, regardless of the timing of such activities.

      For the purposes of this Section, a dependent agent is an individual or a legal entity that simultaneously meets the following requirements:

      1) he/she/it is authorized, on the basis of contractual relations, to represent interests of a non-resident in the Republic of Kazakhstan, to act and (or) perform certain legal actions on behalf of and at the expense of a non-resident, including the conclusion of a paid services agreement or playing a major role in concluding such an agreement or in transfer of the right of ownership (right to use) of property belonging to a non-resident on the basis of the right of ownership (right to use);

      2) he/she/it carries out activity specified in subparagraph 1) of this paragraph not as part of the activityof a customs representative, professional participant of the securities market and other brokerage activities, except for the activity of an insurance broker and cases where such an agent acts exclusively or primarily on behalf of a non-resident;

      3) his/her/its activity is not limited to the activities specified in paragraph 6 of this article.

      4. A non-resident’s activity carried out in the territory of the Republic of Kazakhstan through a subsidiary established in accordance with the legislation of the Republic of Kazakhstan results in the setting up of a permanent establishment of a non-resident if the subsidiary is recognized as a dependent agent, in accordance with paragraph 3 of this article.

      5. A non-resident sets up a permanent establishment in the Republic of Kazakhstan when selling goods at exhibitions and fairs held in the territory of the Republic of Kazakhstan if such realization lasts more than ten calendar days.

      6. The following types of a non-resident activitythat are exclusively of a preparatory or auxiliary nature, not part of main types of entrepreneurial activity of a non-resident and last not more than three years do not result in the setting up of a permanent establishment of a non-resident in the Republic of Kazakhstan:

      1) the use of any place solely for the storage and (or) demonstration of goods belonging to a non-resident, without their realization;

      2) the maintenance of a permanent place of business solely for purchasing goods for a non-resident without their realization;

      3) the maintenance of a permanent place of business solely for collecting, processing and (or) disseminating information, advertising or studying the market of goods, works, services sold by a non-resident.

      In addition to the above, preparatory and auxiliary activities shall be conducted for the non-resident himself/herself, and not for third parties.

      7. A non-resident’s activity on rendering an international outstaffing service in the territory of the Republic of Kazakhstan to a legal entity, including a non-resident operating in the Republic of Kazakhstan through a permanent establishment, does not result in the setting up of a permanent establishment for such a service in the Republic of Kazakhstan, provided that all of the following requirements are met:

      1) such staff act on behalf of and in the interests of the legal entity to which they are provided;

      2) a non-resident rendering an international outstaffing service is not liable for the performance of the staff provided;

      3) the non-resident’s income from rendering an international outstaffing service for a taxable period does not exceed 10 percent of the total amount of the non-resident’s expenses for the provision of such staff over the specified period.

      In this case, the amount of such income is determined in the form of a positive difference between the cost of international outstaffing services rendered by a non-resident for a taxable period and the cost of the non-resident’s total expenses for the provision of staff in the specified period.

      To confirm the amount of expenses for the provision of such services, including the income of foreign staff, the non-resident is obliged to provide copies of source documents compiled in accordance with the legislation of the Republic of Kazakhstan and (or) a foreign state to the service recipient. For the purposes of calculating corporate income tax from the income of a non-resident providing international outstaffing services, such services of a non-resident are recognized as those rendered outside the Republic of Kazakhstan provided that requirements of this paragraph are met.

      8. In case a non-resident carries out its activity in the territory of the Republic of Kazakhstan under a joint activity agreement:

      1) the activity of each party to such an agreement sets up a permanent establishment in accordance with the provisions established by this article;

      2) the tax obligation is fulfilled by each party to such an agreement independently in the manner determined by this Code.

      9. A non-resident, carrying out entrepreneurial activity in the Republic of Kazakhstan that results in the setting up of a permanent establishment, is obliged to register as a taxpayer with a tax authority in the manner specified in Article 76 of this Code.

      A non-resident’s activity sets up a permanent establishment in accordance with the provisions of this article from the date the non-resident commences the activity in the Republic of Kazakhstan, whether the non-resident is registered as a taxpayer with tax authorities or with judicial bodies or not.

      If a non-resident carries out entrepreneurial activity resulting in the setting up of two or more permanent establishments subject to registration with one tax authority, registration is mandatoryonly for one permanent establishment as part of the group of such permanent establishments of a non-resident.

      If a non-resident has a registered permanent establishment carrying out the activity specified in paragraphs 2, 3, 5 or 7 of this article and carries out similar or same activity in a place other than that of registration of such a permanent establishment, the result of carrying out such an activity shall be the setting up of a permanent establishment subject to registration from the commencement of a similar or same activity.

      If, after the removal of a non-resident’s permanent establishment from the state database of taxpayers, such a non-resident resumes an activity specified in paragraphs 2 and 5 of this article within a consecutive twelve-month period, he/she/it is recognized as having set up a permanent establishment and is subject to registration as a taxpayer from the commencement of such an activity.

      10. For the purposes of applying this Code, the date of commencement of activity by a non-resident in the Republic of Kazakhstan is that of:

      1) conclusion of any below mentioned contract (treaty, agreement) for:

      the performance of works, rendering of services in the Republic of Kazakhstan, also under a joint activity agreement;

      granting authority to carry out actions on his/her/its behalf in the Republic of Kazakhstan;

      the purchase of goods in the Republic of Kazakhstan for the purpose of their realization;

      the purchase of works, services for the purposes of performing works, rendering services in the Republic of Kazakhstan;

      2) conclusion of the first labor contract (agreement, treaty) for the purposes of carrying out activities in the Republic of Kazakhstan;

      3) arrival in Kazakhstan of a non-resident individual, non-resident’s employee or other hired staff for the fulfillment of the terms of the contract (agreement, treaty) specified in subparagraphs 1) or 2) of part one of this paragraph;

      4) entry into force of a document certifying the right of a non-resident to carry out the activities specified in subparagraphs 3) and 4) of paragraph 1 of this article.

      Giventhe presence of several conditions of this paragraph, the earliest date is recognized as that of commencement of a non-resident’s activity in the Republic of Kazakhstan, but not earlier than the first of the dates specified in subparagraphs 2) and 3) of part one of this paragraph.

      11. If a non-resident carries out activity through a structural unit, which does not result in the setting up of a permanent establishment in accordance with the international treaty governing the avoidance of double taxation and the prevention of tax evasion, or paragraph 6 of this article, this Code’s provisions for a permanent establishment of a non-resident shall apply to such a structural unit of a non-resident. At the same time, such a structural unit has the right to apply the provisions of the international treaty governing the avoidance of double taxation and the prevention of tax evasion, in accordance with Articles 672, 673 and 674 of this Code.

Article 221. Mutual agreement procedure

      1. A resident or a citizen of the Republic of Kazakhstan has the right to request the authorized body for a mutual agreement procedure with the competent authority of a foreign country with which the Republic of Kazakhstan has concluded an international treaty for:

      1) consideration of applying the provisions of an international treaty if he/she believes that actions of one or both of the contracting states result or will result in taxation inconsistent with the provisions of such an international treaty;

      2) determination of the status of residency.

      2. An application must indicate circumstances on which a resident or a citizen of the Republic of Kazakhstan grounds his/her requirements.

      3. A resident or a citizen of the Republic of Kazakhstan must attach to an application, submitted in accordance with subparagraph 1) of paragraph 1 of this article, copies of accounting documents confirming the amounts of income (to be) received and (or) withheld taxes (in the event of their withholding) in a foreign state with which the Republic of Kazakhstan concluded an international treaty, as well as notarized copies of:

      1) contracts (treaties, agreements) for the performance of works, rendering of services or for other purposes;

      2) for legal entities – constituent documents or extracts from a trade register indicating founders (participants) and majority shareholders of a resident legal entity;

      3) documents specified in subparagraphs 1), 2) and 3) of paragraph 2 of Article 218 of this Code.

      A resident or a citizen of the Republic of Kazakhstan has the right to submit other documents that are not specified in this paragraph, which are required for a mutual agreement procedure.

      4. A resident or a citizen of the Republic of Kazakhstan is obliged to attach the documents specified in subparagraphs 2) and 3) of part one of paragraph 3 of this article to an application submitted in accordance with subparagraph 2) of paragraph 1 of this article.

      5. The authorized body has the right to demand in writing the submission of additional documents required for carrying out a mutual agreement procedure from a resident or a citizen of the Republic of Kazakhstan.

      6. The authorized body shall, within five business days from the submission of the application, send to a resident or a citizen of the Republic of Kazakhstan its decision on refusal to consider the application in case of:

      1) submitting an application for a mutual agreement procedure with the competent authority of a state with which the Republic of Kazakhstan has not concluded an international treaty;

      2) failure to submit documents provided for in paragraphs 3 and 4 of this article.

      If the authorized body refuses to consider the application on the basis provided for in subparagraph 2) of part one of this paragraph, a resident or a citizen of the Republic of Kazakhstan has the right to resubmit the application after eliminating the violations committed.

      7. The authorized body shall consider an application within forty-five calendar days from the date of its receipt, except for the cases specified in paragraph 6 of this article.

      8. Pursuant to the results of consideration of an application by the authorized body, one of the following decisions shall be made:

      1) to refuse a mutual agreement procedure;

      2) to conduct a mutual agreement procedure.

      9. A decision to refuse a mutual agreement procedure shall be made by the authorized body in case of:

      1) inconsistency of the grounds indicated in an application with the provisions of the international treaty of the Republic of Kazakhstan;

      2) provision of unreliable information by a resident or a citizen of the Republic of Kazakhstan;

      3) failure to submit the documents provided for in paragraph 5 of this article by a resident or a citizen of the Republic of Kazakhstan in the course of the application’s consideration.

      Such a decision shall be sent to a resident or a citizen of the Republic of Kazakhstan within two business days from its issuance.

      10. In case of a decision to carry out a mutual agreement procedure, the authorized body shall contact the competent authority of a foreign state for conducting such a procedure.

      11. The authorized body shall terminate the initiated procedure of mutual agreement with the competent authority of a foreign state in case of:

      1) submission of an application for termination of the mutual agreement procedure by a resident or a citizen of the Republic of Kazakhstan;

      2) establishment of the fact of providing unreliable information by a resident or a citizen of the Republic of Kazakhstan during the mutual agreement procedure;

      3) failure to submit the documents provided for in paragraph 5 of this article by a resident or a citizen of the Republic of Kazakhstan during the mutual agreement procedure.

      12. The authorized body shall send information on a decision made pursuant to the results of a mutual agreement procedure to a resident or a citizen of the Republic of Kazakhstan within seven business days from the adoption of such a decision.

      13. A decision made pursuant to the results of a mutual agreement procedure conducted in the manner specified in this article, as well as a decision made pursuant to the results of a mutual agreement procedure conducted on the basis of a request of the competent authority of a foreign state, shall be binding on tax authorities.

SECTION 7. CORPORATE INCOME TAX Chapter 27. GENERAL PROVISIONS

Article 222. Payers

      1. Corporate income tax payers are resident legal entities of the Republic of Kazakhstan, except for state institutions and state secondary education institutions, as well as non-resident legal entities that operate in the Republic of Kazakhstan through a permanent establishment or receive income from sources in the Republic of Kazakhstan.

      2. Legal entities that apply special tax regimes for small business entities calculate and pay corporate income tax on income taxed under these regimes in accordance with Section 20 of this Code.

      Legal entities applying a special tax regime for producers of agricultural products and agricultural cooperatives shall calculate corporate income tax and advance payments thereof on income taxed under this regime, with account of the features established by Section 20 of this Code.

      Note of the RCLI!
      Paragraph 3 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      3. Payers of the tax on gambling business, of the fixed tax are not payers of corporate income tax on income from the activities specified in Sections 16 and 17 of this Code.

Article 223. Taxable items

      Items to be imposed with corporate income tax are:

      1) taxable income;

      2) income taxed at the source of payment;

      3) net income of a non-resident legal entity operating in the Republic of Kazakhstan through a permanent establishment.

Chapter 28. TAXABLE INCOME

Article 224. Taxable income

      Taxable income is defined as the difference between total annual income, with account of adjustments provided for in Article 241 of this Code, and deductions provided for in this section.

      Taxable income also includes aggregate profits of controlled foreign companies or permanent establishments of controlled foreign companies, determined in accordance with Article 297 of this Code.

Subchapter 1. Total annual income

Article 225. Total annual income

      1. Total annual income of a resident legal entity of the Republic of Kazakhstan consists of income (to be) received by this person from sources in the Republic of Kazakhstan and outside it within a taxable period.

      For the purposes of this Section, all types of income that are not income from sources in the Republic of Kazakhstan are recognized as income from sources outside the Republic of Kazakhstan, regardless of the place of their payment.

      Total annual income of a non-resident legal entity carrying out activity in the Republic of Kazakhstan through a permanent establishment consists of income specified in Article 651 of this Code.

      2. For tax purposes, income is not:

      1) the value of property received as a contribution to the authorized capital;

      2) the value of property (to be) received by a shareholder, including that (to be) received in return of earlier contributed one, in the course of distribution of property upon liquidation of a legal entity or reduction of the authorized capital, and also the repurchase of shares issued by a legal entity-issuer of these shares from a shareholder in the amount of the paid authorized capital attributable to the number of shares, for which the property is distributed;

      3) the value of property (to be) received by a participant, a founder, including that (to be) received in return of earlier contributed one, in the course of distribution of property upon liquidation of a legal entity or reduction of the authorized capital, and also the repurchase by a legal entity from the founder, the participant ina participatory interest or part thereof in this legal entity in the amount of the paid authorized capital attributable to the participatory interest, for which the property is distributed, but not greater than the amount of expenses for its acquisition and (or) payment of contributions to the authorized capital made by the participant in whose favor the property is distributed;

      4) the value of property received from the placement of shares by their issuer;

      5) the value of property transferred free of charge - for a taxpayer transferring property;

      6) the amount of penalties and fines written off in accordance with the tax legislation of the Republic of Kazakhstan;

      7) the value of goods received for advertising purposes (also in the form of donations) at no cost, if the value of a unit of goods does not exceed 5 times the monthly calculated index established for a relevant financial year by the law on the republican budget and effective as of the date of such receipt of the goods;

      8) the amount of reduction in a tax obligation in cases provided for by this Code;

      9) unless otherwise provided for by this Code, income generated in connection with a change in the value of assets and (or) liabilities accounted for as income in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, except for the one (to be) received from another person;

      10) increase in undistributed profits due to reduction of reserves for revaluation of assets in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

      11) income generated in connection with the recognition of an obligation in accounting in the form of a positive difference between the amount of the obligation to be executed and the value of this obligation recognized in accounting, in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

      12) investment income received by mutual funds in accordance with the legislation of the Republic of Kazakhstan on investment funds and recognized as such by the custodian of a mutual fund, management company, except for remuneration for such a management company - for a management company that performs trust management of the assets of a mutual fund on the basis of a license for managing an investment portfolio;

      13) the amount of compensation (to be) received in fulfillment of the tax obligation by such a person to pay excise duty on excisable goods, which is the product of processing of the customer’s raw materials - for a person who produced gasoline (except for aviation fuel), diesel fuel from the customer’s raw materials;

      14) the value of property received by a state enterprise from a state institution in the form of:

      fixed assets assigned to such an enterprise by the right of economic management or operations management;

      money for the acquisition of fixed assets that will be assigned to such an enterprise on the basis of the right of economic management or operations management;

      15) insurance payment received in the amount by which the group’s value balancewas reduced in accordance with paragraph 8 of Article 270 of this Code, with account of the excess amount provided for by Article 234 of this Code, if any;

      16) the value (in monetary terms) of mineral resources received from a subsoil user in fulfillment of the tax obligation to pay taxes in kind - for a recipient on behalf of the state;

      17) income from writing off an obligation of a national subsoil use company or a legal entity whose shares (participatory interests in the authorized capital) directly or indirectly belong to such a national subsoil use company before commercial discovery during the period of exploration by a strategic partner and that from investment financing remuneration in accordance with the Law of the Republic of Kazakhstan “On Subsoil and Subsoil Use” - in the amount of remuneration assessed but not paid and to be recognized, for the purposes of forming a separate group of depreciable assets in accordance with Article 258 of the Code;

      18) income from the sale of minerals received from a subsoil user, in fulfillment of the tax obligation in kind, by a recipient on behalf of the state or by a person authorized by a recipient on behalf of the state to implement such realization;

      19) commission of a recipient on behalf of the state or a person authorized by a recipient on behalf of the state, in terms of reimbursement of expenses associated with the sale of minerals received from a subsoil user in fulfillment of the tax obligation in kind;

      20) the value of property, including works, services received in accordance with paragraph 8 of Article 243 of this Code;

      21) remuneration (to be) received, which reduces the cost of construction in progress, in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, up to the amount of remuneration (to be) paid, which increases the cost of such a facility in accordance with international standards of financial reporting and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

      22) the cost of electric grids recognized as ownerless in accordance with the civil legislation of the Republic of Kazakhstan, transferred by local executive bodies into ownership of an energy transfer organization freeofcharge;

      23) the cost of services received for public money in the form of non-financial state support of business entities in accordance with the state program forthe development of agro-industrial complex of the Republic of Kazakhstan, programs approved by the Government of the Republic of Kazakhstan and operated by the National Chamber of Entrepreneurs of the Republic of Kazakhstan;

      Note of the RCLI!
      Subparagraph 24) is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      24) income of a sustainability organization, whose 100 percent of voting shares belong to the National Bank of the Republic of Kazakhstan, generated in connection with the receipt of assets on a free-of-charge basis under the Mortgage (Home Loan) Refinancing Program from an organization for improving the quality of loan portfolios of second-tier banks, whose sole shareholder is the Government of the Republic of Kazakhstan;

      Note of the RCLI!
      Subparagraph 25) is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      25) income of a sustainability organization, whose 100 percent of voting shares belong to the National Bank of the Republic of Kazakhstan, generated in connection with depreciation, in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, of a positive difference between:

      the value of assets in accordance with the terms of a contract on assets’ transfer on a free-of-charge basis from an organization for improving the quality of loan portfolios of second-tier banks, whose sole shareholder is the Government of the Republic of Kazakhstan,

      and their fair value;

      26) technogenic mineral formations received, donated from state property.

Article 226. Income to be included in total annual income

      1. Total annual income includes all types of income of a taxpayer exclusive of the amount of VAT and excise duty:

      1) income from sales;

      2) income of an insurance, reinsurance organization under insurance, reinsurance contracts;

      3) income from increase in value;

      4) income from derivative financial instruments;

      5) income from writing off obligations;

      6) income from doubtful obligations;

      7) income from decreasing the amount of provisions (reserves) created by a taxpayer entitled to deduct provisions (reserves) in accordance with paragraphs1, 5, 6 and 7 of Article 250 of this Code;

      8) income from the assignment of the right of claim;

      9) income from the disposal of fixed assets;

      10) income from adjustment of expenses for geological study and preparatory works for the extraction of natural resources, as well as other subsoil users’ expenses;

      11) income from the excess amount of contributions to the fund for liquidation of consequences of field development over the amount of actual expenses for liquidation of consequences of field development;

      12) income from joint activity;

      13) forfeits (fines, penalties) awarded or recognized by a debtor, except for fines groundlessly withheld but returned from the state budget, if these amounts were not earlier allocated to deductibles;

      14) compensations received for earlier made deductions;

      15) income in the form of property received free of charge;

      16) dividends;

      17) remuneration on deposit, debt security, bill of exchange, Islamic lease certificate;

      18) excess of the amount of positive exchange rate difference over the amount of negative exchange rate difference;

      19) winnings;

      20) income received from operating social facilities;

      21) income from the sale of an enterprise as a property complex;

      22) income from an investment deposit in an Islamic bank;

      23) net income from trust management of property (to be) received by a trust management founder;

      24) income of a state enterprise generated in accordance with international financial reporting standards and requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting in connection with depreciation of fixed assets assigned to such an enterprise by the right of economic management or operations management;

      25) other income not specified in subparagraphs 1) - 24) of this paragraph.

      2. If one and the same income can be stated in several items of income, this income is included in total annual income only once.

      Unless otherwise specified in Articles 227-240, paragraphs 5 and 6 of this section, for the purposes of this section, recognition of income, including the date of its recognition, is carried out in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

      If recognition of income, in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, differs from the procedure for determining and recognizing income in accordance with this Code, this income is recognized for tax purposes in the manner defined by this Code.

      3. The total annual income of a trust manager and a trust management founder from the activity on trust management of property shall be determined with account of the provisions of Articles 40, 42, 43, 44 and 45 of this Code.

      4. A taxpayer has the right to adjust income in accordance with Articles 286 and 287 of this Code. At the same time, the total annual income, subject to adjustments in accordance with Articles 286 and 287 of this Code, can have a negative value.

Article 227. Income from sales

      1. Income from sales is recognized as the amount of income generated by the sale of goods, works, services, except for income included in total annual income in accordance with Articles 228-240 of this Code, as well as income specified in paragraph 4 of Article 258 of this Code, in part not exceeding the amount of expenses specified in paragraph 1 of Article 258 of this Code.

      2. Income from sales is determined in the amount of the value of goods, works, services, exclusive of the amount of VAT and excise duty.

      3. The date of recognition of income from sales is determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

      4. For the purposes of this Section, income from the provision of services includes:

      1) income in the form of interest on a credit (loan, microcredit), repo transactions;

      2) income in the form of remuneration for the transfer of property under a lease agreement;

      3) royalties;

      4) income from the rental (tenancy) of property, except for lease.

      5. Income from sales is subject to adjustment in cases and in the manner established by the legislation of the Republic of Kazakhstan on transfer pricing.

Article 228. Income from increase in value

      1. Income from increase in value is generated from:

      1) the sale of non-depreciable assets, except for assets purchased for state needs in accordance with the laws of the Republic of Kazakhstan;

      2) transfer of non-depreciable assets as a contribution to the authorized capital;

      3) disposal of non-depreciable assets as a result of reorganization through merger, incorporation, division or separation.

      2. For the purposes of this article, non-depreciable assets include:

      1) land plots;

      2) construction in progress;

      3) uninstalled equipment;

      4) assets with a service life of more than one year, not used in profit-orientedactivities, including long-term assets held for sale;

      5) assets with a service life of more than one year not allocated to fixed assets in accordance with subparagraph 2) of paragraph 2 of Article 266 of this Code;

      6) securities;

      7) participatory interest;

      8) investment gold;

      9) fixed assets, the value of which is fully allocated to deductibles in accordance with the tax legislation of the Republic of Kazakhstan that was in effect until January 1, 2000;

      10) assets put into operation within the framework of an investment project with regard to contracts concluded before January 1, 2009 in accordance with the legislation of the Republic of Kazakhstan on investments, the value of which is fully allocated to deductibles;

      11) property attributed to social facilities in accordance with Article 239 of this Code.

      3. As to non-depreciable assets, except for those provided for in paragraphs 4 and 5 of this article, the increase in each asset is recognized as:

      1) a positive difference between the selling price and the initial value – upon sale;

      2) a positive difference between the value of an asset determined on the basis of the value of a contribution to the authorized capital and the initial value - when transferred as a contribution to the authorized capital;

      3) a positive difference between the value indicated in a transfer certificate or a separation balance sheet and the initial value - upon the disposal as a result of reorganization of a legal entity through merger, incorporation, division or separation.

      4. As to debt securities, an increase in value for each security is recognized as:

      1) a positive difference ex coupon between the selling price and the initial value, with account of amortization of a discount and (or) premium as of the date of sale - upon sale;

      2) a positive difference ex coupon between the value of a debt security determined on the basis of the value of a contribution to the authorized capital and the initial value with account of amortization of a discount and (or) premium as of the date of transfer - when transferred as a contribution to the authorized capital;

      3) a positive difference ex coupon between the value indicated in atransfer certificate or a separation balance sheet and the initial value with account of amortization of a discount and (or) premium as of the date of retirement – upon the disposal as a result of reorganization of a legal entity through merger, incorporation, division or separation.

      5. As to assets indicated in subparagraphs 9) and 10) of paragraph 2 of this article, an increase in value for each asset is recognized as:

      1) the cost of realization – upon sale;

      2) the value of a contribution to the authorized capital - when transferred as a contribution to the authorized capital;

      3) the value indicated in a transfer certificate or a separation balance sheet - upon the disposal as a result of reorganization of a legal entity through merger, incorporation, division or separation.

      Note of the RCLI!
      This wording of item one of paragraph 6 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      6. Unless otherwise specified in paragraph 9 of this article, the initial value of the assets specified in subparagraphs 1) - 6) and 8) of paragraph 2 of this article shall be determined in the following order:

      total expenses for acquisition, production, construction

      or

      the value of a contribution to the authorized capital - if assets were received as a contribution to the authorized capital,

      or

      the value indicated in a transfer certificate or a separation balance sheet - if assets were received as a result of reorganization,

      or

      the book value of property (to be) received by a shareholder, participant, founder in the course of distribution of property, including that (to be) received in return of earlier contributed one, as of the date of transfer,to be accounted for by a transferor exclusive of revaluation and impairment, stated in a document confirming the transfer of such property and certified by the signatures of the parties - if assets were received by a shareholder (participant, founder) as a result of distribution of property during the liquidation of a legal entity or reduction of the authorized capital, as well as in case of repurchase by the legal entity from the founder, participant of a participatory interest or part thereof in this legal entity, in case of repurchase of shares from a shareholder by a legal entity that issued these shares,

      or

      the value included in total annual income in the form of the value of property received free of charge in accordance with this Code - if assets were received free of charge,

      plus

      other expenses that increase the value of assets, also after their acquisition, in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, except for:

      costs (expenses) not to be allocated to deductibles in accordance with subparagraphs 2), 3), 4) and 5) of Article 264 of this Code;

      depreciation allowances.

      7. The initial value of a participatory interest is:

      the sum total of actual costs for its acquisition, costs associated with the acquisition and increase in value of the interest in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting,

      or

      the value of a contribution to the authorized capital - if a participatory interest was received as a contribution to the authorized capital,

      or

      the value specified in a transfer certificate or a separation balance sheet - if a participatory interest was received as a result of reorganization,

      or

      the book value of property (to be) received by a shareholder, participant, founder in the course of distribution of property, including that (to be) received in return of earlier contributed one, as of the date of transfer, to be accounted for by a transferor exclusive of revaluation and impairment, stated in a document confirming the transfer of such property and certified by the signatures of the parties - if assets were received by a shareholder (participant, founder) as a result of distribution of property during the liquidation of a legal entity or reduction of the authorized capital, as well as in case of repurchase by the legal entity from the founder, participant of a participatory interest or part thereof in this legal entity, in case of repurchase of shares from a shareholder by a legal entity that issued these shares,

      or

      the value included in total annual income in the form of the value of property received free of charge in accordance with this Code - if a participatory interest was received free of charge.

      8. The initial value of property attributed to social facilities in accordance with Article 239 of this Code is the book value of such assets as of the date of their disposal, exclusive of revaluations and impairments.

      Note of the RCLI!
      Paragraph 9 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      9. For the purposes of this article, the initial value of shares and (or) securities of a bank that performed the transaction stipulated in Article 61-4 of the Law of the Republic of Kazakhstan “On Banks and Banking Activity in the Republic of Kazakhstan” is the initial value of acquisition of such shares and securities with account of actual expenses for increasing the authorized capital.

      10. For the purposes of this article, the value of a contribution to the authorized capital is the value of an asset transferred (received) as a contribution to the authorized capital specified in a transfer certificate or any other document confirming the acceptance and transfer of the asset, its value, but not greater than the amount of a contribution to the authorized capital, for the payment of which the asset was transferred (received).

      11. Income from increase in value is recognized when:

      1) a non-depreciable asset is sold - in a taxable period in which such an asset was sold;

      2) a non-depreciable asset is transferred as a contribution to the authorized capital - in a taxable period in which such an asset was transferred as a contribution to the authorized capital;

      3) a non-depreciable asset is disposed of as a result of reorganization through merger, incorporation, division - in a taxable period for which liquidation tax returns are filed;

      4) a non-depreciable asset is disposed of as a result of reorganization through separation - in a taxable period in which a separation balance sheet is approved.

      12. Income from increase in value received from the sale of securities is included in total annual income, with account of the provisions of paragraphs 3, 4, 5, 6 and 7 of Article 300 of this Code.

Article 229. Income from writing off obligations

      1. Income from writing off obligations is:

      1) the amount of an obligation with respect to which a creditor terminated the requirement to execute it by a taxpayer;

      2) the amount of an obligation that is not claimed by a creditor as of the date of filing liquidation tax returns upon the liquidation of a taxpayer, unless otherwise provided for in this subparagraph.

      If the liquidation of a taxpayer, in accordance with this Code, provides for a liquidation tax audit or issuance of an opinion based on the results of an in-house audit, the amount of such an obligation is determined as:

      the amount of obligations (except for VAT amount) that was payable according to the taxpayer’s source documents and (to be) stated in interim liquidation balance sheet, as of the date of approval of such a balance sheet,

      minus

      the amount of obligations that will be fulfilled between the date of approval of interim liquidation balance sheet and the day of completion of liquidation tax audit or in-house audit.

      Pursuant to the results of a liquidation tax audit, a tax authority determines the amount of an obligation on the basis of the actual amount of fulfilled obligations for the specified period. The amount of such an obligation is stated in a tax audit act.

      Pursuant to the results of an in-house audit, a tax authority determines the amount of an obligation on the basis of the actual amount of fulfilled obligations for the specified period, which shall be stated in a notice of elimination of violations revealed as a result of an in-house audit;

      3) the amount of an obligation for which the limitation period established by the laws of the Republic of Kazakhstan expired during a taxable period;

      4) the amount of an obligation, the fulfillment of which a creditor has no right to demand on the basis of a final and binding court judgment.

      2. The amount of income from writing off obligations is equal to the amount of obligations (except for VAT amount) payable according to the taxpayer’s source documents:

      in the case specified in subparagraph 1) of paragraph 1 of this article – as of the day of termination of claim;

      in the case specified in subparagraph 3) of paragraph 1 of this article – as of the day of expiration of the limitation period established by the laws of the Republic of Kazakhstan;

      in the case specified in subparagraph 4) of paragraph 1 of this article - as of the date of entry into legal force of a court decision.

      3. The provisions of paragraphs 1 and 2 of this article shall not apply to obligations recognized as doubtful in accordance with this Code.

      4. Income from writing off obligations does not include a reduction in the amount of obligations due to their transfer under a contract of sale of an enterprise as a property complex.

      Note of the RCLI!
      Paragraph 5 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      5. Income from writing off obligations does not include a reduction in the amount of obligations for the payment of arrears as a result of acquisition of shares (participatory interests) of a legal entity that, as of January 1, 2017, directly or indirectly owned shares and (or) other securities of a bank that carried out the transaction specified in Article 61-4 of the Law of the Republic of Kazakhstan “On Banks and Banking Activity in the Republic of Kazakhstan”.

Article 230. Income from doubtful obligations

      1. Obligations arising for purchased goods (works, services), as well as for assessed employees’ income determined in accordance with paragraph 1 of Article 322 of this Code, and not fulfilled within a three-year period calculated in accordance with paragraph 2 of this article, are recognized doubtful. Income from doubtful obligations for received credits (loans, microcredits) does not include the amount of the received credit (loan, microcredit).

      The specified doubtful obligations are included in the taxpayer’s total annual income, except for VAT that is subject to exclusion from the offset in the manner specified in Section 10 of this Code.

      2. Income from a doubtful obligation is recognized in a taxable period of expiration of a three-year period, which is calculated as follows:

      1) for doubtful obligations that arose under credit (loan, microcredit) agreements - from the day following the day of maturity of remuneration in accordance with the terms of a credit (loan, microcredit) agreement;

      2) for doubtful obligations that arose under lease agreements - from the day following the day of maturity of a lease payment in accordance with the terms of a lease agreement;

      3) for doubtful obligations that arose with respect to accrued employment income - from the day of calculating employment income in accordance with paragraph 1 of Article 322 of this Code;

      4) for doubtful obligations not specified in subparagraphs 1) - 3) of this paragraph:

      from the day following the expiry date of an obligation for purchased goods (works, services), the deadline for which is fixed;

      from the date of transfer of goods, performance of works, rendering of services under an obligation for purchased goods (works, services), the deadline for which is not fixed.

      3. The provisions of this article shall not apply to interest on credits (loans) that is not deductible, with account of the provisions of paragraph 3 of Article 246 of this Code.

Article 231. Income of an insurance, reinsurance organization under insurance, reinsurance contracts

      1. The income of an insurance, reinsurance organization under insurance, reinsurance contracts is income of an insurance, reinsurance organization in the form of:

      1) insurance premiums (contributions);

      2) reinsurance assets created by unearned premiums, avoided losses, losses reported but not settled, and losses incurred but not reported;

      3) reimbursement of expenses for insurance payments;

      4) income from the reduction of insurance reserves created by insurance, reinsurance organizations under insurance and reinsurance contracts;

      5) other income under insurance and reinsurance contracts, except for income specified in Article 237 of this Code.

      2. The provisions of this article do not apply to insurance and reinsurance contracts under which income in the form of insurance premiums was recognized in full before January 1, 2012 in accordance with international financial reporting standards and requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

      3. The positive difference between the size of reinsurance assets created, in accordance with the legislation of the Republic of Kazakhstan on insurance and insurance activity, by unearned premiums, avoided losses, losses reported but not settled, and losses incurred but not reported as of the end of a tax accounting period and the size of such assets as of the end of a previous financial period is recognized as income of an insurance, reinsurance organization in the form of reinsurance assets created by unearned premiums, avoided losses, losses reported but not settled, and losses incurred but not reported.

      4. Reimbursement of expenses for insurance payments of an insurance, reinsurance organization on the basis of the right of exoneration (recourse) applied with respect to a person that caused the damage, and (or) a reinsurance organization under a reinsurance contract is recognized as income of an insurance, reinsurance organization in the form of reimbursement of expenses for insurance payments.

      In addition to the above, under agreements of accumulative insurance, reinsurance, non-accumulative insurance, life reinsurance that came into force before January 1, 2012, income in the form of insurance premiums is recognized in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, specifically after December 31, 2011, the income of an insurance, reinsurance organization in the form of reimbursement of expenses for insurance payments is determined using the formula below:

      Iх (A/B), where:

      I - income (to be) received in a reporting taxable period in the form of reimbursement of expenses for insurance payments;

      A - insurance premiums (to be) received in the form of reimbursement of expenses for insurance payments from December 31, 2011 until the day of recognition of income in a reporting taxable period;

      B - insurance premiums (to be) received in the form of reimbursement of expenses for insurance payments from the effective date of the agreement until the day of recognition of income in a reporting taxable period.

Article 232. Income from decreasing the amount of created provisions (reserves)

      1. Income from decreasing the amount of provisions (reserves) created by a taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraphs 1, 3, 6 and 7 of Article 250 of this Code, unless otherwise provided for by this article, is recognized as:

      1) the amount of provisions (reserves) allocated to deductibles in a reporting taxable period and (or) previous taxable periods in the amount proportionate to that of claim satisfaction – upon the satisfaction of a claim by a debtor;

      2) the amount of provisions (reserves) allocated to deductibles in a reporting taxable period and (or) previous taxable periods, in case of reduction in the size of claims to a debtor under a settlement agreement, contract of novation, of assignment of claim by concluding a cession agreement and (or) on other grounds provided for by the legislation of the Republic of Kazakhstan, in the amount proportionate to the amount of reduction in the size of claims;

      3) amounts of reductions allocated to deductibles in a reporting taxable period and (or) previous taxable periods for provisions (reserves) as a result of a change in the estimate of expected credit losses.

      Note of the RCLI!
      Paragraph 2 is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      2. Income from decreasing the amount of provisions (reserves) created by a taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraph 2 of Article 250 of this Code is recognized as:

      1) the amount of provisions (reserves) allocated to deductibles in a reporting taxable period and (or) previous taxable periods in the amount proportionate to that of claim satisfaction - upon the satisfaction of a claim by a debtor;

      2) the amount of provisions (reserves) allocated to deductibles in a reporting taxable period and (or) previous taxable periods, in case of reduction in the size of claims to a debtor under a settlement agreement, contract of novation, of assignment of claim by concluding a cession agreement and (or) on other grounds provided for by the legislation of the Republic of Kazakhstan, in the amount proportionate to the amount of reduction in the size of claims;

      3) amounts of reductions allocated to deductibles in a reporting taxable period and (or) previous taxable periods for provisions (reserves) as a result of a change in the estimate of expected credit losses.

      4) as accounted for as of December 31, 2026 in accordance with international financial reporting standards, the amounts of provisions (reserves) deductible in a reporting taxable period and (or) previous taxable periods against doubtful and bad assets provided by a bank’s subsidiary for the acquisition of doubtful and bad assets of its parent bank. The amounts of provisions (reserves) specified in this subparagraph are included in the bank’s total annual income for a taxable period falling on 2026.

      Note of the RCLI!
      Paragraph 3 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      3. A bank entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraph 1 of Article 250 of this Code does not recognize the amount of provisions (reserves) deductible in a reporting taxable period and (or) previous taxable periods as income from decreasing the amounts of provisions (reserves), in case of forgiveness of a credit (loan) in the manner and under the conditions established by this paragraph.

      The provisions of this paragraph apply to a bank restructured by a court decision, more than 90 percent of whose voting shares belonged to a national management holding as of December 31, 2013, or to a legal entity that used to be such a bank before.

      The provisions of this paragraph apply to a credit (loan), against which a bank created provisions (reserves) allocated to deductibles in a reporting taxable period and (or) previous taxable periods in accordance with paragraph 1 of Article 250 of this Code, which consists of:

      principal debt;

      outstanding interest accrued after December 31, 2012.

      This paragraph applies in case of credit (loan) forgiveness provided that all of the following requirements are met:

      1) the credit (loan) was granted before October 1, 2009;

      2) the credit (loan) debtor is indicated in the list (lists) of debtors of credits (loans) to be forgiven, which was (were) approved before January 1, 2015 by the management body of a bank specified in part two of this paragraph and submitted to the authorized body on or before February 1, 2015;

      3) the credit (loan) is forgiven up to the amount indicated in the list (lists) of debtors of credits (loans) to be forgiven, which was (were) approved before January 1, 2015 by the management body of a bank specified in part two of this paragraph and submitted to the authorized body on or before February 1, 2015;

      4) there is one and (or) more documents on the credit (loan):

      granted to a non-resident:

      an application to a law enforcement agency of a foreign state to initiate criminal proceedings against a debtor - an individual and (or) an official or a person who could otherwise directly or indirectly influence decisions made by the debtor that is a legal entity;

      a claim to a court of the Republic of Kazakhstan or a foreign state torecover debt, to foreclose on a pledge and (or) to restore lost rights to a pledge;

      a legally effective decision of a law enforcement officer or another document of a foreign state concerning the return of an execution document to the bank, if the debtor and third parties, bearing joint or secondary liability together with the debtor to the said bank, have no property, including money, securities or income, that can be foreclosed on, and the measures taken to identify his/her/its property or income have been ineffective;

      a final and binding judgment of a foreign court to refuse to recover debt, to restore lost rights to a pledge, to foreclose on the debtor’s property, including money, securities or income;

      a final and binding judgment of a foreign court to declare the debtor bankrupt and (or) a decision to complete bankruptcy proceedings;

      a document of a foreign competent authority concerning the removal of the debtor or the pledger from the register of legal entities in connection with liquidation;

      granted to a resident:

      an application to a law enforcement agency of the Republic of Kazakhstan for initiating a criminal case against a debtor that is an individual and (or) an official or a person who could otherwise directly or indirectly influence decisions made by the debtor that is a legal entity;

      a document confirming that law enforcement agencies of the Republic of Kazakhstan took measures pursuant to the application of the bank or confirming initiation of criminal proceedings.

      Documents provided for in this subparagraph are not required for credits (loans) granted to non-residents:

      provided that the outstanding loan amount was forgiven after the sale of the pledged property, which fully secured the principal debt as of the date of the mortgage contract, through out-of-court auctions at a price lower than the principal debt amount;

      in case of the bank’s assignment of claim of a credit (loan) at a discount to a third person who was a non-resident on the date of claim assignment, if the value of the claim of the credit (loan) for which the assignment was given is equal to the market value of the bank’s right of claim specified in a report on appraisal conducted in accordance with the legislation of the Republic of Kazakhstan on appraisal activity or a foreign state under a contract between an appraiser and such a third party or a bank or a person representing interests of the bank or designated by a foreign court to manage property in the interests of such a bank.

      For the purposes of part two of this subparagraph, a discount is recognized as a negative difference between the value of the claim of the credit (loan) for which the bank gave the assignment and the value of the claim of the loan;

      in case the bank’s management body provides documentary confirmation of impossibility to apply to a law enforcement agency or a foreign court due to:

      the absence of a treaty on legal assistance in criminal and (or) civil cases between the Republic of Kazakhstan and such a foreign state;

      the absence of an original contract confirming the granting of a credit (loan);

      forgiveness of part of the debt of a debtor, who was a non-resident on the date of debt forgiveness, which is a difference between the amount of a credit (loan) and the market value of the bank’s right of claim specified in part two of this paragraph determined in a report on appraisal conducted in accordance with the legislation of the Republic of Kazakhstan on appraisal activity or a foreign state under a contract between an appraiser and a debtor or such a bank, in case if:

      there is an amendment to the agreement signed by the debtor, under which the credit (loan) was granted, providing for the forgiveness of part of the debt if the remaining part of the debt is paid off (hereinafter referred to asoutstanding debt);

      the bank specified in part two of this paragraph:

      in accordance with paragraph 1 of this article, recognized income from decreasing the amount of created provisions (reserves) equal to outstanding debt;

      did not adjust income provided for in Articles 286 and 287 of this Code;

      did not allocate the amount of expenses for provisions (reserves) to deductibles against the amount of outstanding debt after part of the debt was forgiven;

      5) the credit bureau has information on the amount of credit (loan) provided by the bank in accordance with the legislation of the Republic of Kazakhstan on credit bureaus and the formation of credit histories;

      6) there is an accounting source document on the credit (loan), on the basis of which provisions (reserves) were created for such a credit (loan) and allocated to deductibles in accordance with paragraph 1 of Article 250 of this Code;

      7) there is information on the credit (loan) in the credit register provided by the bank to the National Bank of the Republic of Kazakhstan in the manner prescribed by the legislation of the Republic of Kazakhstan.

      In this case, the list of debtors of credits (loans) to be forgiven contains the following details with regard to each credit (loan):

      1) the number of the credit file;

      2) the date of granting the credit (loan);

      3) the last name, first name, patronymic (if it is indicated in an identity document) and (or) the name of the borrower (co-borrower);

      4) the ceiling amount of debt to be forgiven broken down by the interest assessed after December 31, 2012, and the principal debt.

      The provisions of this paragraph do not apply to credits (loans) granted to a bank employee, a bank employee’s spouse and close relatives.

      Note of the RCLI!
      Paragraph 4 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      4. The provisions of paragraphs 1 and 5 of this article shall apply to a legal entity that used to be a bank restructured by a court decision, more than 90 percent of whose voting shares as of December 31, 2013 belonged to a national management holding.

      Note of the RCLI!
      This wording of item one of paragraph 5 is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      5. The amounts of provisions (reserves) allocated to deductibles in a reporting taxable period and (or) previous taxable periods in case of a decrease in the amount of claims to the debtor are not recognized as income from decreasing the amount of provisions (reserves) created by a taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraphs 1, 2, 3, 6 and 7 of Article 250 of this Code, in case of:

      1) removal from the National Register of Business Identification Numbers in connection with the liquidation of a debtor-legal entity by a court decision on the grounds established by the laws of the Republic of Kazakhstan;

      2) declaring a debtor-individual missing, incapacitated, partially incapacitated or dead by a final and binding court judgment;

      3) categorizing a debtor-individual as a I, II disability group member, as well as in case of death of a debtor-individual;

      Note of the RCLI!
      This wording of subparagraph 4) is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      4) a legally effective decision of a law enforcement officer on the return of an execution document to the taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraphs 1, 2, 3, 6 and 7 of Article 250 of this Code, if a debtor and third parties bearing joint or secondary liability to the taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraphs 1, 2, 3, 6 and 7 of Article 250 of this Code, have no property, including money, securities or income that can be foreclosed on, and the measures, provided for by the legislation of the Republic of Kazakhstan on Enforcement Proceedings and Status of Law Enforcement Agents, taken to identify his/her/its property or income have been ineffective;

      Note of the RCLI!
      This wording of subparagraph 5) is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      5) a final and binding court judgment to refuse the taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraphs 1, 2, 3, 6 and 7 of Article 250 of this Code to foreclose on the debtor’s property, including money, securities or income;

      6) deregistration as an individual entrepreneur in connection with declaring a debtor-individual entrepreneur bankrupt in accordance with the legislation of the Republic of Kazakhstan on rehabilitation and bankruptcy;

      7) assignment by a second-tier bank, a microfinance organization of claims of a credit (loan, microcredit) to legal entities specified in the laws of the Republic of Kazakhstan “On Banks and Banking Activity in the Republic of Kazakhstan” and “On Microfinance Organizations” with regard to the negative difference between the value of the right to claim a credit (loan, microcredit), for which a second-tier bank, a microfinance organization gave an assignment, and the value of the right to claim a credit (loan, microcredit) to be received by the second-tier bank, the microfinance organization from the debtor, as of the date of assignment of the right to claim the credit (loan, microcredit) according to source documents of the second-tier bank, the microfinance organization;

      8) decrease in the amount of the claim to the debtor in accounting records in the form of outstanding overdue credit (loan) and interest on it, receivables for documentary settlements and guarantees, in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, made by the taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraph 1 of Article 250 of this Code, in case of neither full nor partial termination of the right of claim of such a taxpayer to the debtor in a reporting taxable period in accordance with the legislation of the Republic of Kazakhstan;

      9) reduction of the size of a claim to the debtor in connection with the forgiveness of bad debts with respect toa credit (loan) and interest thereon up to the maximum ratio of total amount of bad debts with respect to credits (loans) and interest thereon forgiven in a taxable period to the amount of principal credits (loans) and interest thereon as of the beginning of the taxable period by a taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraph 1 of Article 250 of this Code. In this case, the maximum ratio is equal to 0.1;

      10) reduction of the size of a claim to the debtor of a home loan (mortgage loan) subject to refinancing within the program for refinancing home loans (mortgage loans) approved by the National Bank of the Republic of Kazakhstan in connection with the forgiveness of bad debts with respect toa credit (loan) and interest thereon up to the maximum ratio of total amount of bad debts with respect to credits (loans) and interest thereon forgiven in a taxable period to the amount of principal credits (loans) and interest thereon as of the beginning of the taxable period by a taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraph 3 of Article 250 of this Code. In this case, the maximum ratio is equal to 0.1;

      Note of the RCLI!
      Subparagraph 11) is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      11) forgiveness of bad debts with respect to credit (loan) and interest thereon as of January 1, 2017 by a bank that carried out the transaction provided for in Article 61-4 of the Law of the Republic of Kazakhstan “On banks and Banking Activity in the Republic of Kazakhstan” and entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraph 1 of Article 250 of this Code.

      6. Income from decrease in insurance reserves of an insurance, reinsurance organization is recognized as the negative difference between the amount of insurance reserves earlier allocated to deductibles and created in accordance with the legislation of the Republic of Kazakhstan on insurance and insurance activities by unearned premiums, avoided losses, losses reported but not settled, and losses incurred but not reported at the end of areporting taxable period and the amount of such reserves at the end of a previous taxable period.

Income 233. Income from the assignment of the right of claim

      1. Unless otherwise established by this article, income from the assignment of the right of claim is:

      1) a positive difference between the amount receivable from the debtor under the principal debt claim, including the amount in excess of the principal debt as of the date of assignment of the right of claim, and the cost of acquisition of the right of claim;

      2) a positive difference between the value of the right of claim for which the assignment was given and the value of the claim receivable from the debtor as of the date of assignment of the right of claim, according to the taxpayer’s source documents - for a taxpayer assigning the right of claim.

      Income from the assignment of the right of claim is recognized in the taxable period in which the right of claim was assigned.

      Note of the RCLI!
      Part three of paragraph 1 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      Income from the assignment of the right to claim credits (loans) recognized as doubtful and bad assets is the positive difference between the amount actually paid by the debtor and the cost of acquisition of the right of claim if a bank that is a party to such a transaction on the assignment of the right to claimthe credit (loan), which was committed before January 1, 2016, is the bank restructured by a court decision, more than 90 percent of whose voting shares as of December 31, 2013 belonged to a national management holding and if the value of the assigned right to claim the credit (loan) is not lower than the market value of the right of claim specified in a report on appraisal conducted in accordance with the legislation on appraisal activity of the Republic of Kazakhstan or of a foreign state.

      Note of the RCLI!
      Part four of paragraph 1 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      Income from the assignment of the right to claim credits (loans) is a positive difference between the amount actually paid by the debtor and the cost of acquisition of the right of claim if such a right of claim was acquired from the bank that carried out the transaction stipulated in Article 61-4 of the Law of the Republic of Kazakhstan “On Banks and Banking Activity in the Republic of Kazakhstan”.

      2. Income from the assignment of the right of claim of a taxpayer acquiring the right to claim credits (loans, microcredits) and specified in the laws of the Republic of Kazakhstan “On Banks and Banking Activity in the Republic of Kazakhstan” and “On Microfinance Organizations” is a positive difference between the amount actually paid by the debtor and the cost of acquisition of the right of claim.

      Income from the assignment of the right of claim is recognized in that taxable period in which a positive difference occurs (increases). In this case, the positive difference earlier recognized in previous taxable periods is not taken into account.

Article 234. Income from the disposal of fixed assets

      If the value of disposed fixed assets of a subgroup (with respect to group I) or a group (with respect to groups II, III and IV) determined in accordance with Article 270 of this Code exceeds the value balance of the subgroup (with respect to group I) or the group (with respect to groups II, III and IV) at the beginning of a taxable period with account of the value of the fixed assets received in the taxable period, as well as subsequent expenses incurred in the taxable period and accounted for in accordance with paragraph 2 of Article 272 of this Code, the amount of excess shall be included in total annual income. The value balance of this subgroup (with respect to group I) or group (with respect to groups II, III and IV) at the end of the taxable period becomesequal to zero.

      Income from the disposal of fixed assets is recognized in the taxable period in which such assets were disposed of in accordance with Article 270 of this Code.

Article 235. Income from adjustment of expenses for geological study and preparatory works for the extraction of natural resources, as well as other subsoil users’ expenses

      If the size of amounts adjusting expenses that form a separate group,in accordance with Article 258 of this Code, exceeds the amount of the latter at the beginning of a taxable period with account of expenses incurred in the taxable period, the excess amount shall be included in total annual income. The size of this group at the end of the taxable period becomes equal to zero.

Article 236. Income from the excess amount of contributions to the fund for liquidation of consequences of field development over the amount of actual expenses for liquidation of consequences of field development

      If subsoil user’s actual expenses for liquidation of consequences of field development for the entire period of a subsoil use contract covered by the fund for liquidation of consequences of field development set up during the entire period of the subsoil use contract are lower than its contributions to the specified fund, the difference is to be included in total annual income in that taxable period in which the subsoil use contract terminates.

      In this case, the amount of such a difference to be included in total annual income is reduced by the amount of adjustment of total annual income made by the subsoil user during the period of validity of the subsoil use contract in accordance with Article 252 of this Code in connection with the misuse of the liquidation fund by the subsoil user.

Article 237. Compensations received for earlier made deductions

      1. Income received in the form of compensation for earlier made deductions includes:

      1) the amount of claims recognized as doubtful, which were earlier allocated to deductibles and reimbursed in subsequent taxable periods, also by the assignment of rights of such claims;

      2) amounts received from the state budget to cover costs (expenses);

      3) the amount of compensation for damage paid by an insurance organization or a person that caused the damage, except for insurance payments specified in Article 270 of this Code;

      4) other compensations received to reimburseexpenses earlier allocated to deductibles.

      The compensation received is the income of the taxable period in which it was received.

      2. In case of reimbursementby an individual of training expenses to which a taxpayer applied the provisions of subparagraph 4) of paragraph 1 of Article 288 of this Code, the amount of such compensation is included in the taxpayer’s total annual income to the extent of the amount of such expenses allocated to the reduction of taxable income of previous taxable periods provided that such compensation is made by an individual within a period of time including the taxable period in which the individual’s training is terminated (a labor agreement is terminated before the expiry of three years from the date of its conclusion), and the subsequent taxable period.

      3. The amount of insurance premiums subject to return or returned by an insurance organization to an insurant in accordance with the civil legislation of the Republic of Kazakhstan under non-accumulative insurance contracts and earlier allocated to deductibles by the insurant is included in total annual income of the taxable period in which they were subject to return or were returned to the insurant.

Article 238. Property received free of charge

      1. Unless otherwise established by this Code, the value of any property, including works and services received by the taxpayer free of charge, is his/her/its income.

      2. Income in the form of property received free of charge, including works and services, is recognized in the taxable period in which such property is received, works are performed, services are rendered.

      3. For the purposes of determining the amount of income in the form of property received free of charge, the value of property received free of charge, including works and services, is determined based on accounting records in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, but not lower than the value specified in a transfer certificate (if any) of such property, inclusive of VAT specified in the donor’s documents.

      4. The value of property received free of charge in the form of a GNG emission quota obtained in accordance with the National Plan for GNG emission quotas allocation in the manner determined by the authorized body in the field of environmental protection is recognized to be zero.

Article 239. Income received from operating social facilities

      If income (to be) received from another person in the operation of social facilities is not more than 5 percent of total annual income, including such income, then the taxpayer’s total annual income includes the excess of such income over actual expenses incurred in the operation of social facilities, which are determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting and.

      A social facility is property belonging to the taxpayer on the basis of the right of ownership and:

      1) used in one or more of the following activities:

      in the field of recreation, entertainment;

      in the field of science, culture, physical training and sports, conservation of historical and cultural heritage, archival valuables;

      2) being a housing facility.

Article 240. Income (loss) from the sale of an enterprise as a property complex

      1. Income from the sale of an enterprise as a property complex is determined as a positive difference between the sales value under a contract of sale of the enterprise as a property complex and the book value of transferred assets reduced by the book value of transferred liabilities according to the accounting data as of the date of the sale.

      2. Loss from the sale of an enterprise as a property complex is determined as a negative difference between the sales value under a contract of sale of the enterprise as a property complex and the book value of transferred assets, reduced by the book value of transferred liabilities according to the accounting data as of the date of the sale.

      Loss from the sale of an enterprise as a property complex is carried forward or back in the manner prescribed by Article 300 of this Code.

Article 241. Adjustment of total annual income

      1. Subject to exclusion from taxpayers’ total annual income:

      1) are dividends, including those paid by a legal entity reducing the calculated corporate income tax by 100 percent for an activity, including that carried out under an investment contract providing for such a reduction, if such dividends are accrued for the period of reduction provided that the share of corporate income tax reduced by 100 percent is less than 50 percent in the total amount of the calculated corporate income tax for a legal entity, paying dividends, as a whole;

      2) are dividends paid out by joint-stock investment funds for risk investment provided all of the following requirements are met:

      the taxpayer has been holding shares or participatory interests of such a joint-stock investment fund for risk investment for more than three years by the day of dividend accrual;

      the participation of the National Development Institute in the field of technological development in the authorized capital of such a joint-stock investment fund for risk investment is more than 25 percent;

      3) is the amount of mandatory calendar, additional and emergency contributions of banks received by organizations for mandatory insurance of deposits of individuals;

      4) is the amount of guarantee contributions received by the Housing Guarantee Fund up to the amount aimed at increasing the reserve for the settlement of warranty claims;

      5) is the amount of mandatory, additional and emergency contributions of insurance organizations received by the Insurance Payments Guarantee Fund;

      6) is the amount of money received by an organization for mandatory insurance of deposits of individuals and the Insurance Payments Guarantee Fund to satisfy their claims for reimbursed deposits and guarantee and compensation payments given out;

      7) is the amount of money received by the Housing Guarantee Fund to satisfy claims for payments upon the completion of housing construction (residential buildings);

      8) is investment income received in accordance with the legislation of the Republic of Kazakhstan on pensions and transferred to individual pension accounts;

      9) is investment income received in accordance with the legislation of the Republic of Kazakhstan on compulsory social insurance and aimed at increasing the assets of the State Social Insurance Fund;

      10) is investment income received in accordance with the legislation of the Republic of Kazakhstan on compulsory social health insurance and aimed at increasing the assets of the Social Health Insurance Fund;

      11) is investment income received by joint-stock investment funds from investment activities in accordance with the legislation of the Republic of Kazakhstan on investment funds and accounted for by the custodian of a joint-stock investment fund;

      12) is income from the assignment of the right ofclaim of debt received by a special financing company under a securitization transaction in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization;

      13) is net income from trust management of property (to be) received by atrust management founder;

      14) is the amount of annual mandatory contributions received by the fund guaranteeing the fulfillment of obligations for cotton receipts from cotton processing organizations;

      15) is the amount of annual mandatory contributions received by the fund guaranteeing the fulfillment of obligations for grain receipts from grain collecting stations;

      16) is the amount of money received by the fund guaranteeing the fulfillment of obligations for cotton (grain) receipts to satisfy claims with respect to guarantee payments given out;

      17) is income of the state Islamic special-purpose financial company received from renting property and (or) sale of immovable property specified in subparagraph 6) of paragraph 3 of Article 519 of this Code, including land plots;

      18) is income received by an Islamic bank in the process of managing money in the form of investment deposits sent to these investment deposit accounts and available in them. Such income does not include the interest of an Islamic bank;

      19) is income from the assignment of the right of claim of debt received by an Islamic special-purpose financial company established in accordance with the legislation of the Republic of Kazakhstan on the securities market;

      20) is income of an organization for mandatory insurance of deposits of individuals received as a result of placement of special reserve assets, and also in the form of a penalty applied to second-tier banks for failure to fulfill or improper fulfillment of obligations under an accession agreement in accordance with the Law of the Republic of Kazakhstan “On Mandatory Insurance of Deposits Placed with Second-Tier Banks of the Republic of Kazakhstan”.

      The provisions of this subparagraph shall be valid provided the said income goes to increase the special reserve;

      21) is income of an autonomous cluster fund designated by the legislation of the Republic of Kazakhstan on the innovation cluster, which is received from the state budget in the form of a targeted transfer solely for the establishment of joint ventures with the participation of transnational corporations, as well as for participatory interest in foreign investment funds;

      22) is investment income of the Housing Guarantee Fund in accordance with the Law of the Republic of Kazakhstan “On Shared Participation in Housing Construction” up to the amount of funds aimed at increasing the reserve for the settlement of warranty claims;

      23) is income of a non-commercial organization provided for by paragraph 2 of Article 289 of this Code, given the observance of the provisions set forth in Article 289 of this Code;

      24) is income of the attorney (agent) of the authorized body in the field of education in the form of an awarded penalty in connection with implementation of the activity on the reimbursement of budget expenses, as well as for the return of state tuition and state student loans.

      Note of the RCLI!
      Part two of paragraph 1) is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      Subject to exclusion from total annual income of a bank’s subsidiary acquiring doubtful and bad assets of its parent bank is income from the activities specified in the legislation of the Republic of Kazakhstan on banks and banking activity included in total annual income of such an organization and transferred to its parent bank.

      Note of the RCLI!
      Part three of paragraph 1) is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      In this case, income to be received is allocated to income from the activities provided for by the legislation of the Republic of Kazakhstan on banks and banking activity in the manner determined by the National Bank of the Republic of Kazakhstan in coordination with the authorized body.

      Note of the RCLI!
      Part four of paragraph 1) is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      Subject to exclusion from total annual income of a bank is income from the assignment of the right of claim obtained in connection with the repurchase of rights to claim credits (loans) earlier assigned toan organization for improving the quality of loan portfolios of second-tier banks, whose sole shareholder is the Government of the Republic of Kazakhstan, from such an organization.

      2. It is not allowed to exclude from total annual income dividends:

      1) paid by closed-end mutual funds for risk investment and joint-stock investment funds for risk investment, unless otherwise specified by subparagraph 2) of paragraph 1 of this article;

      2) paid by a legal entity reducing the calculated corporate income tax by 100 percent for an activity, including that carried out under an investment contract providing for such a reduction, if such dividends are accrued for the period of reduction provided that the share of corporate income tax reduced by 100 percent is 50 or more percent in the total amount of the calculated corporate tax for a legal entity, paying dividends, as a whole;

      3. When switching to an inventory costing method other than that used by a taxpayer in previous taxable period, the taxpayer’s total annual income shall be increased by the positive difference amount and decreased by the negative difference amount appearing as a result of applying the new costing method.

      The taxpayer shall switch to a different inventory costing method in the beginning of a taxable period.

Subchapter 2. Deductions

Article 242. General provisions

      1. When determining taxable income, the taxpayer’s expenses in connection with aprofit-oriented activity shall be deductible, with account of the provisions established by this article and Articles 243 - 263 of this Code, except for expenses not subject to deduction in accordance with this Code.

      The provisions of this paragraph apply to the taxpayer’s expenses incurred both in the Republic of Kazakhstan and outside it.

      The taxpayer’s expenses for construction, acquisition of fixed assets and other capital expenses are deductible in accordance with Articles 265 - 276 of this Code.

      2. The taxpayer’s expenses related to activities carried out in a foreign state through a permanent establishment are subject to deduction in accordance with this Code.

      When determining taxable income of a permanent establishment of a resident legal entity in a foreign country, it is allowed to deduct managerial and general administrative expenses incurred both in the Republic of Kazakhstan and outside it for the purposes of obtaining such a taxable income in accordance with the provisions of tax legislation of such a foreign state or an international treaty.

      The amount of managerial and general administrative expenses is deductible in a foreign state, from which sources a resident legal entity receives income, in the manner prescribed by tax legislation of such a foreign state.

      If tax legislation of a foreign state, from which sources a resident legal entity receives income, or an international treaty allows the deduction of managerial and general administrative expenses, but the foreign state’s tax legislation does not provide for the procedure for allocating such expenses to deductibles, a resident taxpayer allocates managerial and general administrative expenses to deductibles in the indicated foreign state in the manner determined by Articles 662 - 665 of this Code.

      3. A taxpayer deducts actually incurred expenses given documents confirming such expenses related to a profit-oriented activity.

      Prepaid expenses determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting are subject to deduction in the taxable period to which they relate.

      4. Unless otherwise established by this article and Articles 243 - 263 of this Code, for the purposes of this Section, expenses are recognized, including the date of their recognition, in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

      If the procedure for recognizing expenses in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting differs from the procedure for determining deductions in accordance with this Code, for tax purposes, these expenses are accounted for in the manner established by this Code.

      5. Unless otherwise provided for by paragraph 4 of Article 192 of this Code, costs for tax purposes are not recognized as such if they are accounted for in connection with changes in the value of assets and (or) liabilities because of application of international financial reporting standards and legislation of the Republic of Kazakhstan on accounting and financial reporting, except for those (to be) paid.

      6. If several expense items provide for the same types of expenses, the latter are deducted only once when calculating taxable income.

      7. A taxpayer shall adjustdeductions in accordance with Article 287 of this Code. In this case, the sum of these deductions, with account of these adjustments, can have a negative value.

Article 243. Deductions with regard to individual types of expenses

      1. The loss of goods incurred by a taxpayer, except for cases provided for in paragraph 2 of this article, shall be deductible up to the amount of natural loss rates established by the legislation of the Republic of Kazakhstan.

      2. Losses incurred by a natural monopoly entity for the purposes of providing regulated services (goods, works) are subject to deduction up to the amount of technical loss rates and (or) with account of restrictions established in accordance with the legislation of the Republic of Kazakhstan.

      3. The taxpayer’s expenses in the amount of the book value of goods not earlier allocated to deductibles, in connection with the loss of, damage to which or with the occurrence of an insured event with respect to which, compensation for damages was received from a person that did damage or an insurance organization, also in the form of an insurance payment, are deductible up to the amount of the compensation received in the period in which the amount of compensation for damage was received.

      For the purposes of this Section:

      deterioration of goods means deterioration of all or certain qualities (properties) of the goods, as a result of which the given goods cannot be used in profit-oriented activities;

      loss of goods means an event that resulted in the destruction or loss of goods. The loss of goods incurred by a taxpayer to the extent of natural loss rates established by the legislation of the Republic of Kazakhstan is not a loss.

      4. Subject to deduction are the taxpayer’s expenses for compulsory employees’ periodic (during their working life) medical examinations and pre-shift, post-shift and other medical examination (check-up), for maintenance or services for the organization of medical posts in cases stipulated in an agreement, a collective agreement, the legislation of the Republic Kazakhstan.

      5. Subject to deduction are the taxpayer’s expenses for providing employees with working conditions that meet the safety, health and hygiene requirements, including sanitary and epidemiological requirements, for providing employees with the opportunity to rest and eat in a specially equipped place in accordance with the labor legislation of the Republic of Kazakhstan, labor, collective agreements or the employer’s acts.

      6. Subject to deduction are the taxpayer’s expenses for providing catering services to employees, for pre-school education and training, social protection and social security of children, the elderly and the disabled.

      7. Subject to deduction are awarded or recognized penalties (fines, penalties), unless otherwise provided for in Articles 246 and 264 of this Code.

      8. If terms of a transaction provide for the quality guarantee of goods sold, works performed, services rendered by a taxpayer, the amount of the taxpayer’s actual expenses for elimination of defects in goods sold, works performed, services rendered during the warranty period under the transaction, shall be allocated to deductibles in accordance with this Code.

      9. Unless otherwise established by this article, the cost of purchased goods, works, services shall include the following expenses for VAT:

      the amount of VAT not taken as an offset in accordance with paragraph 1 of Article 402 of this Code;

      the amount of VAT that may not be taken as an offset in accordance with Articles 408, 409 and 410 of this Code;

      the amount of VAT adjustment taken as an offset in the cases specified in subparagraphs 1) and 4) of paragraph 2 of Article 404 of this Code.

      A VAT payer has the right to deduct the amount of:

      1) VAT that may not be taken as offset when applying the proportional method in accordance with Article 408 of this Code, if such a tax is not accounted for in the value of purchased goods, works, services;

      2) VAT downward adjustment in the case specified in subparagraph 1) of paragraph 2 of Article 404 of this Code with regard to fixed assets, inventories, works, services used in a profit-oriented activity;

      3) reduction of VAT taken as an offset, in the case specified in subparagraph 4) of paragraph 2 of Article 404 of this Code, except for transfer of non-depreciable assets as a contribution to the authorized capital.

      The deduction provided for in subparagraph 1) of part two of this paragraph shall be made in the taxable period in which VAT, which shall not be taken as an offset, arises when applying the proportional method of allocating to offsets in accordance with Article 408 of this Code.

      Deductions provided for in subparagraphs 2) and 3) of part two of this paragraph shall be made in the taxable period in which the amount of VAT to be taken as an offset is subject to adjustment.

      The amounts of downward adjustment of VAT to be taken as an offset in the case specified in subparagraphs 1) and 4) of paragraph 2 of Article 404 of this Code with regard to non-depreciable assets are accounted for in accordance with paragraph 6 of Article 228 of this Code.

      If a payer of corporate income tax is a subsoil user carrying out activity under a production sharing agreement (contract) as part of a simple partnership (consortium) and the fulfillment of tax obligations for VAT is imposed on the operator in accordance with paragraph 3 of Article 426 of this Code, then subject to deduction is VAT provided for in part two of this paragraph in the amount attributable to the specified subsoil user according to the operator’s VAT declaration.

      The provisions of this article do not apply to VAT on goods, works, services, the value of which shall be allocated to deductibles in accordance with paragraph 3 of Article 258 of this Code.

      10. Subject to deduction are membership fees paid by a taxpayer to:

      1) associations of private business entities in accordance with the legislation of the Republic of Kazakhstan in the field of entrepreneurship in the amount not exceeding the monthly calculated index, established by the law on the republican budget and effective as of January 1 of a relevant financial year, per employee based on the average number of employees over a year;

      2) the National Chamber of Entrepreneurs of the Republic of Kazakhstan in the amount not exceeding the maximum amount of mandatory membership fees approved by the Government of the Republic of Kazakhstan.

      11. Subject to deduction are the taxpayer’s expenses for assessed social contributions to the State Social Insurance Fund in the amount determined by the legislation of the Republic of Kazakhstan.

      12. Subject to deduction are the taxpayer’s expenses for contributions to the social health insurance fund in accordance with the legislation of the Republic of Kazakhstan on compulsory social health insurance:

      1) up to the amount of assessed and (or) calculated ones for a tax accounting period and (or) taxable periods preceding the tax accounting period - in a reporting taxable period;

      2) up to the amount of assessed and (or) calculated ones for a tax accounting period – in taxable periods preceding the reporting taxable period.

      13. The value of goods transferred free of charge for advertising purposes (also in the form of donations) is allocated to deductibles in a taxable period in which such goods were transferred, if a unit value of such goods does not exceed 5 times the monthly calculation index established for a relevant financial year by the law on the republican budget and effective as of the date of such transfer.

      14. Subject to deduction are expenses incurred by an electric power transmission organization in connection with the provision of gratuitous services for the transmission of electric power to entities using renewable energy sources.

      15. A taxpayer who has the right to manufacture and (or) sell goods on the basis of a license or a sub-license contract (agreement), registered in accordance with the procedure established by the legislation of the Republic of Kazakhstan, shall deduct expenses for activities aimed at maintaining and (or) increasing sales volumes of such goods, regardless of the right of ownership to it.

      16. For the purposes of this Section, when this Code imposes the fulfillment of a tax obligation for trust management activity on a trust manager, the expenses of such a trust manager, for the purposes of deduction, are determined with account of the provisions of Articles 40, 42, 43, 44 and 45 of this Code.

Article 244. Deduction of amounts of compensation for business trips and travels of members of a taxpayer’s management body

      1. Subject to deduction are expenses for compensation of business trips such as:

      1) expenses for around trip to a business destination, including payment for reservation, on the basis of documents confirming expenses for travel and reservation. In case of travel using an electronic ticket or an electronic travel document, documents confirming expenses for travel and reservation are as follows:

      an electronic ticket, an electronic travel document;

      a document confirming payment for an electronic ticket, an electronic travel document;

      a document confirming the fact of travel (including a boarding pass) issued by a carrier or a person that sold an electronic ticket or an electronic travel in hard or soft copy.

      Expenses covered by this subparagraph do not include travel expenses within one and the same populated locality;

      2) expenses for lodging away from an employee’s permanent place of work during a business trip, including the cost of reservation, on the basis of documents confirming expenses for lodging and reservation. Such expenses also cover lodging expenses for days of temporary incapacity for work of a seconded employee (unless the seconded employee is hospitalized);

      3) daily subsistence allowance in the amount fixed by ataxpayer’s decision, paid to an employee for the duration of a business trip, including days of temporary incapacity for work of the seconded employee;

      4) expenses incurred by a taxpayer for obtaining permits for entry and exit (visas) (the cost of a visa, consular services, compulsory medical insurance), on the basis of documents confirming such expenses.

      2. For the purposes of paragraph 1 of this article:

      1) the place of destination is that indicated in an employer’s order or written instruction on the business trip of an employee for performing work duties, training, advanced training or retraining;

      2) a business trip time is determined on the basis of:

      an employer’s order or written instruction onan employee’s business trip;

      the number of days of a business trip counted from the date of departure to a business trip destination and until the return date indicated in travel documents, including the departure and return dates. Without such documents, the number of days of a business trip is determined on the basis of other documents confirming the date of departure to the business trip destination and (or) the return date provided for by the taxpayer’s tax accounting policy.

      3. Subject to deduction are the following expenses for compensation for travel of members of the taxpayer’s board of directors or another management body that is not the highest management body, incurred in connection with the performance of their management duties, except for compensation for business trips:

      1) expenses for travel to the place of performance of management duties and back, including payment for reservation, on the basis of documents confirming expenses for travel and reservation. In case of travel using an electronic ticket or an electronic travel document, documents confirming expenses for travel and reservation are as follows:

      an electronic ticket, an electronic travel document;

      a document confirming payment for an electronic ticket, an electronic travel document;

      a document confirming the fact of travel (including a boarding pass) issued by a carrier or a person that sold an electronic ticket or an electronic travel in hard or soft copy.

      Expenses covered by this subparagraph do not include travel expenses within one and the same populated locality;

      2) expenses for lodging during a travel aimed at performing management duties, including the cost of reservation, on the basis of documents confirming expenses for lodging and reservation;

      3) the amount of money paid to a member of the management body for the time of a travel in connection with his/her performance of management duties in the amount fixed by a taxpayer’s decision;

      4) expenses incurred by a taxpayer for obtaining permits for entry and exit (visas) (the cost of a visa, consular services, compulsory medical insurance), on the basis of documents confirming such expenses.

      4. For the purposes of paragraph 3 of this article:

      1) the place of performance of management duties is a place of destination specified in a document issued by the taxpayer independently, which contains an invitation to a management body’s member to an event, in connection with his/her performance of management duties, the place and the date of such an event;

      2) the time of a travel aimed at the performance of management duties is determined on the basis of the number of days counted from the date of departure to the place of performance of management duties and until the return date indicated in travel documents, including the departure and return dates.

Article 245. Deduction of representation expenses

      1. Representation expenses include expenses for hosting and entertaining persons, including individuals that are not the taxpayer’s staff, which are incurred in the conduct of the following representational events, regardless of their venue, aimed at:

      1) establishing or maintaining mutual cooperation;

      2) organizing and (or) holding meetings of the taxpayer’s board of directors, another management body, except for executive bodies.

      Representation expenses include, but are not limited to:

      1) transport support to persons participating in representational events, except for expenses allocated to compensations for business trips in accordance with subparagraph 1) of paragraph 1 of Article 244 of this Code;

      2) meals for such persons at representational events;

      3) payment for services of interpreters that are not the taxpayer’s staff;

      4) rent and (or) decoration of premises hosting representational events.

      2. Expenses for the accommodation of invited persons, issuance of visas for such persons, organization of their leisure time, entertainment, recreation, as well as expenses not allocated to those for transportation of persons participating in representational events in accordance with part two of this paragraph are neither representation expenses nor subject to deduction.

      Expenses for transport support do not include those for travel by rail, sea and air by participants of representational events.

      3. Grounds for deducting representation expenses are as follows:

      1) a taxpayer’s written order or written instructionon conducting a representational event with an indication of its purpose and persons responsible for conductingit;

      2) the estimated cost of such an event approved by the taxpayer;

      3) the responsible persons’ report on the representational event held, indicating its date and venue, results, participants, program, actual costs incurred;

      ) source and other documents confirming the grounds for and incurrence of representation expenses.

      4. Representation expenses shall be allocated to deductibles in the amount not exceeding 1 percent of the amount of the employer’s expenses for employees’ income subject to taxation specified in paragraph 1 of Article 322 of this Code for a taxable period.

Article 246. Deduction of remuneration

      1. For the purposes of this article, remuneration shall be recognized as:

      1) remuneration defined in subparagraph 62) of Article 1 of this Code;

      2) forfeit (fine, penalty) under a credit (loan) agreement between related parties;

      3) payment for the guarantee to a related party.

      2. Unless otherwise established by paragraph 3 of this article, the amount of remuneration to be allocated to deductibles shall be determined by the accrual method in accordance with paragraph 2 of Article 192 of this Code.

      3. Remuneration for obligations to a person entitled to create provisions (reserves) subject to deduction in accordance with paragraphs 1 and 6 of Article 250 of this Code, and (or) to a person specified in paragraph 2 of Article 233 of this Code shall be deducted in the amount of actually paid by a taxpayer or a third party against the obligations of such a taxpayer:

      1) in a reporting taxable period up to the amount of expenses recognized by the taxpayer as expenses in a reporting taxable period and (or) taxable periods preceding the reporting taxable period;

      2) in taxable periods preceding a reporting taxable period, up to the amount of expenses recognized by the taxpayer as expenses in the reporting taxable period.

      4. Remuneration is deducted with account of the provisions specified in paragraphs 2 and 3 of this article, up to the amount calculated using the following formula:

      (A + E) + (AE/AL) х (MC) х (B + C + D),

      where:

      A - the amount of remuneration, except for the amounts included in B,C,D,E indices;

      B - the amount of remuneration (to be) paid with account of the provisions of paragraph 3 of this article to the related party, except for the amounts included in E index;

      C - the amount of remuneration (to be) paid with account of the provisions of paragraph 3 of this article, to persons registered in a state with preferential taxation, determined in accordance with Article 294 of this Code, except for the amounts included in B index;

      D - the sum of D1 and D2 indices with account of the provisions of paragraph 3 of this article, except for the amounts included in C index;

      D1 - the amount of remuneration (to be) paid to an independent party for loans secured by the deposit of the related party;

      D2 - the amount of remuneration (to be) paid to an independent party for loans secured by guarantee, suretyship or other form of collateral of related parties, if obligations under the guarantee, suretyship or other form of collateral (payment of a loan) are fulfilled by a related party in a reporting taxable period;

      E - the amount of remuneration for credits (loans) granted by a credit partnership established in the Republic of Kazakhstan, a bank that is a national development institute, a controlling interest in which is held by the national management holding;

      MC – marginal coefficient;

      AE - average annual total equity;

      AL - average annual amount of liabilities.

      When calculating A,B,C,D,E amounts, remunerations included in the cost of a construction object, in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, shall be excluded. For the purposes of this article, an independent party is recognized as a non-related party.

      5. For the purposes of paragraph 4 of this article:

      1) the average annual total equity is equal to the arithmetic-mean of sums of equity at the end of each month of a reporting taxable period. The negative value of the average annual total equity for the purposes of this article is considered to be zero;

      2) the average annual amount of liabilities is equal to the arithmetic-mean of sums of liabilities in each month of a reporting taxable period. When calculating the average annual amount of liabilities, one shall not take into account assessed obligations such as those:

      for taxes and payments to the budget;

      for wages and other income of employees;

      for deferred income, except for income from a related party;

      for remunerations and commissions;

      for dividends;

      for estimated liabilities accounted for in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

      3) the marginal coefficient for financial organizations is equal to 7, for other legal entities –to 4.

      6. For the purposes of paragraph 4 of this article, the amount of equity of a permanent establishment of a non-resident legal entity in the Republic of Kazakhstan is determined as a difference between the assets and liabilities of such a permanent establishment.

      For the purposes of this paragraph, the amount of equity of a permanent establishment of a non-resident legal entity in the Republic of Kazakhstan is treated as if this permanent establishment was a detached and separate legal entity and acted independently of the non-resident legal entity whose permanent establishment it is.

Article 247. Deduction of paid doubtful liabilities

      1. If doubtful liabilities earlier recognized as income were paid by a taxpayer to a creditor, then subject to deduction is the amount of the payment made, except for VAT amount taken as an offset in accordance with paragraph 2 of Article 405 of this Code.

      Such a deduction is made in the taxable period in which the payment was made, up to the amount earlier allocated to income.

      2. The procedure for allocating to deductibles provided for in this article shall also apply in case of payment of liabilities earlier recognized as income in accordance with Article 229 of this Code.

Article 248. Deduction of doubtful claims

      1. Unless otherwise established by paragraph 6 of this article, doubtful claims are considered to be those:

      1) arising in connection with the sale of goods, the performance of works, the rendering of services to legal entities and individual entrepreneurs, as well as non-resident legal entities operating in the Republic of Kazakhstan through a permanent establishment, structural unit of a legal entity and not satisfied within a three-year period calculated in accordance with paragraph 4 of this article;

      2) arising in connection with the sale of goods, the performance of works, the rendering of services to legal entities and individual entrepreneurs and not satisfied in connection with declaring a debtor-taxpayer bankrupt in accordance with the legislation of the Republic of Kazakhstan;

      3) in connection with inclusion of fines and penalties intotal annual income on the basis of a final and binding court judgment on bank credit (loan) agreements and microcredit contracts not satisfied within a three-year period calculated in accordance with paragraph 4 of this article.

      2. Doubtful claims are subject to deduction from a person that:

      1) sold goods, performed works, rendered services and did not assign the right of such a claim;

      2) sold goods, performed works, rendered services and assigned the right of such a claim;

      3) acquired the right of claim of goods sold, works performed, services rendered from a person specified in subparagraph 2) of this paragraph;

      4) included fines and penalties in total annual income on the basis of a final and binding court judgment on bank credit (loan) agreements and microcredit contracts.

      3. Doubtful claims are subject to deduction from the person:

      1) specified in subparagraph 1) of paragraph 2 of this article – up to the amount including the value of goods sold, works performed, services rendered, as well as the amount of other claims arising in connection with such sale of goods, performance of works, rendering of services, including the amount of forfeits (fines, penalties), but not more than the amount of earlier recognized income;

      2) specified in subparagraph 2) of paragraph 2 of this article – up to the amount of a positive difference between the amount including the value of goods sold, works performed, services rendered and the amount of other claims arising in connection with such sale of goods, performance of works, rendering of services, including the amount of forfeits (fines, penalties), but not more than the amount of earlier recognized income, and the value of the assigned right of claim;

      3) specified in subparagraph 3) of paragraph 2 of this article – up to the amount including the value of goods sold, works performed, services rendered, as well as the amount of other claims arising in connection with such sale of goods, performance of works, rendering of services, including the amount of forfeits (fines, penalties), but not more than the amount of earlier recognized income, in accordance with Article 233 of this Code, increased by the value of the acquired right of claim;

      4) specified in subparagraph 4) paragraph 2 of this article – up to the amount of earlier recognized income indicated in subparagraph 13) of paragraph 1 of Article 226 of this Code.

      4. In cases provided for by subparagraph 1) of paragraph 1 of this article, doubtful claims are deductible in the taxable period in which a three-year period expired that is calculated:

      1) for persons specified in subparagraphs 1) and 2) of paragraph 2 of this article:

      for doubtful claims that arose under credit (loan) agreements - from the day following the day of maturity of interest in accordance with the terms of a credit (loan) agreement;

      for doubtful claims that arose under lease agreements - from the day following the day of maturity of a lease payment in accordance with the terms of a lease agreement;

      in other cases - from the day:

      following the expiration of a deadline for the claim of sold goods (works, services), the deadline for which is fixed;

      of transfer of goods, performance of works, rendering of services under the claim of sold goods (works, services), the deadline for which is not fixed;

      2) for persons specified in subparagraph 3) of paragraph 2 of this article:

      for doubtful claims that arose under credit (loan) agreements - from the day following the day of maturity of interest in accordance with the terms of a credit (loan) agreement;

      for doubtful claims that arose under lease agreements - from the day following the day of maturity of a lease payment in accordance with the terms of a lease agreement;

      in other cases - from the following dates whichever comes last:

      the day following the expiration of a deadline for the claim of sold goods (works, services), the deadline for which is fixed;

      the day of assignment of the right of claim of sold goods (works, services), the deadline for which is not fixed;

      5. In cases provided for by subparagraph 2) of paragraph 1 of this article, doubtful claims are subject to deduction in the taxable period in which a court ruling on completion of bankruptcy procedure became final and binding.

      6. In cases provided for by subparagraph 3) of paragraph 1 of this article, doubtful claims are deductible in the taxable period in which a three-year period, calculated from the day of entry into legal force of a court decision, expired.

      7. Claims are not recognized as doubtful ones if these are claims of taxpayers entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraph 1 of Article 250 of this Code for the payment of accrued, after December 31, 2012,:

      1) interest on deposits, including balances of correspondent accounts with other banks;

      2) interest on loans (except for financial lease) granted to other banks and clients;

      3) receivables for documentary settlements and guarantees;

      4) contingent liabilities for unsecured letters of credit, issued or confirmed guarantees.

      8. Unless otherwise provided for in paragraph 9 of this article, a taxpayer shall allocate doubtful claims to deductibles with concurrent observation of the following conditions:

      1) documents confirming the occurrence of claims shall be available;

      2) claims shall be stated in accounting records at the time of deduction or such claims shall be allocated to expenses in accounting records of previous periods.

      9. In the case provided for by subparagraph 2) of paragraph 1 of this article, besides documents specified in paragraph 8 of this article, a copy of the court ruling on completion of bankruptcy procedure is required in addition.

Article 249. Deductions of an insurance, reinsurance organization

      1. An insurance, reinsurance organization has the right to allocate to deductibles the following assessed expenses:

      1) insurance payments under insurance, reinsurance contracts;

      2) cash surrender value and insurance premiums (contributions) (to be) returned in accordance with the civil legislation of the Republic of Kazakhstan;

      3) insurance premiums (contributions) (to be) paid to the reinsurer under reinsurance contracts;

      4) expenses for creating insurance reserves under insurance and reinsurance contracts in accordance with paragraph 5 of Article 250 of this Code;

      5) payments to insurance agents and insurance brokers under insurance and reinsurance contracts;

      6) other expenses of the insurance, reinsurance organization related to profit-oriented activities.

      2. The provisions of this article shall not apply to insurance and reinsurance contracts under which income in the form of insurance premiums was recognized in full in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting before January 1, 2012.

      3. Under an agreement of accumulative insurance, reinsurance, non-accumulativeinsurance, life reinsurance effective before January 1, 2012, under which income in the form of insurance premiums is recognized in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, also after December 31, 2011:

      1) deduction of expenses specified in subparagraphs 1) and 2) of paragraph 1 of this article shall be determined using the following formula:

      Eх (A/B), where:

      E - expenses (to) paid in a reporting taxable period;

      A - insurance premiums (to be) received from December 31, 2011 to the date of assessment of expenses in a reporting taxable period;

      B - insurance premiums (to be) received from the date of entry into force of the agreement to the date of assessment of expenses in a reporting taxable period;

      2) deduction of expenses specified in subparagraph 3) of paragraph 1 of this article shall not exceed the amount of income in the form of an insurance premium (contribution) recognized in accordance with international standards of financial reporting and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting after January 1, 2012.

Article 250. Deduction of contributions to reserve funds

      Note of the RCLI!
      This wording of part one of paragraph 1 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      1. Unless otherwise established by paragraph 3 of Article 232 of this Code, banks, except for a bank that is a national development institute, whose controlling interest belongs to a national management holding, are entitled to deduct the amount of expenses for provisions (reserves) created in accordance with international the standards of financial reporting and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting and in the manner determined by the National Bank of the Republic of Kazakhstan in coordination with the authorized body.

      The value of collateral and other security is taken into account when determining the amount of provisions (reserves) in the cases and in the manner determined by the rules for creating provisions (reserves).

      The provisions of this paragraph apply to provisions (reserves) against assets, contingent liabilities, except for assets and contingent liabilities granted to related parties or third parties with respect to obligations of the related parties, such as:

      1) deposits, including balances of correspondent accounts with other banks, as well as interest on such deposits accrued after December 31, 2012;

      2) loans (except for financial lease) granted to other banks and clients, as well as interest on such loans accrued after December 31, 2012;

      3) receivables for documentary settlements and guarantees;

      4) contingent liabilities for unsecured letters of credit, issued or confirmed guarantees.

      Note of the RCLI!
      Part one of paragraph 1 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      The provisions of this paragraph also apply to provisions (reserves) against assets and contingent liabilities granted in favor of:

      a bank restructured by a court decision, more than 90 percent of voting shares of which, as of December 31, 2013, belonged to a national management holding;

      a legal entity that used to be a bank restructured by a court decision, more than 90 percent of voting shares of which, as of December 31, 2013, belonged to a national management holding.

      Note of the RCLI!
      Paragraph 2 is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      2. Banks have the right to deduct the amount of expenses for creating provisions (reserves) against doubtful and bad assets provided by asubsidiary bank to purchase doubtful and bad assets of its parent bank.

      The list of issued permits for the establishment or acquisition of a subsidiary that acquired doubtful and bad assets of its parent bank is approved by the regulatory legal act of the National Bank of the Republic of Kazakhstan.

      In this case, subject to deduction is the amount of expenses, in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, for the creation of provisions against doubtful or bad assets provided by a subsidiary’s parent bank to purchase doubtful and bad assets of such a parent bank.

      The procedure for classifying assets, provided by banks to their subsidiaries for the acquisition of doubtful and bad assets of a parent bank, as doubtful and bad, as well as the procedure for creating provisions (reserves) against assets provided by parent banks to their subsidiaries are determined by the National Bank of the Republic of Kazakhstan in coordination with the authorized body.

      Banks have no right to deduct the amount of expenses for creating provisions (reserves) against assets purchased from an organization for improving the quality of loan portfolios of second-tier banks, whose sole shareholder is the Government of the Republic of Kazakhstan.

      3. Organizations carrying out certain types of banking operations on the basis of a license to conduct banking borrowing operations are entitled to deduct the amount of expenses for provisions (reserves) created in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting and in the manner determined by the National Bank of the Republic of Kazakhstan in coordination with the authorized body, against credits (loans), except for:

      1) financial lease;

      2) credits (loans) granted to the benefit of related parties or to third parties for liabilities of related parties.

      The value of collateral and other security is taken into account when determining the amount of provisions (reserves) in the cases and in the manner determined by the rules for creating provisions (reserves).

      Note of the RCLI!
      Paragraph 4 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      4. The provisions of paragraph 1 of this article apply to a legal entity that was previously a subsidiary bank restructured by a court decision, more than 90 percent of the voting shares of which as of December 31, 2013 belonged to a national management holding.

      5. Insurance and reinsurance organizations have the right to deduct the amount of expenses for creating insurance reserves for unearned premiums, avoided losses, losses reported but not settled, and losses incurred but not reported up to the amount determined as a positive difference between the size of insurance reserves established in accordance with the legislation of the Republic of Kazakhstan on insurance and insurance activities for unearned premiums, avoided losses, losses reported but not settled, and losses incurred but not reported at the end of a reporting taxable period and the amount of such reserves at the end of previous taxable period.

      The provisions of this paragraph do not apply to insurance and reinsurance contracts under which income in the form of insurance premiums, in accordance with international financial reporting standards and requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting,was recognized in full before January 1, 2012.

      6. Microfinance organizations have the right to deduct the amount of expenses for creation of provisions (reserves) against doubtful and bad assets for granted microcredits, as well as interest on them, except for assets granted to arelated party or to third parties for liabilities of the related party.

      The procedure for classifying assets with respect to granted microcredits as doubtful and bad, as well as the procedure for creating provisions (reserves) against them is determined by the National Bank of the Republic of Kazakhstan in coordination with the authorized body.

      7. A national management holding and also legal entities, whose main activity is performance of loan operations or purchase of rights of claim and whose 100 percent of voting shares (participatory interests) belong to a national management holding, are entitled to deduct the amount of expenses for creating provisions (reserves) against doubtful and bad assets, contingent liabilities, except for assets and contingent liabilities granted to related parties or third parties for liabilities of related parties (except for assets and contingent liabilities of credit partnerships) such as:

      deposits, including balances of correspondent accounts with banks;

      loans (except for financial lease) granted to banks and clients;

      receivables for documentary settlements and guarantees;

      contingent liabilities for unsecured letters of credit, issued or confirmed guarantees.

      The amount of expenses for creating provisions (reserves) is deducted up to the amount of provisions (reserves) created in the manner determined by the Government of the Republic of Kazakhstan.

      The list of legal entities specified in this paragraph and the procedure for compiling such a list are approved by the Government of the Republic of Kazakhstan.

      The provisions of this paragraph shall not apply to taxpayers specified in paragraphs 1, 5 and 6 of this article.

      Note of the RCLI!
      Paragraph 8 is in effect until 01.01.2019 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      8. Taxpayers entitled to deduct the amount of expenses for creating provisions (reserves) specified in paragraphs 1, 3, 6 and 7 of this article have the right allocate to deductibles the amount of a one-time increase in the amount of provisions, which arose as a result of switching to a new standard for creating provisions in compliance with international standards of financial reporting and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

Article 251. Deduction of reduction in reinsurance assets

      Insurance and reinsurance organizations have the right to deduct the amount of reduction in reinsurance assets earlier recognized as income in accordance with Article 231 of this Code for unearned premiums, avoided losses, losses reported but not settled, and losses incurred but not reported up to the amount determined as a negative difference between the size of reinsurance assets created in accordance with the legislation of the Republic of Kazakhstan on insurance and insurance activity for unearned premiums, avoided losses, losses reported but not settled, and losses incurred but not reported at the end of a reporting taxable period and the size of such assets at the end of previous taxable period.

Article 252. Deduction of expenses for liquidation of consequences of field development and amounts of contributions to liquidation funds

      1. A subsoil user operating on the basis of a subsoil use contract, concluded in the manner determined by the legislation of the Republic of Kazakhstan, deducts the amount of contributions to the liquidation fund from total annual income. The specified deduction is made up to the amount of actually paid contributions to a special deposit account with any second-tier bank in the territory of the Republic of Kazakhstan by the subsoil user for a taxable period.

      The amount of and order for thepayment of contributions to the liquidation fund are established by a subsoil use contract.

      If the authorized state body for subsoil use establishes the fact of the subsoil user’s inappropriate use of the liquidation fund’s resources, the inappropriately used amount shall be included in the subsoil user’s total annual income for a taxable period in which it occurred, except for the fact of inappropriate use revealed in the taxable period exceeding the limitation period established by Article 48 of this Code, under which the amount of inappropriately used money shall be included in the subsoil user’s total annual income for a taxable period for which the limitation period expires in a taxable period following current taxable period.

      If the subsoil user receives, in accordance with the legislation of the Republic of Kazakhstan, the liquidation fund’s resources from another subsoil user upon the transfer of subsoil use contract, the subsoil user that received such resources:

      shall not include them in total annual income provided that they were placed into a special deposit account with any second-tier bank in the territory of the Republic of Kazakhstan for creating a liquidation fund in the year in which they were received;

      does not allocate them to deductibles.

      2. The subsoil user’s expenses actually incurred during a taxable period for the liquidation of consequences of field development are deductible in the taxable period in which they were incurred, except for expenses covered by the liquidation fund’sresources placed into a special deposit account.

Article 253. Deduction of expenses for liquidation of waste disposal sites and for amounts of contributions to the waste disposal site liquidation fund

      1. A taxpayer shall deduct the amount of contributions to the waste disposal site liquidation fund transferred to a special deposit account with any second-tier bank in the territory of the Republic of Kazakhstan.

      2. The amount and procedure for transferring contributions to the waste disposal site liquidation fund, as well as the procedure for using the fund’s resources, shall be established in accordance with the legislation of the Republic of Kazakhstan.

      3. If the authorized body in the field of environmental protection establishes the fact of the taxpayer’s inappropriate useof resources of the waste disposal site liquidation fund, the inappropriately used amounts shall be included in the taxpayer’s total annual income of the taxable period in which it occurred.

      4. The taxpayer’s expenses actually incurred on liquidation of waste disposal sites during a taxable period are deductible in the taxable period in which they were incurred, except for expenses covered by the liquidation fund’s resources placed into a special deposit account.

Article 254. Deduction of expenses for scientific research, scientific and technical works and acquisition of exclusive rights to intellectual property items

      1. Expenses for scientific research and scientific-and-technical works, except for expenses for acquiring fixed assets, their installation and other capital expenses, are allocated to deductibles.

      A ground for allocating such expenses to deductibles is actually performed technical requirements to research and scientific-and-technical works and acceptance certificates for completed stages of such works.

      2. Expenses for the acquisition of exclusive rights to intellectual property items from higher education institutions, scientific organizations, start-up companies under a license agreement or contract of assignment of exclusive rights aimed at their further commercialization shall be deductible.

      The basis for allocating such expenses to deductibles is a license agreement or a contract of assignment (partial assignment) registered by the authorized state body in the manner prescribed by the legislation of the Republic of Kazakhstan.

Article 255. Deduction of subsoil user’s expenses for financing research, scientific-and-technical works and (or) development work, as well as for transferring money to an autonomous cluster fund

      1. The subsoil user has the right to deduct expenses related to contract operations for financing (transfer of money for) scientific research in accordance with the legislation of the Republic of Kazakhstan on subsoil and subsoil use of:

      organizations carrying out activities in the field of science accredited by the authorized body in the field of science;

      an autonomous cluster fund to finance projects of participants in the “Park of Innovative Technologies” innovation cluster.

      2. The deduction of expenses specified in this article shall not exceed the amount of the positive difference determined as follows:

      the amount equal to 1 percent of total annual income from contract operations at the end of a taxable period preceding a reporting taxable period

      minus

      expenses allocated to deductibles, in accordance with Article 254 of this Code, in a reporting taxable period.

Article 256. Deduction of expenses for insurance premiums and contributions of participants in guarantee systems

      1. Insurance premiums (to be) paid by an insurant under insurance contracts, except for insurance premiums under accumulative insurance agreements, shall be deductible.

      2. The amount of mandatory calendar, additional and emergency contributions transferred in connection with the guarantee of deposits of individuals is subject to deduction by a bank participating in the mandatory deposit insurance system for individuals.

      3. The amount of mandatory, emergency and additional contributions transferred in connection with the guarantee of insurance payments is subject to deduction by an insurance, reinsurance organization participating in the insurance payments guarantee system.

      4. The amount of annual mandatory contributions transferred to guarantee the fulfillment of obligations for cotton receipts is subject to deduction by a cotton processing organization participating in the system guaranteeing the fulfillment of obligations for cotton receipts.

      5. The amount of annual mandatory contributions transferred to guarantee the fulfillment of obligations for grain receipts is subject to deduction by a grain receiving enterprise participating in the system guaranteeing the fulfillment of obligations for grain receipts.

Article 257. Deduction of expenses for assessed income of employees and other payments to individuals

      1. Subject to deduction are employer’s expenses for employees’ income subject to taxation specified in paragraph 1 of Article 322 of this Code (including the employer’s expenses for the employee’s income specified in subparagraphs 20), 22), 23) and 24) of paragraph 1 of Article 644 of this Code), except for:

      1) those included in the initial value of:

      fixed assets;

      objects of preferences;

      non-depreciable assets;

      2) those included in the production cost of inventories and to be allocated to deductibles through the production cost of such inventories, which is determined in accordance with international standards of financial reporting and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

      3) those recognized as subsequent expenses in accordance with paragraph 5 of Article 272 of this Code.

      Subject to deduction is, among other things, the employee’s income in the form of the employer’s expenses for training, advanced training or retraining of an employee in the speciality related to the employer’s activity, in accordance with the legislation of the Republic of Kazakhstan.

      Note of the RCLI!
      This wording of paragraph 2 is in effect until 01.01.2020 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

      2. Subject to deduction are taxpayer’s expenses in the form of payments to individuals specified in subparagraphs 1), 5), 7), 8), 9), 10) and 12) of paragraph 2 of Article 319, subparagraphs 42) and 44) of paragraph 1 of Article 341 of this Of the Code.

      3. Mandatory professional pension contributions paid by a taxpayer according to the rules of the single accumulative pension fund shall be deductible within the limits established by the legislation of the Republic of Kazakhstan on pensions.

Article 258. Deduction of expenses for geological study, exploration and preparatory works for the extraction of natural resources and other deductions of a subsoil user

      1. Expenses actually incurred by a subsoil user, prior to the commencement of extraction after commercial discovery, for geological study, exploration, preparatory works for extraction of mineral resources, including expenses for appraisal, infrastructure development, general administrative expenses, the amount of paid signature bonus and commercial discovery bonus, expenses for acquisition and (or) creation of fixed assets and intangible assets, except for the assets specified in subparagraphs 2) - 6), 8) - 15) of paragraph 2 of Article 266 of this Code, and other expenses deductible in accordance with this Code, form a separate group of depreciable assets. It should be noted that the expenses indicated in this paragraph include:

      1) expenses for acquiring and (or) creating fixed assets and intangible assets, except for the assets specified in subparagraphs 2) - 6), 8) - 15) of paragraph 2 of Article 266 of this Code. Such expenses comprise those to be included in the initial value of these assets in accordance with paragraph 2 of Article 268 of this Code, as well as subsequent expenses for such assets incurred in accordance with Article 272 of this Code;

      2) other expenses.

      In the cases provided for by this Code, the amount of expenses specified in this subparagraph that are included in a separate group of depreciable assets shall not exceed the established limits for classifying such expenses as deductibles for corporate income tax purposes.

      2. Expenses specified in paragraph 1 of this article shall be deducted from total annual income in the form of depreciation allowances from the commencement of extraction after commercial discovery of minerals. The amount of depreciation allowances is calculated by applying the depreciation rate determined at the discretion of a subsoil user, but not more than 25 percent, to the amount of accrued expenses for the group of depreciable assets provided for by this paragraph at the end of a taxable period.

      This procedure is also applied in the following cases:

      if a subsoil user carries out activity under an extraction contract, which is concluded on the basis of the field’s discovery and appraisal as part of the exploration contract. The amount of accrued expenses for the group of depreciable assets as of the end of the last taxable period under such an exploration contract is subject to deduction from total annual income in the form of depreciation allowances under the specified extraction contract;

      in accordance with the legislation of the Republic of Kazakhstan on the subsoil and subsoil use, part of an exploration site was allotted by modifying the exploration contract under which the allotment is made and a separate extraction contract with respect to the allotted subsoil site is concluded. In this case, the amount of accrued expenses for a group of depreciable assets to be carried forward for deduction purposes under an extraction contract is determined by the share of direct expenses attributable to such an allotted part of the exploration site in the total amount of direct expenses incurred by the subsoil user prior to the allotment under the relevant exploration contract.

      In case of completion of subsoil use activity under a separate extraction contract or a combined exploration and extraction contract, provided that the subsoil user completed subsoil use activity after commencement of extraction after commercial discovery established by this article, the value balance of the depreciable assets’ group formed at the end of the last taxable period, in which the subsoil use contract terminated, is subject to deduction.

      For the purposes of this article and Article 260 of this Code, extraction after commercial discovery means:

      1) commencement of mining operations after the approval of reserves by a state body authorized for this purpose – under exploration contracts, as well as combined exploration and extraction ones with unapproved mineral reserves;

      2) commencement of extraction of minerals after the conclusion of these contracts if such works are provided for by the work program of a contract and agreed upon with the authorized body for the study and use of subsoil resources - under contracts for combined exploration and extraction with respect to which mineral reserves are on the state balance sheet and approved by an expert opinion of the authorized state body, including reserves requiring additional geological study and geological and economic reassessment.

      3. If a well is abandoned because of no commercial inflow of hydrocarbons while testing (hereinafter, for the purposes of this paragraph, a non-productive well), in accordance with the legislation of the Republic of Kazakhstan on subsurface and subsoil use, actual expenses incurred on the construction and abandonment of such a well, including VAT, are deductible in the following order:

      1) expenses for construction and (or) abandonment of a non-productive well or part of such expenses incurred prior to the commencement of extraction after commercial discovery are subject to deduction in the manner specified in paragraph 1 of this article;

      2) expenses for construction and (or) abandonment of a non-productive well or part of such expenses incurred after the commencement of extraction after commercial discovery are deductible in that taxable period in which such a well is abandoned.

      In this case, expenses for construction and (or) abandonment of a non-productive well, incurred prior to the commencement of extraction after commercial discovery, are not excluded from a separate group of depreciable assets formed in accordance with paragraph 1 of this article.

      4. Expenses specified in paragraph 1 of this article (except for accrued but unpaid interest on investment financing in accordance with the legislation of the Republic of Kazakhstan on subsoil and subsoil use) are reduced by the amount of:

      1) income received during the period of geological study and preparatory works for extraction, except for income subject to exclusion from total annual income in accordance with Article 241 of this Code;

      2) income received from the sale of minerals extracted prior to the commencement of extraction after commercial discovery;

      3) income received from the realization of the subsoil use right or part thereof;

      4) the value of assets accounted for in a separate group of depreciable assets formed in accordance with paragraph 1 of this article, when transferred as a contribution to the authorized capital. In this case, such a value is determined based on the value of the contribution specified in the constituent documents of a legal entity;

      5) the value of assets transferred free of charge, accounted for in a separate group of depreciable assets formed in accordance with paragraph 1 of this article, specified in a certificate of transfer of the said assets, but not less than the book value of the said assets according to the accounting data as of the date of transfer.

      5. The procedure specified in paragraph 1 of this article shall also apply to expenses for acquisition and (or) creation of intangible assets incurred by a taxpayer in connection with the acquisition of the subsoil use right.

Article 259. Features of deductions of expenses for geological study and preparatory works for the extraction of natural resources and other deductions of a subsoil user operating under a contract for exploration and (or) combined exploration and extraction of hydrocarbons

      1. As to expenses specified in paragraph 1 of Article 258 of this Code, incurred by the subsoil user from January 1, 2018 under a contract for exploration and (or) combined exploration and extraction (during the exploration period), a subsoil user has the right to form a separate group of depreciable assets for the purposes of allocating them to deductibles under other contracts for extraction and (or) combined exploration and extraction (during the extraction period) of the subsoil user.

      As to these expenses, the subsoil user calculates depreciation allowances by applying the depreciation rate determined at the discretion of the subsoil user, but not more than 25 percent, to the amount of accrued expenses for the group of depreciable assets provided for by this paragraph at the end of each taxable period.

      In this case, these depreciation allowances are allocated to deductibles under other contracts for extraction and (or) combined exploration and extraction (during the extraction period) of this subsoil user through their distribution by the share of direct income attributable to each specific contract for extraction and (or) combined exploration and extraction (received in the extraction period) in the total amount of direct income received by the subsoil user under such contracts for a taxable period.

      2. The right to form a separate group established by this article shall be granted in the taxable period in which first expenses specified in paragraph 1 of this article are incurred. In this case, if at the time of formation of such a separate group,the subsoil user does not have another contract for extraction and (or) combined exploration and extraction (during the extraction period), the right to form such a separate group is granted in the taxable period in which the contract for extraction was concluded and (or) the period of extraction under the contract for combined exploration and extraction began.

      However, such a right is not subject to revision until the end of an exploration contract or a contract for combined exploration and extraction (prior to the extraction period).

      3. Prior to the calculation of depreciation allowances for a taxable period, a separate group of depreciable assets, formed in accordance with this article, shall be reduced by the amount of income specified in paragraph 4 of Article 258 of this Code received under the relevant contract.

      If the amount of such income exceeds the size of a separate group of depreciable assets, formed in accordance with this article, the excess amount reduces a separate group of depreciable assets, formed in accordance with Article 258 of this Code, under a relevant exploration contract or a contract for combined exploration and extraction (prior to the extraction period). Without a separate group of depreciable assets formed in accordance with Article 258 of this Code, the amount of such excess is included in total annual income.

      4. A subsoil user is obliged to maintain separate tax accounting for a separate group of depreciable assets, formed in accordance with this article, and a separate group of depreciable assets, formed in accordance with Article 258 of this Code, within the framework of a relevant contract for exploration and (or) combined exploration and extraction (during the exploration period).

      5. From the taxable period in which the period of extraction under a combined exploration and extraction contract began or in which an extraction contract is concluded on the basis of discovery and appraisal of a field as part of the exploration contract, the value of a separate group of depreciable assets, formed in accordance with this article, not earlier allocated to deductibles, is subject to deduction in accordance with the procedure specified in Article 258 of this Code within the framework of such a contract for extraction or combined exploration and extraction.

      6. In case of termination of an exploration and (or) combined exploration and extraction contract (during the exploration period), the value of a separate group of depreciable assets, formed in accordance with this article, not allocated to deductibles, at the time of such termination is not deductible, except for the case established by paragraph 5 of this article.

Article 260. Deduction of expenses for preparatory works for uranium mining using ISL method after commencement of extraction after commercial discovery

      1. Costs of (expenses for) acquisition and (or) creation of depreciable assets actually incurred by a subsoil user in the preparation of processing facilities (well fields) for the extraction of uranium using ISL method in the period after commencement of extraction after commercial discovery form a separate group of depreciable assets under a relevant subsoil use contract.

      The depreciable assets indicated in this paragraph include:

      1) production, injection and monitor wells, semi-wildcats constructed at processing facilities (well fields), including expenses for their geophysical study;

      2) process pipelines constructed from processing facilities (well fields) to a sand pond at an industrial site for processing pregnant solutions, including production and injection reservoirs at processing facilities (well fields);

      3) process pipelines constructed between processing facilities (sections of well fields);

      4) process pipelines constructed at processing facilities (well fields);

      5) header houses built at processing facilities (well fields);

      6) units for distribution of pregnant solutions built at processing facilities (well fields);

      7) units for reception of technical solutions built at processing facilities (well fields);

      8) units for acid reception and liquid reagent warehouses, as well as acid pipes built at processing facilities (well fields);

      9) industrial pumping stations with equipment and instrumentation installed at processing facilities (well fields);

      10) pumps for pumping solutions with equipment and instrumentation installed at processing facilities (well fields) at the stage of mining-and-preparatory works;

      11) submersible pumps with control cabinets installed at processing facilities (well fields) at the stage of mining-and-preparatory works;

      12) power supply facilities installed or built at processing facilities (well fields): transformer substations, compressor stations, air lines, cable lines;

      13) control and process automation equipment installed at processing facilities (well fields);

      14) air ducts at processing facilities (well fields);

      15) access roads to processing facilities (well fields) and inside them;

      16) sand ponds or tanks of pregnant solutions and leach solutions at processing facilities (well fields);

      17) protection against sand blowout at processing facilities (well fields).

      The cost of depreciable assets referred to in this paragraph includes costs of (expenses for) the acquisition and (or) creation of assets, as well as other costs (expenses) that are subject to inclusion in the value of such assets in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial statements.

      In addition to the above, in the cases provided for by this Code, the amount of expenses specified in this paragraph allocated to a separate group of depreciable assets shall not exceed the established norms for allocating such expenses to deductibles for corporate income tax purposes.

      2. Costs (expenses) specified in paragraph 1 of this article shall be deducted from total annual income in the form of depreciation allowances from the commencement of extraction after commercial discovery of minerals.

      In this case, the amount of depreciation allowances, calculated in accordance with this article, is deductible up to the amount of depreciation allowances of such a group of assets calculated on the basis of taxpayer’s accounting records.

      The amount of depreciation allowances is determined in accordance with the accounting method for a group of depreciable assets, formed in accordance with paragraph 1 of this article, for processing facilities or a field (well field) as a whole using the following formula:



      S - the amount of depreciation allowances;

      C1 - the value of a separate group of depreciable assets at the beginning of a taxable period;

      C2 - costs of (expenses for) preparatory works for extraction specified in paragraph 1 of this article incurred in a current taxable period;

      C3 - the cost of a separate group of depreciable assets specified in paragraph 3 of this article, acquired from third parties or received as a contribution to the authorized capital in connection with the acquisition of the subsoil use right;

      V1 - physical quantity of ready-for-extraction uranium reserves at the beginning of a taxable period;

      V2 - physical quantity of ready-for-extraction uranium reserves, for which extraction all the preparatory works were completed during a taxable period;

      V3 - physical quantity of ready-for-extraction uranium reserves, purchased from third parties or received as a contribution to the authorized capital in connection with the acquisition of the subsoil use right;

      V4 - physical quantity of recovered reserves of uranium with account of standard losses in subsoil resources for a taxable period.

      For a taxable period in 2009, the value of a separate group of depreciable assets at the beginning of the taxable period is the amount of accrued costs of (expenses for) preparing for uranium mining determined in accordance with paragraph 1 of this article as of January 1, 2009.

      In subsequent taxable periods after 2009, the value of a separate group of depreciable assets at the beginning of a taxable period is the value of this group of assets as of the end of a previous taxable period, determined in the following order:

      the value of a separate group of depreciable assets as of the beginning of the taxable period

      plus

      costs (expenses), specified in paragraph 1 of this article for preparatory works for extraction, incurred in current taxable period,

      plus

      the cost of acquiring a group of depreciable assets from third parties specified in paragraph 3 of this article,

      plus

      the value of a group of depreciable assets received as a contribution to the authorized capital specified in paragraph 3 of this article,

      minus

      the amount of depreciation allowances for the taxable period.

      For a taxable period in 2009, the physical quantity of ready-for-extraction uranium reserves at the beginning of a taxable period is the physical quantity of ready-for-extraction uranium reserves as of January 1, 2009.

      In subsequent taxable periods after 2009, the volume of ready-for-extraction uranium reserves at the beginning of a taxable period is the physical quantity of ready-for-extraction reserves at the end of a previous taxable period determined in the following order:

      the physical quantity of ready-for-extraction uranium reserves at the beginning of the taxable period

      plus

      the physical quantity of uranium reserves, for which extraction all the preparatory works were completed during the taxable period,

      plus

      the physical quantity of ready-for-extraction uranium reserves, acquired from third parties or received as a contribution to the authorized capital in connection with the acquisition of the subsoil use right,

      minus

      the volume of recoveredreserves of uranium with account of standard losses in subsoil resources during the taxable period.

      If the actual quantity of recovered reserves of uranium over the entire period of the processing facility’s operation is less than the actual quantity of ready-for-extraction uranium reserves of this processing facility, the remaining value of the group of depreciable assets of this processing facility is deducted in the taxable period in which the taxpayer’s accounting writes it off as the production cost of extraction and primary processing (enrichment).

      If a subsoil use activity is completed under a separate extraction or combined exploration and extraction contract, provided that a subsoil user completed subsoil use activity after the commencement of extraction after commercial discovery, the value of a separate group of depreciable assets at the end of a taxable period is deductible in the taxable period in which such activity was completed.

      3. The procedure established by this article shall also apply to a separate group of depreciable assets specified in paragraph 1 of this article acquired from third parties and (or) received as a contribution to the authorized capital in connection with the acquisition of the subsoil use right.

      In case of receipt of a separate group of depreciable assets, specified in paragraph 1 of this article, in connection with its acquisition from third parties, the value of such a group of assets is the value of its acquisition, determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting. When a separate group of depreciable assets, specified in paragraph 1 of this article, is received as a contribution to the authorized capital, the value of such a group of assets is the value of the contribution specified in constituent documents of a legal entity.

Article 261. Deduction of subsoil user’s expenses for the training of Kazakhstani personnel and social development of regions

      1. Expenses actually incurred by a subsoil user for the training of Kazakhstani personnel who are not subsoil user’s employees, as well as social development of regions, are deductible up to the amount stipulated ina subsoil use contract.

      Subsoil user’s expenses for the training, advanced training or retraining of an employee in a speciality related to the production activity of a subsoil user are deductible in accordance with Article 257 of this Code.

      2. Expenses specified in paragraph 1 of this article actually incurred by a subsoil user prior to the commencement of extraction after commercial discovery shall be deductible in the manner specified in Article 258 of this Code, up to the amount stipulated in a subsoil use contract.

      3. For the purposes of this Article, expenses actually incurred by a subsoil user are recognized as:

      1) those for the training of Kazakhstani personnel, including:

      money for the training, advanced training and retraining of citizens of the Republic of Kazakhstan;

      money transferred to the state budget for training, advanced training and retraining of citizens of the Republic of Kazakhstan;

      actual expenses incurred by the taxpayer in order to perform the subsoil user’s duty in accordance with the legislation of the Republic of Kazakhstan on subsoil and subsoil use with regard to the financing of training and retraining of citizens of the Republic of Kazakhstan in the form of acquisition of goods, works and services required for the improvement of material and technical base of educational establishments training personnel in specialities directly related to the subsoil use sphere that are located in a region, a city of national significance, the capital, according to the list provided by local executive bodies of a region, a city of national significance, the capital and approved by the competent authority;

      2) those for social development of a region – expenses for the development and maintenance of social infrastructure of a region, as well as money transferred for these purposes to the state budget.

Article 262. Deduction of the amount of negative exchange rate difference in excess of the amount of positive exchange rate difference

      If the amount of the negative exchange rate difference exceeds the amount of the positive exchange rate difference, the excess amount is subject to deduction.

Article 263. Deduction of taxes and payments to the budget

      1. Unless otherwise established by this article, in a reporting taxable period, taxes and payments to the budget paid to the state budget of the Republic of Kazakhstan or another state are deductible:

      1) in a reporting taxable period up to the amount of assessed and (or) calculated ones for the reporting taxable period and (or) taxable periods preceding the reporting taxable period;

      2) in taxable periods preceding the reporting taxable period up to the amount of assessed and (or) calculated ones for the reporting taxable period.

      In this case,paid amounts of taxes and payments to the budget are determined with account of offsets according to the procedure established by Articles 102 and 103 of this Code.

      Taxes and payments to the budget are calculated and assessed in accordance with the tax legislation of the Republic of Kazakhstan or another state (for taxes and payments paid to the budget of another state).

      2. As to a loan received from a non-resident bank with foreign participation in the authorized capital of such a bank at the time of conclusion of a loan agreement under which corporate income tax at the source of payment shall be paid from the borrower’s own funds from the amount of interest payable to the non-resident bank, the specified tax at the source of payment is deductible provided that the amount of such a loan exceeds 10,000,000 times the monthly calculated index established by the law of the Republic of Kazakhstan on the national budget and effective as of January 1 of a relevant taxable period.

      3. Not subject to deduction:

      1) are taxes excluded prior to determining total annual income;

      2) is corporate income tax and taxes on income (profit), similar to corporate income tax of legal entities paid in the territory of the Republic of Kazakhstan and in other states;

      3) are taxes paid in countries with preferential taxation;

      4) is excess profits tax;

      5) is an alternative tax on subsoil use.

Article 264. Non-deductible expenses

      Not subject to deduction:

      1) are expenses not related to profit-oriented activities;

      2) are expenses for transactions without actual performance of works, rendering of services, shipment of goods that were carried out with a taxpayer, whose head and (or) founder (participant) is not involved in registration (reregistration) and (or) financial and economic activities of such a legal entity, established by a final and binding court judgment, except for transactions for goods, works, services actually received from such a taxpayer as established by court;

      3) are expenses for transactions with a taxpayer recognized inactive in the manner specified in Article 91 of this Code, from the date of issuing an order to recognize it as inactive;

      4) are expenses for the action (actions) on the issuance of an invoice and (or) other document recognized by an effective court decision as committed by a private business entity without actual performance of works, rendering of services, shipping of goods;

      5) are expenses for a transaction declared invalid by a final and binding court judgment;

      6) are forfeits (fines, penalties) (to be) paid to the budget, except for forfeits (fines, penalties) (to be) paid to the budget under public procurement contracts;

      7) is the amount of expenses, for which this Code establishes rates to be allocated to deductibles, in excess over the maximum amount of deduction calculated using the specified rates;

      8) is the amount of taxes and payments to the budget calculated (assessed) and paid in excess of the amounts established by the legislation of the Republic of Kazakhstan or another state (on taxes and payments paid to the budget of another state);

      9) are costs of acquisition, production, construction, assembly, installation and other costs included in the value of social facilities provided for in Article 239 of this Code, as well as expenses for their operation;

      10) is the value of property transferred by the taxpayer free of charge, unless otherwise provided for by this Code. The cost of works performed and services rendered free of charge is determined up to the amount of expenses incurred in connection with such performance of works, rendering of services;

      11) is VAT amount in excess over VAT amount for a taxable period received by a taxpayer applying Article 411 of this Code;

      12) are contributions to reserve funds, except for deductions provided for in Articles 250, 252 and 253 of this Code;

      13) is the book value of inventories transferred under a contract of purchase and sale of an enterprise as a property complex;

      14) is the amount of an additional payment paid by a subsoil user operating under a production sharing contract;

      15) are expenses of a taxpayer included in accordance with Article 228 of this Code in the initial value of non-depreciable assets;

      16) are expenses related to the sale of minerals transferred by a subsoil user to fulfill the tax obligation in kind;

      17) is the value of volumes of minerals transferred by a subsoil user to fulfill the tax obligation in kind - from a recipient on behalf of the state;

      18) is the book value of assets transferred into temporary possession and use under a contract of property lease (rent), except for a lease agreement;

      19) is the value of volumes of minerals transferred by a subsoil user to fulfill the tax obligation in kind;

      Note of the RCLI!
      Subparagraph 20) is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

      20) are expenses of a bank’s subsidiary acquiring doubtful and bad assets of its parent bank:

      in the form of money received by this subsidiary, in accordance with the legislation of the Republic of Kazakhstan on banks and banking activity, and transferred to the parent bank;

      not related to the implementation of activity provided for by the legislation of the Republic of Kazakhstan on banks and banking activity;

      21) are expenses of a non-commercial organization for the income specified in paragraph 2 of Article 289 of this Code.

Subchapter 3. Deductions of fixed assets

Article 265. Deductions of fixed assets

      Subject to deduction:

      1) are depreciation allowances calculated in accordance with Article 271 of this Code;

      2) is the value balance of a subgroup (group) as of the end of a taxable period in accordance with paragraphs 2 and 4 of Article 273 of this Code;

      3) are subsequent expenses in accordance with Article 272 of this Code.

Article 266. Fixed assets

      1. Unless otherwise provided for by this article, fixed assets include:

      1) fixed assets, investments in real estate, intangible and biological assets accounted for by a taxpayer at their receipt in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting and intended for the use in profit-oriented activities in reporting and (or) future periods, except for the assets specified in subparagraph 2) of this paragraph;

      2) assets with a service life of more than one year, transferred by a concession grantor into possession and use of a concessionaire (successor or legal entity specially set up by the concessionaire exclusively for the implementation of the concession agreement) under a concession agreement;

      3) assets with a service life of more than one year, which are intended for use for more than one year in a profit-oriented activity, which are received into trust management by a trust manager;

      4) subsequent expenses incurred in respect of property received under a contract of property lease (rent), except for a lease agreement, and recognized as a long-term asset in accounting records;

      5) property transferred under a property lease (rent) agreement not accounted for as fixed assets, investments in real estate, intangible or biological assets after transfer under such an agreement, except for property transferred under a lease agreement – with regards to a lessor.

      2. Fixed assets do not include:

      1) fixed assets and intangible assets put into operation by a subsoil user before the commencement of extraction after commercial discovery and accounted for tax purposes in accordance with Article 258 of this Code;

      2) assets for which depreciation allowances are not calculated in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, except for:

      assets specified in subparagraphs 2) and 4) of paragraph 1 of this article;

      biological assets, investments in real estate for which depreciation allowances are not calculated because of such assets’ accounting at fair value in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

      3) land;

      4) museum valuables;

      5) pieces of architecture and art;

      6) public facilities: motor roads, except for roads that are concession objects built and (or) received by a concessionaire under a concession agreement, sidewalks, boulevards, squares;

      7) capital construction in progress;

      8) objects related to the film fund;

      9) state standards of measurement units of the Republic of Kazakhstan;

      10) fixed assets, the value of which was earlier fully allocated to deductibles in accordance with the tax legislation of the Republic of Kazakhstan that was effective before January 1, 2000;

      11) intangible assets with indefinite service lives, recognized as such and recorded in the taxpayer’s balance sheet in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

      12) assets put into operation within an investment project under contracts granting the right of additional deductions from total annual income, concluded before January 1, 2009 in accordance with the legislation of the Republic of Kazakhstan on investments;

      13) assets put into operation within an investment project under contracts granting corporate income tax exemption, concluded before January 1, 2009 in accordance with the legislation of the Republic of Kazakhstan on investments, to the extent of the value allocated to deductibles before January 1, 2009;

      14) objects of preferences during three taxable periods following the taxable period in which such facilities were put into operation, except for cases provided for by paragraph 14 of Article 268 of this Code;

      15) assets with a service life of more than one year, being social facilities provided for in Article 239 of this Code;

      16) assets specified in Article 260 of this Code;

      17) assets received into temporary possession and use under a property lease (rent) agreement accounted for as fixed assets, investment in real estate, intangible or biological assets after receipt under such an agreement, except for assets received under a lease agreement - with regards to a lessee.

Article 267. Determination of the value balance

      1. Fixed assets shall be accounted for by groups formed in accordance with the classification established by the state body exercising state regulation in the field of technical regulation in the following order:

Item №

Group №

Fixed assets

1

2

3

1.

I

Buildings, structures, except for oil, gas wells and transfer devices

2.

II

Machinery and equipment, except for machinery and equipment for oil and gas production, as well as computers and information processing equipment

3.

III

Computers, software and information processing equipment

4.

IV

Fixed assets not included in other groups, including oil, gas wells, transfer devices, machinery and equipment for oil and gas production

      Each group I item is equated to a subgroup.

      2. With respect to each subgroup (of group I), group, final amounts are determined at the beginning and at the end of a taxable period, which are called the value balance of a subgroup (of group I), group.

      The value balance of group I consists of value balances of subgroups for each item of fixed assets and the value balance of a subgroup formed in accordance with subparagraph 2) of paragraph 2 of Article 272 of this Code.

      3. The residual value of group I fixed assets is the value balance of subgroups at the beginning of a taxable period with account of adjustments made in the taxable period in accordance with Article 272 of this Code.

      4. Fixed assets are accounted for:

      1) as broken down by fixed assets, each of which forms a separate subgroup of the group’s balance value – with regard to group I;

      2) as broken down by groups’ value balances – with regard to groups II, III and IV.

      5. Received fixed assets increase relevant balances of subgroups (with regard to group I), groups (with regard to the rest groups) by the value determined in accordance with Article 268 of this Code in the manner specified in this article.

      6. Disposed fixed assets reduce relevant balances of subgroups (with regard to group I), groups (with regard to the rest groups) by the value determined in accordance with Article 270 of this Code, in the manner specified in this article.

      7. The value balance of a subgroup (of group I), a group at the beginning of a taxable period is determined as:

      the value balance of a subgroup (of group I), a group at the end of a previous taxable period

      minus

      the amount of depreciation allowances calculated in a previous taxable period,

      minus

      adjustments made in accordance with Article 273 of this Code.

      The valuebalance of a subgroup (of group I), a group at the beginning of a taxable period shall not be negative.

      8. The value balance of a subgroup (of group I), a group at the end of a taxable period is determined as:

      the balance value of a subgroup (of group I), a group at the beginning of a taxable period

      plus

      fixed assets received in a taxable period

      minus

      fixed assets disposedof in a taxable period

      plus

      adjustments made in accordance with paragraph 2 of Article 272 of this Code.

      9. A trust manager shall form separate value balances of groups (subgroups) for fixed assets specified in subparagraph 3) of paragraph 1 of Article 266 of this Code and maintain separate tax accounting for such assets on the basis of Articles 194 and 195 of this Code.

      10. A taxpayer is obliged to form separate value balances of groups (subgroups) in terms of the value, not deducted before January 1, 2009, of fixed assets put into operation before and (or) after January 1, 2009 as part of an investment project under contracts granting corporate income tax exemption, concluded before January 1, 2009 in accordance with the legislation of the Republic of Kazakhstan in the field of entrepreneurship.

Article 268. Receipt of fixed assets

      1. Fixed assets increase the value balance of groups (subgroups) by the initial value of the said assets at their receipt, including that under a lease agreement and also from their transfer from inventories.

      Recognition of receipt of fixed assets for the purposes of taxation means the inclusion of received assets in fixed assets.

      2. Unless otherwise provided for by this article, the initial value of fixed assets is defined as the amount of expenses incurred by a taxpayer on the day of recognition of a fixed asset in accordance with paragraph 1 of Article 266 of this Code. Such expenses include those for a fixed asset’s acquisition, production, construction, assembly and installation, as well as other expenses increasing its value in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, except for:

      costs (expenses) not subject to deduction in accordance with subparagraphs 2), 3), 4) and 5) of Article 264 of this Code;

      depreciation allowances.

      3. Unless otherwise provided for by this paragraph, the initial value of a fixed asset received by transfer from inventories or assets intended for sale is its book value determined on the date of such receipt in accordance with international financial reporting standards and requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

      The initial value of a fixed asset,earlier derecognized as a fixed asset, received by transfer from inventories or assets intended for sale is its book value determined on the date of such receipt in accordance with International Financial Reporting Standards and the requirements of the laws of the Republic Kazakhstan on accounting and financial reporting, not exceeding the value specified in paragraph 2 of Article 270 of this Code.

      4. In case of receipt of fixed assets free of charge, the initial value of fixed assets is their value included in total annual income in accordance with Article 238 of this Code in the form of property received free of charge, with account of actual expenses increasing the value of such assets at initial recognition in accordance with international standards financial statements and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, except for costs (expenses) not included in the initial value of fixed assets on the basis of paragraph 2 of this article.

      5. When a state-owned enterprise receives fixed assets from a government agency, which are assigned to it on the basis of the right of economic management or operations management, the initial value of the fixed assets is the book value of the assets received, which is specified in a certificate of transfer of the said assets, with account of actual costs increasing the value of such assets at initial recognition in accordance with international financial reporting standards and statutory requirements of the Republic of Kazakhstan on accounting and financial reporting, except for costs (expenses) not included in the initial value of fixed assets on the basis of paragraph 2 of this article.

      6. When received as a contribution to the authorized capital, the initial value of a fixed asset is that specified in a transfer certificate or, without such a certificate, in another document confirming actual contribution and value of the asset, with account of actual costs increasing the value of such assets at initial recognition in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, except for costs (expenses) not included in the initial value of fixed assets on the basis of paragraph 2 of this article.

      The value of assets received in payment for a contribution to the authorized capital is accounted for up to the amount of the contribution to the authorized capital, against which the asset was applied.

      7. If a fixed asset is acquired in connection with reorganization through merger, incorporation, division or separation of a taxpayer, the initial value of such an asset is its book value as specified in a transfer certificate or separation balance sheet, except for cases provided for in parts two and three of this paragraph, with account of actual costs increasing the value of such an asset at initial recognition in accordance with international financial reporting standards and the requirements of law of the Republic of Kazakhstan on accounting and financial reporting, except for costs (expenses) not included in the initial value of fixed assets on the basis of paragraph 2 of this article.

      The value balance of a subgroup (group) of a legal entity established by way of merger or a legal entity that incorporated another legal entity is increased by the value of transferred fixed assets according to tax accounting data if such a value is stated in a transfer certificate in accordance with part two of paragraph 6 of Article 270 of this Code.

      The value balance of a subgroup (group) of a legal entity established by way of separation, in accordance with the decision of the Government of the Republic of Kazakhstan, includes the value of transferred fixed assets according to tax accounting data if such a value is stated in a transfer certificate in accordance with part three of paragraph 6 of Article 270 of this of the Code.

      8. When a trust manager receives fixed assets into trust management, the initial value of such fixed assets is:

      1) that determined in accordance with paragraph 10 of Article 270 of this Code – if these assets were held as fixed ones by the transferor;

      2) that determined based on the data in a transfer certificate of the said assets - in other cases.

      9. Upon receipt of fixed assets from a trust manager in connection with the termination of obligations for trust management, the initial value of such fixed assets is:

      1) that determined in accordance with paragraph 11 of Article 270 of this Code - if these assets were held as fixed ones by that trust manager;

      2) that determined in accordance with paragraph 10 of Article 270 of this Code, reduced by the amount of depreciation allowances. In this case, depreciation allowances are calculated for each taxable period of trust management preceding areporting taxable period, proceeding from the maximum depreciation rate prescribed by this Code for a relevant group of fixed assets applied to the initial value reduced by the amount of depreciation allowances for previous periods - in other cases.

      10. When fixed assets are received by a concessionaire (by a successor or a legal entity established by the concessionaire exclusively for implementation of a concession agreement) under a concession agreement, the initial value of such fixed assets is the value determined in accordance with paragraph 12 of Article 270 of this Code, and with no such value – the value in accordance with the procedure determined by the authorized body.

      11. In case of receipt of fixed assets by a concession grantor upon termination of a concession agreement, the initial value of such fixed assets is that determined in accordance with paragraph 13 of Article 270 of this Code.

      12. The initial value of fixed assets of an insurance, reinsurance organization as of January 1, 2012 is the book value of fixed assets, investments in real estate, intangible assets determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, without regard to revaluation and impairment as of that date.

      13. Fixed assets earlier disposed of due to temporary cessation of use in profit-oriented activities are subject to inclusion at the disposal value in the value balance of the fixed assets’ group in the taxable period in which such fixed assets are put into operation for use in profit-oriented activities, with account of expenses to be allocated to increase in the value of such assets in accordance with Article 272 of this Code.

      14. Assets, for which preferences are canceled,shall be included in the value balance of a group (subgroup) in the cases specified in paragraph 4 of Article 276 of this Code at their initial value determined in accordance with this article.

      15. An object of preferences, after expiration of three taxable periods following the taxable period in which this object was put into operation, in addition to the assets specified in paragraph 13 of this article, shall be included in the value balance of a group (subgroup) at zero value in the case specified in paragraph 6 of Article 276 of this Code.

      16. The initial value of the fixed asset specified in subparagraph 5) of paragraph 1 of Article 266 of this Code is expenses for repair, reconstruction, modernization, maintenance and other expenses incurred by a taxpayer in respect of property received under a property lease (rent) agreement, except for a lease agreement. In accordance with this paragraph, those expenses are recognized which are incurred until the day of their recognition in accountingas a long-term asset, which increase its value in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

      17. The initial value of a fixed asset received under a lease agreement is that at which the leased asset is received.

      18. When a lessee returns a leased asset to a lessor, the initial value of a fixed asset is positive difference between the value at which the leased asset is transferred under the lease agreement and the value of the leased asset included in the amount of lease payments for the period running from the date of transfer until the date of return of the leased asset.

Article 269. Compilation of the value balance of a group (subgroup) in individual cases

      1. Unless otherwise provided for in this article, when a taxpayer switches from a special tax regime for small business entities or peasant or farm enterprises to a standard one, the initial value of fixed assets is the cost of their acquisition reduced by the estimated amount of depreciation.

      Unless otherwise provided for in this article, the acquisition cost is the aggregate of costs of acquisition, production, construction, assembly, installation, reconstruction and modernization performed prior to the operation of an asset, except for costs (expenses) specified in subparagraphs 1) - 6) and 8) Article 264 of this Code.

      If an asset was earlier received free of charge, for the purposes of this article, the cost of acquiring such an asset is its value included in a taxable item in accordance with paragraph 2 of Article 681 of this Code in the form of property received free of charge.

      As to assets received in the form of charitable assistance, inheritance, except for the case provided for in part two of this paragraph, the cost of acquiring an asset is the market value of an asset as of the date of the right of ownership of the asset as determined in a report on appraisal conducted under an agreement between the appraiser and the taxpayer in accordance with the legislation of the Republic of Kazakhstan on appraisal activity.

      The estimated amount of depreciation is determined as the product of the following values:

      the cost of acquisition of an asset determined in accordance with this paragraph;

      the maximum monthly depreciation rate provided for in paragraph 3 of this article;

      the number of months after the daythe asset was first put into operation by such a taxpayer.

      2. Unless otherwise established by this Article, expenses for reconstruction and modernization of a fixed asset made after the commencement of its operation are recognized as a separate fixed asset with an initial value equal to the amount of such expenses, except for costs (expenses) specified in subparagraphs 1) - 6) and 8) of Article 264 of this Code, reduced by the estimated amount of depreciation.

      The estimated amount of depreciation is determined as the product of the following values:

      the amount of expenses for reconstruction and modernization, determined in accordance with this paragraph;

      the maximum monthly depreciation rate provided for in paragraph 3 of this article;

      the number of months after the completion of reconstruction, modernization.

      For the purposes of this paragraph, paragraph 3 of Article 334 and paragraph 6 of Article 520 of this Code, reconstruction and modernization are recognized as reconstruction and modernization, the results of which are altogether:

      alteration, including renewal, of a fixed asset’s design;

      increase in the fixed asset’s service life by more than three years;

      improvement of technical characteristics of a fixed asset compared to those at the beginning of a calendar month in which the fixed asset is temporarily taken out of service for reconstruction and modernization.

      3. Depending on a group in which a fixed asset is to be included in accordance with paragraph 1 of Article 267 of this Code, the following monthly depreciation rates apply:

Item №
 

Group №

Fixed assets

Monthly depreciation rate, % 

1.

I

Buildings, structures, except for oil, gas wells and transfer devices

0,83

2.

II

Machinery and equipment, except for machinery and equipment for oil and gas production, as well as computers and information processing equipment

2,08

3.

III

Computers, software and information processing equipment

3,33

4.

IV

Fixed assets not included in other groups, including oil, gas wells, transfer devices, machinery and equipment for oil and gas production

1,25

      For the purposes of applying paragraph 2 of this article, a fixed asset created as a result of reconstruction and modernization is included in the group in which a fixed asset that underwent reconstruction and modernization is to be included.

      4. The initial value of fixed assets is determined in accordance with this paragraph provided all of the following requirements are met:

      a taxpayer applying special tax regime for small business entities or special tax regime for peasant or farm enterprises, shall switch to a standard procedure;

      a taxpayer applied special tax regime for small business entities or special tax regime for peasant or farm enterprises less than 12 calendar months;

      a taxpayer applied a standard procedure prior to switching to special tax regime for small business entities or special tax regime for peasant or farm enterprises.

      The initial value of fixed assets is determined on the basis of the size of the value groups (subgroups) as of the day preceding the day of application of special tax regime for small businesses or special tax regime for peasant or farm enterprises and deductions for fixed assets determined in accordance with Articles 266-268 and 270 - 273 of this Code, during the application of special tax regime for small businesses or special tax regime for peasant or farm enterprises.

Article 270. Disposal of fixed assets

      1. Unless otherwise established by this article, disposal of fixed assets is:

      1) termination of recognition of these assets in accounting as fixed assets, investment in real estate, intangible and biological assets, except for cases of termination of recognition as a result of full depreciation and (or) impairment, transfer under a property lease (rent) agreement;

      2) transfer of assets under a lease agreement;

      3) allocation of these assets to assets held for sale, inventories;

      4) with respect to fixed assets indicated in subparagraph 5) of paragraph 1 of Article 266 of this Code - termination of a property lease (rent) agreement, if the asset recognized in accounting after termination of the property lease (rent) agreement is not allocated to fixed assets.

      For tax purposes, recognitionof disposal of fixed assets means the exclusion of disposed assets from fixed assets.

      2. Unless otherwise established by this article, the value balance of a subgroup (group) is reduced by the book value as of the date of disposal, determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial statements:

      1) of fixed assets being disposed of;

      2) of an asset accounted for after the termination of a property lease (rent) agreement - in respect of fixed assets specified in subparagraph 5) of paragraph 1 of Article 266 of this Code.

      3. When selling fixed assets, except for transfer under a lease agreement, the value balance of a subgroup (group) is reduced by the selling price ex VAT.

      If a purchase and sale agreement, including the agreement of sale of an enterprise as a property complex, does not determine the value of the sale in terms of fixed assets, the value balance of a subgroup (group) is reduced by the book value of disposed fixed assets determined in accordance with international financial reporting standards and requirements legislation of the Republic of Kazakhstan on accounting and financial reporting, as of the date of sale.

      When transferring fixed assets under a lease agreement, the value balance of a subgroup (group) is reduced by the value at which the leased asset is transferred in accordance with such an agreement.

      4. In case of fixed assets’ transfer free of charge, the value balance of a subgroup (group) is reduced by the value of transferred assets specified in a certificate of transfer of the said assets, but not less than the book value of the said assets according to accounting data as of the date of transfer.

      5. When transferring fixed assets as a contribution to the authorized capital, the value balance of a subgroup (group) is reduced by the value determined in accordance with the civil legislation of the Republic of Kazakhstan.

      6. Unless otherwise provided for by this paragraph, if fixed assets are disposed of as a result of reorganization through merger, incorporation, division or separation, the value balance of a subgroup (group) of a reorganized legal entity is reduced by the book value of transferred assets specified in a transfer certificate or separation balance sheet.

      In case of reorganization through merger, incorporation, taxpayers are entitled, for the purposes of tax accounting, to state the value of fixed assets transferred in a transfer certificate according to tax accounting data of the reorganized legal entity:

      1) as to fixed assets of group I - the residual value of fixed assets calculated in accordance with the procedure specified in paragraph 3 of Article 267 of this Code;

      2) as to fixed assets of groups II, III, IV, given the transfer of all fixed assets of a group - the value of the group’s value balance calculated in accordance with the procedure specified in paragraph 8 of Article 267 of this Code.

      The value balance of a subgroup (group) of a legal entity, reorganized through merger and incorporation, is reduced by the value of transferred fixed assets according to tax accounting data reflected in a transfer certificate in accordance with this paragraph.

      When reorganizing a legal entity through separation in accordance with the decision of the Government of the Republic of Kazakhstan, a taxpayer, for tax accounting purposes, has the right to state in a transfer certificate the residual value of fixed assets of group I, according to tax accounting data, calculated in accordance with paragraph 3 of Article 267 of this Code.

      The value balance of a subgroup (group) of a legal entity under reorganization through separation in accordance with the decision of the Government of the Republic of Kazakhstan is reduced by the value of transferred fixed assets according to tax accounting data stated in a transfer certificate in accordance with this paragraph.

      7. In case of seizure of property by a founder or a participant, the value balance of a subgroup (group) is reduced by the value agreed by founders, participants.

      8. In case of loss of or damage to fixed assets resulting in the termination of the asset’s recognition in accounting:

      1) in cases of insurance of fixed assets - the value balance of a subgroup (group) is reduced by a value equal to the amount of insurance payments to an insurant by an insurance organization under an insurance contract;

      2) without insurance of fixed assets of group I - the value balance of relevant subgroups is reduced by the residual value of fixed assets calculated in accordance with the procedure specified in paragraph 3 of Article 267 of this Code;

      3) without insurance of fixed assets, except for fixed assets of group I, disposal is not stated.

      9. When a lessee returns a leased asset to a lessor the value balance of a subgroup (group) is reduced by positive difference between the initial value at which the asset was recognized in tax accounting and the value of the leased asset included in the amount of lease payments for the period running from the date of receipt until the date of return of the leased asset.

      10. When transferring fixed assets into trust management, the value balance of a group (subgroup) is reduced:

      1) by the residual value of fixed assets – with respect to group I;

      2) by the book value determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting as of the date of transfer – with respect to groups II, III and IV.

      11. A trust manager terminating his/her obligations for trust management reduces the value balance of a group (subgroup):

      1) by the residual value of fixed assets calculated in accordance with the procedure specified in paragraph 3 of Article 267 of this Code – with respect to group I;

      2) with respect to groups II, III and IV:

      when transferring all the assets of a group - by the value of the group’s value balance, calculated in the manner specified in paragraph 8 of Article 267 of this Code;

      in other cases - by the initial value of transferred assets, determined in accordance with Article 268 of this Code, reduced by the amount of depreciation allowances. In this case, depreciation allowances are calculated for each taxable period of trust management preceding a reporting taxable period, proceeding from the maximum depreciation rate, prescribed by this Code for a relevant group of fixed assets, applied to the initial value reduced by the amount of depreciation allowances for previous periods.

      12. When transferring fixed assets to a concessionaire under a concession contract, the value balance of a group (subgroup) of a concession grantor is reduced:

      1) by the residual value of fixed assets, calculated in accordance with the procedure specified in paragraph 3 of Article 267 of this Code – with respect to group I;

      2) by the value in accordance with the procedure determined by the authorized body – with respect to groups II, III and IV.

      13. When transferring fixed assets to a concession grantor upon termination of a concession contract, the value balance of a group (subgroup) of a concessionaire is reduced:

      1) by the residual value of fixed assets, calculated in accordance with the procedure specified in paragraph 3 of Article 267 of this Code – with respect to group I;

      2) by the value in accordance with the procedure determined by the authorized body – with respect to groups II, III and IV.

      14. In case of temporary cessation of use of fixed assets in profit-oriented activities:

      1) disposal of fixed assets of group I used in seasonal production is not stated;

      2) with respect to other fixed assets of group I, the value balance of respective subgroups is reduced by the residual value of fixed assets calculated in the manner specified in paragraph 3 of Article 267 of this Code. The subgroup’s value balance is decreased when taxable periods for temporary taking an asset out of serviceand its putting into operation after temporary cessation of use do not coincide;

      3) the disposal is not stated with regard to groups II, III and IV.

      Temporary cessation of use of fixed assets is their temporary taking out of servicewithout ceasing recognition of such assets in accounting as fixed assets, investment in real estate, intangible and biological assets.

      For the purposes of this paragraph, fixed assets of group I used in seasonal production are fixed assets of group I that simultaneously meet the following requirements:

      they cannot be used at the end of a reporting period due to the requirements specified in technical documentation concerning operation in certain temperature modes;

      they participate in production process during a certain period of a calendar year, but not less than three months in connection with climatic, natural or technological conditions;

      in a reporting taxable period, they were used in profit-oriented activities.

Article 271. Calculation of depreciation allowances

      1. The value of fixed assets is allocated to deductibles by calculating depreciation allowances in the manner and under the conditions established by this Code.

      2. Unless otherwise established by this article, depreciation allowances for each subgroup and group are determined by applying depreciation rates specified in a tax register to determine value balances of groups (subgroups) of fixed assets and subsequent expenses for fixed assets, which shall not exceed the limits established by this paragraph, to the value balance of a subgroup, a group at the end of a taxable period:

Item №
 

Group №

Fixed assets

Maximum rate of depreciation (%)

1

2

3

4

1.

I

Buildings, structures, except for oil, gas wells and transfer devices

10

2.

II

Machinery and equipment, except for machinery and equipment for oil and gas production, as well as computers and information processing equipment

25

3.

III

Computers, software and information processing equipment

40

4.

IV

Fixed assets not included in other groups, including oil, gas wells, transfer devices, machinery and equipment for oil and gas production

15

      3. Depreciation allowances for value balances of groups (subgroups) specified in paragraph 10 of Article 267 of this Code are determined by applying depreciation rates established by this Article to such value balances of groups (subgroups) at the end of a taxable period.

      4. As to buildings and structures, except for oil, gas wells and transfer devices, depreciation allowances are determined for each facility separately.

      5. In case of liquidation or reorganization of a taxpayer, switching of a legal entity from special tax regime on the basis of a simplified declaration to the calculation of corporate income tax in accordance with this Section, and also in case of termination of application of special tax regime for producers of agricultural products, aquaculture products and agricultural cooperatives, depreciation allowances are adjusted for the period of activity in a taxable period.

      6. A taxpayer shall have the right to recognize buildings and facilities for production purposes put into operation in the territory of the Republic of Kazakhstan for the first time, machinery and equipment that comply with the provisions of paragraph 2 of Article 274 of this Code:

      as fixed assets and deduct their value in the manner specified in paragraph 3 of this section, or

      as objects of preferences and allocate their value to deductibles under the conditions and in the manner specified in paragraph 4 of this Section.

      7. As to fixed assets put into operation in the Republic of Kazakhstan for the first time, a subsoil user is entitled to calculate depreciation allowances at double depreciation rates in the first taxable period of operation provided that these fixed assets are used to obtain total annual income for at least three years. These fixed assets in the first taxable period of operation are accounted for separately from the group’s value balance. In a subsequent taxable period, these fixed assets are subject to inclusion in the value balance of a relevant group.

      In case of disposal of a fixed asset for which depreciation allowances were calculated in accordance with this paragraph, prior to the expiration of a three-year period, the amount of deduction of the fixed asset in excess over the amount of depreciation allowances determined by maximum depreciation rates provided for in this Article shall be included in total annual income of the taxable period in which the double depreciation rate was applied.

      The provisions of this paragraph apply only to fixed assets that simultaneously meet the following requirements:

      1) they are assets that, due to the specific nature of their use, have a direct causal link to the implementation of activities under a subsoil use contract (contracts);

      2) in tax accounting, subsequent expenses incurred by the subsoil user on these assets are not subject to distribution between activities under a subsoil use contract (contracts) and non-contract activities.

      8. With regard to activities providing for 100 percent reduction of corporate income tax calculated in accordance with Article 302 of this Code, taxpayers calculate depreciation allowances at the following depreciation rates:

      at least 50 percent of maximum depreciation rates established by this article - regarding an organization implementing a priority investment project and not applying special tax regime;

      within maximum depreciation rates established by this article - regarding other taxpayers.

Article 272. Deduction of subsequent expenses

      1. Expenses shall be recognized as subsequent if these are expenses for operation, repair, reconstruction, modernization, maintenance, liquidation and other costs incurred on the following assets, after their recognition in accounting,:

      1) fixed assets, including in the period of temporary cessation of their use;

      2) not allocated to fixed assets, real estate investments, intangible and biological assets accounted for by the taxpayer in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting and intended for use in profit-oriented activities, except for the assets indicated:

      in subparagraph 1) of paragraph 2 of Article 266 of this Code - in the period before the commencement of extraction after commercial discovery;

      in subparagraphs 7) and 15) of paragraph 2 of Article 266 of this Code;

      3) the assets specified in Article 260 of this Code.

      Subsequent expenses include, in particular, expenses paid by the taxpayer’s reserve funds, except for subsoil users’ expenses paid by the liquidation fund, contributions to which are allocated to deductibles in accordance with Article 252 of this Code.

      Subsequent expenses also include the costs of operation, repair, reconstruction, modernization, maintenance and others incurred on property received under a property lease (rent) agreement.

      2. Unless otherwise provided for in paragraphs 3 and 4 of this article, the amount of subsequent expenses to be accounted for as an increase in the book value of assets attributable to fixed assets, assets specified in subparagraph 14) of paragraph 2 of Article 266 of this Code, as well as subsequent expenses specified in paragraph 5 of Article 276 of this Code:

      1) increases the value balance of a group (subgroup) corresponding to the type of an asset;

      2) with no value balance of a group (subgroup) corresponding to the type of an asset, it forms the value balance of a group (subgroup) corresponding to the asset type at the end of a current taxable period.

      Subsequent expenses provided for in this paragraph are recognized, for tax purposes, in the taxable period in which they are allocated to increase the book value of assets in accounting records, except for the case provided for in paragraph13 of Article 268 of this Code.

      The amount of subsequent expenses incurred on property received under a property lease (rent) agreement, except for a lease agreement, and recognized in accounting as a long-term asset, is accounted for in accordance with subparagraph 5) of paragraph 1 of Article 266 of this Code as a fixed asset.

      3. A taxpayer entitled to apply investment tax preferences, at his/her/its choice, may deduct subsequent expenses for the reconstruction, modernization of buildings and production facilities, as well as machinery and equipment in accordance with paragraph 2 of this article or Articles 274 - 276 of this Code.

      4. As to the assets specified in subparagraph 1) of paragraph 2 of Article 266 of this Code, the amount of subsequent expenses, incurred from the commencement of extraction after commercial discovery of minerals to be accounted for as an increase in the book value of such assets, increases the amount of accrued expenses for the group of depreciable assets provided for by paragraph 1 of Article 258 of this Code at the end of a taxable period, also in case when such an amount at the end of the taxable period is zero.

      For tax purposes, subsequent expenses provided for in this paragraph are recognized in the taxable period in which they are accounted for as an increase in the book value of assets.

      5. Subsequent expenses, including those incurred by a lessee in respect of leased property, except for those specified in paragraphs 2 and 4 of this article, as well as subsequent expenses increasing, in accordance with paragraph 6 of Article 228 of this Code, the initial value of non-depreciable assets shall be allocated to deductibles in the taxable period in which they are incurred.

Article 273. Other deductions of fixed assets

      1. After their disposal, except for transfer of a fixed asset of a subgroup (of group I) free of charge, the amount equal to that of the subgroup’s value balance at the end of a taxable period is recognized as a loss from the disposal of fixed assets of group I.

      The value balance of this subgroup is equal to zero and is not deductible.

      2. After the disposal of all fixed assets of a group (with regard to groups II, III and IV), the value balance of the relevant group at the end of a taxable period is subject to deduction, unless otherwise provided for by this article.

      3. When transferring all the fixed assets of a subgroup (with regard to group I) or group (with regard to groups II, III and IV) free of charge, the value balance of the corresponding subgroup or group at the end of a taxable period is equal to zero and is not deductible.

      4. A taxpayer has the right to deduct the amount of the value balance of a subgroup (group) at the end of a taxable period, which is less than 300 times the monthly calculation index established by the law on the republican budget and effective as of the last date of the taxable period.

      5. A subsoil user engaged in extraction of solid minerals shall be entitled to deduct the amount of the subgroup’s (group’s) value balance at the end of a taxable period. The deduction is made in the taxable period in which works on the liquidation of consequences of the development of all fields under an extraction contract were completed.

      With no total annual income or given a loss under the specified extraction contract, the deduction is made under another extraction contract of such a subsoil user.

      In this case, the amount of deduction shall not exceed 150 000 times the monthly calculated index established by the law on the republican budget and effective as of the last date of the taxable period.

Subchapter 4. Investment tax preferences

Article 274. Investment tax preferences

      1. Investment tax preferences (hereinafter referred to as preferences) shall be applied at the choice of a taxpayer in accordance with this article and Articles 275 and 276 of this Code and consist in allocating values of objects of preferences and (or) subsequent expenses for reconstruction and modernization to deductibles.

      The right to apply preferences is granted to legal entities of the Republic of Kazakhstan, except for those specified in paragraph 6 of this article.

      2. Objects of preferences include buildings and production structures put into operation in the Republic of Kazakhstan for the first time, machinery and equipment that, for at least three taxable periods following the taxable period of their putting into operation, simultaneously meet the following requirements:

      1) they are assets with a service life of more than one year, transferred by a concession grantor into possession and use of a concessionaire (successor or a legal entity set up by the concessionaire exclusively for implementation of a concession agreement) under a concession agreement, or fixed assets;

      2) they are used by a taxpayer who applied preferences to profit-oriented activities;

      3) they are not assets that, due to specific nature of their use, have a direct causal link to implementation of activities under a subsoil use contract (contracts);

      4) in tax accounting, subsequent expenses incurred by a subsoil user for these assets are not subject to distribution between activity under a subsoil use contract (contracts) and non-contract activity;

      5) they are not assets put into operation within an investment project under contracts concluded before January 1, 2009 in accordance with the legislation of the Republic of Kazakhstan in the field of entrepreneurship;

      6) they are not assets put into operation as part of a priority investment project under an investment contract concluded after December 31, 2014 in accordance with the legislation of the Republic of Kazakhstan in the field of entrepreneurship.

      3. Subsequent expenses for reconstruction, modernization of buildings and structures for production purposes, machinery and equipment shall be deductible in the taxable period in which they are actually incurred, provided that such buildings and structures, machinery and equipment meet all of the following requirements:

      1) they are accounted for by a taxpayer as fixed assets in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

      2) they are intended for use in profit-oriented activities for at least three taxable periods following the taxable period of their putting into operation after reconstruction, modernization;

      3) temporarily taken out of service for the period of reconstruction and modernization;

      4) they are not assets that, due to specific nature of their use, have a direct causal link to implementation of activities under a subsoil use contract (contracts);

      5) in tax accounting, subsequent expenses incurred by a subsoil user on these assets are not subject to distribution between activity under a subsoil use contract (contracts) and non-contract activity.

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