On approval of the Rules of categorizing a hydrocarbon deposit (group of deposits, part of a deposit) as low-profit, high-viscosity, watered, marginal and depleted and order of taxation in terms of mineral extraction tax

New Unofficial translation

Resolution No. 204 of the Government of the Republic of Kazakhstan dated April 18, 2018.

      Unofficial translation

      Note RCLI!
      This regulation shall take effect on January 1, 2018

      In accordance with paragraph 4 of Article 720 of the Code of the Republic of Kazakhstan dated December 25, 2017 “On taxes and other obligatory payments to the budget” (Tax Code)”, the Government of the Republic of Kazakhstan HEREBY RESOLVES to:

      1. Approve the attached Rules of categorizing a hydrocarbon deposit (group of deposits, part of a deposit) as low-profit, high-viscosity, watered, marginal and depleted and order of taxation in terms of mineral extraction tax.

      2. Invalidate some resolutions of the Government of the Republic of Kazakhstan in accordance with the attachment to this resolution.

      3. This resolution shall take effect on January 1, 2018 and is subject to official publication.

      Prime Minister
of the Republic of Kazakhstan
B. Sagintayev

  Approved
by Resolution No.204
of the Government of the
Republic of Kazakhstan
dated April 12, 2018

Rules of categorizing a hydrocarbon deposit (group of deposits, part of a deposit) as low-profit, high-viscosity, watered, marginal and depleted and order of taxation in terms of mineral extraction tax

Chapter 1. Oder of categorizing a hydrocarbon deposit (group of deposits, part of a deposit) as low-profit, high-viscosity, watered, marginal and depleted and order of taxation in terms of mineral extraction tax

Paragraph 1. Order of filing and considering applications for categorizing a hydrocarbon deposit (group of deposits, part of a deposit) as low-profit

      1. To categorize a hydrocarbon deposit (group of deposits, part of a deposit) as low-profit, a subsoil user pursuing activities involving development of a hydrocarbon deposit that meets the criteria defined in subsection 2 of this section shall file an application to the authorized state planning body (hereinafter referred to as the authorized body).

      2. Application for categorizing a hydrocarbon deposit (group of deposits, part of a deposit) as low-profit for the current unfinished calendar year shall be filed in accordance with Appendix 1 to these Rules no later than September 1 of the given calendar year. Copies of the following electronic documents shall be attached to the application:

      1) financial statement for the previous financial year, signed by the chief executive or the person replacing him, as well as the chief accountant (accountant);

      2) an audit report for the previous financial year of legal entities for which the legislative acts of the Republic of Kazakhstan establish a mandatory audit (if the application is filed before June 1 of the current year, then an audit report for the financial year preceding the previous financial year shall be filed);

      3) financial statements of the legal entity-subsoil user for the reporting period of the current calendar year (for a quarter, six months or nine months) preceding the application filing date;

      4) a report on budget execution for the previous calendar year, certified by the head of the legal entity-subsoil user or a person replacing him;

      5) calculation of the budget for the current calendar year, certified by the head of the legal entity-subsoil user or a person replacing him;

      6) report on budget execution for the reporting period of the current calendar year (quarter, six months or nine months) preceding the application filing date, certified by the head of the legal entity-subsoil user or a person replacing him;7) tax reporting (declarations on corporate income tax (hereinafter - CIT) under the contract and excess profit tax (hereinafter - EPT) under the contract for the previous tax period and mineral extraction tax (hereinafter - MET) under the contract for the current and previous calendar years);

      8) calculation of advance payments on CIT (if the subsoil user is a payer of advance payments) and calculation of the CIT amount planned for the current reporting year;

      9) calculation of tax liabilities on CIT, as well as calculation of net income, return on sales under the contract for the current tax period with detailed linking of these calculations to the budget of the legal entity-subsoil user, the forecast price for hydrocarbons and the planned hydrocarbon production volumes under the contract for the same period;

      10) substantiation of the forecast hydrocarbon price used to calculate profitability indicators under the contract;

      11) the planned hydrocarbon production volume under the contract, agreed with the competent authority.

      Footnote. Paragraph 2 as amended by Resolution No. 449 of the Government of the Republic of Kazakhstan dated 27.06. 2019 (shall be enforced ten calendar days after the date of its first official publication).

      3. An application for categorizing a deposit (a group of deposits, a part of a deposit) as low-profit for the coming calendar year shall be filed in accordance with the form of Appendix 1 to these Rules, no earlier than September 30 of the current year, but no later than December 31 of the current year. In addition to the documents specified in paragraph 2 of these Rules, copies of the following documents on electronic media shall be attached to the application:

      1) calculation of the budget for the upcoming calendar year, certified by the head of the legal entity-subsoil user or a person replacing him;

      2) calculation of the company's tax liabilities on CIT under the contract, as well as calculation of net income, return on sales under the contract for the upcoming calendar year with a detailed linkage of these calculations to the budget of the legal entity-subsoil user, the forecast price for hydrocarbons and the planned hydrocarbon production volumes under the contract for the same reporting period.

      In this case, the information specified in subparagraphs 3) and 6) of paragraph 2 of these Rules shall be presented for the past nine months of the current calendar year.

      Footnote. Paragraph 3 as amended by Resolution No. 449 of the Government of the Republic of Kazakhstan dated 27.06. 2019 (shall be enforced ten calendar days after the date of its first official publication).

      4. If necessary, the authorized body, no later than five working days after receipt of the application, may request from the applicant other documents and calculations substantiating the information contained in the application.

      The applicant, after receiving the relevant request from the authorized body, no later than ten working days, shall provide documents and calculations on electronic media to the authorized body substantiating the information contained in the application requested in accordance with this paragraph of the Rules.

      Footnote. Paragraph 4 as amended by Resolution No. 449 of the Government of the Republic of Kazakhstan dated 27.06. 2019 (shall be enforced ten calendar days after the date of its first official publication).

      5. The authorized body, no later than five working days after receipt of the application and (or) additional documents and calculations substantiating the information contained in the application, in cases of incomplete information in the documents provided by the applicant, or an incomplete list of documents provided for in paragraphs 2 , 3 and 4 of these Rules, or filing an application in violation of the requirements established by these Rules, shall send a reasoned rejection of the application.

      6. The authorized body, no later than five working days after accepting the application for examination and (or) additional documents and calculations substantiating the information contained in the application, shall direct copies of the application and documents attached to it for examination by the state bodies listed below to prepare conclusions on them to:

      1) the Ministry of Finance of the Republic of Kazakhstan - to confirm tax reporting data;

      2) the authorized body in hydrocarbons - on validity of the planned hydrocarbon production volumes and the volume of subsoil use operations, with regard to the work programs (annual work programs) and (or) design solutions and obligations under the subsoil use contract approved in accordance with the procedure established by the legislation of the Republic of Kazakhstan;

      3) other state bodies - on issues within their competence and set by the authorized body in order to develop balanced decisions on specific amounts of the individual MET rate.

      The conclusions of the relevant state bodies must be presented to the authorized body no later than twenty calendar days from the receipt of the copy of the application and the documents attached to it from the authorized body. Within the indicated period, the authorized body shall calculate profitability under the contract based on the data provided by the applicant and prepare proposals on specific amounts of the individual MET rate.

      7. No later than seven working days from the date of receipt of all the conclusions of the state bodies specified in paragraph 6 of these Rules, the authorized body shall file an application with attached conclusions of the state bodies to the interdepartmental commission for the development of recommendations on categorizing the subsoil use contract as low-profit, and also of the deposit (group of deposits, part of a deposit) as high-viscosity, watered, marginal or depleted, with the exception of common minerals, (further- the commission), which develops recommendations on categorizing the hydrocarbon deposit (group of deposits, part of a deposit) as low-profit, high-viscosity , watered, marginal and depleted, with the exception of common minerals.

      Within ten working days, the commission must consider the application and conclusions of state bodies and develop a proposal to classify or refuse to classify the hydrocarbon deposit (group of deposits, part of a deposit) as low-profit, the amount of the MET rate for a low-profit deposit (if a proposal is made to categorize the hydrocarbon deposit (group of deposits, part of a deposit) as low-profit).

      8. In the event that the commission develops a proposal to categorize the hydrocarbon deposit (group of deposits, part of a deposit) as low-profit, the authorized body within fifteen working days shall develop and, in accordance with the procedure established by law, submit to the Government of the Republic of Kazakhstan a draft resolution of the Government of the Republic of Kazakhstan on putting the hydrocarbon deposit ( group of deposits, part of the deposit) on the list of low-profit category with the attachment of MET rates established in accordance with paragraph 13 of these Rules, and an indication of the calendar year during which such rates will be applied.

      9. The MET rate shall be set for a calendar year. If the MET rate is established during the specified year, then the MET accrued and paid from the beginning of the calendar year on the obligations of this year shall be recalculated at the rate established in accordance with these Rules.

      10. The decision on refusing to categorize a hydrocarbon deposit (group of deposits, part of a deposit) as low-profit shall be taken by the authorized body, with regard to the proposals developed by the commission, and communicated to the subsoil user within ten working days after the commission makes the relevant decision, indicating reasons for the refusal.

      11. The grounds for refusing to categorize a hydrocarbon deposit (group of deposits, part of a deposit) as low-profit shall be:

      1) non-compliance of the presented calculation of tax liabilities on CIT, and also calculation of net income, return on sales of the deposit (group of deposits, part of the deposit) for the corresponding calendar year, with the tax legislation of the Republic of Kazakhstan, including paragraph 12 of these Rules;

      2) applying by the subsoil user of an unreasonable forecast of hydrocarbon price for the corresponding calendar year, used for the profitability level calculation;

      3) discrepancy between the production volumes declared for the deposit (group of deposits, part of the deposit) for the corresponding calendar year and the planned production volumes;

      4) a significant (over 10%) and (or) unreasonable increase in production costs, sales costs and general administrative costs per ton of hydrocarbon raw materials in comparison with the data for the previous calendar year, if the application is made for the current calendar year, or with data on the current calendar year, based on the forecast data for the year, calculated on the basis of the budget for the specified period, with regard to the adjustments made, if the application is submitted for the upcoming calendar year;

      5) excess of the actual profitability level for the deposit (group of deposits, part of the deposit) based on the reporting periods outcome (six months or nine months) preceding the date of filing the application, the current incomplete calendar year of the level of 0%.

      In the event that the reasons for which the subsoil user was refused to classify a hydrocarbon deposit (group of deposits, part of a deposit) as low-profit are eliminated, he shall be entitled to re-submit an application to the authorized body as established by this chapter.

Paragraph 2. Criteria for categorizing a hydrocarbon deposit (group of deposits, part of a deposit) as low-profit

      12. A hydrocarbon deposit (group of deposits, part of a deposit) shall be categorized as low-profit if the planned profitability level of a deposit (group of deposits, part of a deposit) on the results of the upcoming calendar year or the current incomplete calendar year, according to calculations made by the subsoil user independently in accordance with the procedure established by this paragraph is equal to or less than 0%.

      The calculation of the planned profitability level for a hydrocarbon deposit (group of deposits, part of a deposit) for a calendar year shall be based on the forecast data of the subsoil user, including hydrocarbon prices for the relevant period, and on the production volumes confirmed by the authorized body.

      The planned profitability level of a hydrocarbon deposit (group of deposits, part of the deposit) shall be determined by the following formula:

     


      РПк – profit on sales on a hydrocarbon deposit (group of deposits, part of the deposit) in percent;

      ЧДк - net profit from a hydrocarbon deposit (group of deposits, part of a deposit), calculated in accordance with this paragraph and the methodology of maintaining separate tax accounting of a subsoil user, approved in the tax accounting policy in accordance with the terms of Article 723 of the Tax Code of the Republic of Kazakhstan (hereinafter -the methodology of the subsoil user);

      Ук - the amount of made and outstanding losses on a hydrocarbon deposit (group of deposits, part of a deposit), calculated in accordance with Chapter 31 of the Tax Code of the Republic of Kazakhstan, that arose after December 31, 2008;

      СГДк - total annual income on a hydrocarbon deposit (group of deposits, part of a deposit), calculated in accordance with the methodology of the subsoil user.

      The amount of net income from a hydrocarbon deposit (group of deposits, part of a deposit) for a tax period shall be determined by the subsoil user according to the following formula:

     


      КПНк - corporate income tax on a hydrocarbon deposit (group of deposits, part of a deposit), calculated in accordance with the methodology of the subsoil user;

      НДк - taxable income from a hydrocarbon deposit (group of deposits, part of a deposit) , calculated in accordance with the methodology of the subsoil user, reduced by the amount of income and expenses provided for in Article 288 of the Tax Code of the Republic of Kazakhstan.

      When determining taxable income, the amount of deductions for the tax period should not exceed the amount of deductions for the previous tax period, with the exception of deductions due to additional tax liabilities, or an increase in the amount of deductions due to expenses, the increase of which is associated with a rise in tariffs for regulated services (goods, works) of the natural monopoly subject. In case of deviation of the planned hydrocarbon production volume in the current incomplete (upcoming) calendar year by more than 10% from the level of the previous (current) calendar year, the amount of deductions for the purposes of determining the profitability level for the hydrocarbon deposit (group of deposits, part of a deposit) may be adjusted in proportion to changes in production volumes.

      13. MET rates for a hydrocarbon deposit (group of deposits, part of a deposit) categorized as low-profit shall be set to achieve a profitability level under the contract of 0% on the world prices scale per oil barrel in increments of 1 US dollar.

      The minimum MET rate for a hydrocarbon deposit (group of deposits, part of a deposit) categorized as low-profit is set at 5% of the generally established MET rate effective in the relevant tax period. At the same time, the MET rates established for a deposit (group of deposits, part of a deposit) categorized as low-profit in accordance with these Rules should not exceed the generally established MET rates effective in the relevant tax period.

      If the MET rates for a hydrocarbon deposit (group of deposits, part of a deposit) categorized as low-profit are set for the corresponding calendar year during the specified year, then the MET paid from the beginning of the calendar year shall be recalculated at the rates established in accordance with this chapter, based on the actual prices for the past tax periods.

      The subsoil user shall independently apply the rates established in accordance with this paragraph, based on the price determined in the manner established by Article 741 of the Tax Code of the Republic of Kazakhstan.

      14. The taxpayer, no later than February 15 of the year following the calendar year in which he applied the MET rates established in accordance with paragraph 13 of these Rules, shall calculate profitability indicators for the past year based on actual data using these MET rates .

      If the actual profitability level of a deposit (group of deposits, part of a deposit) exceeds 0%, the subsoil user shall recalculate tax liabilities on MET at the rate calculated according to the following formula:

     


      СНк - is the MET rate on a hydrocarbon deposit (group of deposits, part of a deposit) in percent;

      СГДк - the total annual income on a hydrocarbon deposit (group of deposits, part of a deposit), calculated in accordance with the methodology of the subsoil user;

      Вк - deductions on a hydrocarbon deposit (group of deposits, part of a deposit), excluding MET, calculated in accordance with the methodology of the subsoil user;

      НБк - the MET tax base on a hydrocarbon deposit (group of deposits, part of a deposit), calculated in accordance with the methodology of a subsoil user.

      At the same time, the MET rate amount calculated in accordance with this paragraph is calculated with an accuracy of two decimal places with rounding up, and should not go beyond the threshold values ​​specified in paragraph 13 of these Rules.

      The resulting value of the MET rate shall be applied by the subsoil user to calculate the amount of MET payable for the past calendar year. If the MET amount calculated for the past calendar year in accordance with this paragraph exceeds the MET amount calculated for the past calendar year at the rate established in accordance with paragraph 13 of these Rules, the corresponding excess amount shall be reflected in the additional MET declaration. The MET amount indicated in this declaration is a tax liability of the 4th quarter of the past calendar year and shall be payable in accordance with the generally established procedure. In the event of a change in the indicators used in calculating the actual profitability level according to the formula given in part three of paragraph 12 of these Rules, the subsoil user shall independently recalculate and fulfill tax obligations in accordance with this paragraph within at least 45 calendar days from the date such changes are reflected in tax accounting.

Chapter 2. Order of categorizing a hydrocarbon deposit (group of deposits, part of a deposit) as high-viscosity, watered, marginal and depleted and order of taxation in terms of mineral extraction tax

Paragraph 1. Order of filing and considering applications for categorizing a hydrocarbon deposit (group of deposits) as high-viscosity, watered, marginal or depleted

      15. A subsoil user developing a hydrocarbon deposit (group of deposits, part of a deposit) may apply to the authorized body to categorize this deposit (group of deposits, part of a deposit) as high-viscosity, watered, marginal or depleted if the following conditions are met simultaneously:

      1) the deposit meets one of the criteria specified in paragraph 27 of these Rules;

      2) the hydrocarbon production volume in the deposit (group of deposits, part of a deposit) does not exceed 3 (three) million tons per year;

      3) the actual or planned profitability level of the deposit (group of deposits, part of a deposit) based on the results of the past calendar year or the current incomplete calendar year is equal to or less than 25%.

      For the purposes of this paragraph, the calculation of profitability for a deposit (group of deposits, part of a deposit) shall be made in accordance with paragraph 12 of these Rules based on indicators for a deposit (group of deposits, part of a deposit).

      16. The subsoil user's application for categorizing a deposit (group of deposits, part of a deposit) as high-viscosity, watered, marginal or depleted shall be filed in accordance with the form of Appendix 1 to these Rules. Copies of the following documents on electronic media must be attached to the application:

      1) a report on compliance of the achieved technological indicators of the deposit (group of deposits, part of a deposit) with the approved design solutions;

      2) protocol of the State Commission on mineral reserves of the Republic of Kazakhstan;

      3) a report on fulfillment of contractual (licensed) obligations as of the end date of the last quarter preceding the application filing date;

      4) documents indicated in paragraph 2 of these Rules.

      Footnote. Paragraph 16 as amended by Resolution No. 449 of the Government of the Republic of Kazakhstan dated 27.06.2019 (shall be enforced ten calendar days after the date of its first official publication).

      17. If necessary, the authorized body, no later than five working days after the receipt of the application, may request from the applicant other documents and calculations substantiating the information contained in the application.

      The applicant, after receiving the relevant request from the authorized body, no later than ten working days, shall submit to the authorized body electronic documents and calculations substantiating the information contained in the application requested in accordance with this paragraph of the Rules.

      Footnote. Paragraph 17 as amended by Resolution No. 449 of the Government of the Republic of Kazakhstan dated 27.06.2019 (shall be enforced ten calendar days after the date of its first official publication).

      18. The authorized body, no later than five working days after receipt of the application and (or) additional documents and calculations substantiating the information contained in the application, in cases of incomplete information in the documents provided by the applicant, or an incomplete list of documents provided for in paragraphs 16 and 17 of these Rules, or filing an application in violation of the requirements established by these Rules, shall send a reasoned refusal to examine the application.

      19. After receipt of the application, the authorized body, no later than five working days, shall direct copies of the application and the documents attached to it for examination to the state bodies indicated in paragraph 6 of these Rules, as well as to the authorized body in oil and gas to prepare a conclusion on compliance or non-compliance of the deposit (group of deposits, part of the deposit) with the criteria of high-viscosity, watered, marginal or depleted and the applicant's observance of the approved design solutions.

      The conclusions of the relevant state bodies must be submitted to the authorized body no later than twenty calendar days from the receipt of a copy of the application and the documents attached to it from the authorized body.

      20. Within no later than seven working days from the date of receipt of the state bodies’ conclusions, the authorized body shall file an application with the attached conclusions for consideration by the commission.

      21. No later than ten working days, the commission shall examine the application and develop a proposal to categorize or refuse to categorize the deposit (group of deposits, part of the deposit) as high-viscosity, watered, marginal or depleted.

      22. If the commission makes a proposition to categorize a deposit (group of deposits, part of a deposit) as high-viscosity, watered, marginal or depleted, the authorized body within fifteen working days shall develop and, in the prescribed manner, submit to the Government of the Republic of Kazakhstan a draft resolution of the Government of the Republic of Kazakhstan on putting the deposit (group of deposits, part of the deposit) on the list of high-viscosity, watered, marginal or depleted deposits, which should contain the following information:

      1) the name and coordinates of the deposit (group of deposits, parts of the deposit) in accordance with the mining allotment;

      2) date and registration number of the subsoil use contract and license (if any);

      3) one or more criteria specified in paragraph 27 of these Rules, to which the deposit (group of deposits, part of the deposit) corresponds.

      If a deposit (a group of deposits, a part of a deposit) is put on the list of high-viscosity, watered, marginal or depleted deposits, the MET paid from the beginning of the calendar year in which the relevant decision of the Government of the Republic of Kazakhstan was made, shall be recalculated at the rates in accordance with Appendix 2 to these Rules, based on the actual prices for the past tax periods, determined in the manner prescribed by Article 741 of the Tax Code of the Republic of Kazakhstan, by submitting additional declarations.

      If a deposit (group of deposits, part of a deposit) meets several criteria specified in paragraph 27 of these Rules, for which different MET rates are established, the rate with the lowest value shall be applied for the purposes of calculating and paying the said tax.

      If a part of the deposit is categorized as high-viscosity watered, marginal or depleted, the entire production volume under the contract shall be taken into account to determine the reduced rate of mineral extraction tax.

      Footnote. Paragraph 22 as amended by Resolution No. 449 of the Government of the Republic of Kazakhstan dated 27.06.2019 (shall be enforced ten calendar days after the date of its first official publication).

      22-1. In the event that a deposit (a group of deposits, a part of a deposit) is categorized as high-viscosity, watered, marginal or depleted, reduced tax rates for the minerals extraction specified in Appendix 2 to these Rules, by decisions of the Government of the Republic of Kazakhstan adopted after January 1, 2019, shall be effective for three calendar years, starting on January 1 of the year in which such a decision was made.

      Before the expiration of the reduced mineral extraction tax rates, the subsoil user shall re-apply to the authorized body in accordance with the provisions of these Rules.

      At the same time, the three-year period for limiting the effect of reduced mineral extraction tax rates, established in part one of this paragraph, shall not apply to a legal entity whose controlling stake is owned by a national company and / or legal entities, whose 70 or more percent of voting shares are owned by a national company.

      Footnote. The Rules have been supplemented by Paragraph 22-1 in accordance with Resolution No. 449 of the Government of the Republic of Kazakhstan dated 27.06.2019 (shall be enforced ten calendar days after the date of its first official publication; as amended by Resolution No. 937 of the Government of the Republic of Kazakhstan dated 30.12.2020(shall be enforced ten calendar days after the date of its first official publication.

      23. The taxpayer who applied the MET rates in accordance with part two of paragraph 22 of these Rules, no later than February 15 of the year following the expired calendar year in which these MET rates were applied, shall calculate the actual profitability for the deposit (group of deposits, part of a deposit) over the past year based on actual data according to the formula given in part three of paragraph 12 of these Rules, based on indicators for the deposit (group of deposits, part of a deposit) using MET rates in accordance with Appendix 2 to these Rules.

      In the event that the actual profitability level of a deposit (group of deposits, part of a deposit), calculated according to the formula given in part three of paragraph 12 of these Rules, exceeds 20%, but not more than 25%, the subsoil user shall recalculate tax liabilities on MET at the rate in accordance with Appendix 2 to these Rules, increased by 5% from the MET base rate established by the Tax Code of the Republic of Kazakhstan for the corresponding year.

      In the event that the actual profitability level of a deposit (group of deposits, part of a deposit), calculated according to the formula given in part three of paragraph 12 of these Rules, exceeds 25%, the subsoil user shall recalculate tax liabilities on MET at the rate calculated according to the following formula:

     


      СНм -is the MET rate for the deposit (group of deposits, part of a deposit) in percent;

      СГДм - the total annual income for the deposit (group of deposits, part of a deposit), calculated in accordance with the methodology of the subsoil user;

      Вм - deductions for a deposit (a group of deposits, part of a deposit), excluding MET, calculated in accordance with the methodology of the subsoil user;

      НБм - the MET tax base for a deposit (group of deposits, part of a deposit), calculated in accordance with the methodology of the subsoil user;

      К - the CIT rate value established by the tax legislation of the Republic of Kazakhstan for the relevant tax period, converted to a decimal fraction by dividing the percentage rate by 100.

      At the same time, the MET rate amount calculated in accordance with this paragraph shall be calculated with an accuracy of two decimal places rounded up and shall not exceed the threshold values ​​specified in paragraph 13 of these Rules.

      The resulting MET rate value shall be used by the subsoil user to calculate the amount of MET payable for the past calendar year. If the MET amount calculated for the past calendar year in accordance with this paragraph exceeds the MET amount calculated for the past calendar year at the rate established in accordance with paragraph 13 of these Rules, the corresponding excess amount shall be reflected in the additional MET declaration. The MET amount indicated in this declaration is a tax liability of the 4th quarter of the past calendar year and shall be payable in accordance with the generally established procedure. In the event of a change in the indicators used in calculating the actual profitability level on the formula given in part three of paragraph 12 of these Rules, the subsoil user shall independently recalculate and fulfill tax obligations in accordance with this paragraph within at least 45 calendar days from the date such changes are reflected in the tax accounting.

      24. The decision on refusing to categorize a hydrocarbon deposit (group of deposits, part of a deposit) as high-viscosity, watered, marginal or depleted shall be taken by the authorized body, with regard to the proposals developed by the commission, and communicated to the subsoil user within ten working days, indicating the reasons for the refusal.

      25. The grounds for refusing to categorize a hydrocarbon deposit (group of deposits, part of a deposit) as high-viscosity, watered, marginal or depleted shall include:

      1) non-compliance of the presented calculation of tax liabilities on CIT, as well as the calculation of net income, sales profitability under the contract for the corresponding calendar year, with the tax legislation of the Republic of Kazakhstan, including paragraph 12 of these Rules;

      2) applying by the subsoil user of an unreasonable forecast of hydrocarbon price for the corresponding calendar year, used by the applicant to calculate the profitability level;

      3) discrepancy between the declared production volumes and the planned production volumes for the corresponding calendar year;

      4) the actual or planned profitability level of a deposit (group of deposits, part of a deposit) based on the results of the past calendar year or the current incomplete calendar year exceeds 25%;

      5) non-compliance of the deposit (group of deposits, part of the deposit) with any of the stated criteria specified in paragraph 27 of these Rules;

      6) the declared criterion (criteria) is achieved as a result of violation by the applicant of the approved design solutions (documents).

      26. Change in the parameters of the deposit (group of deposits, part of the deposit) specified in the application, which occurred after the decision was made to categorize the deposit (group of deposits, part of the deposit) as high-viscosity, watered, marginal or depleted, as a result of taking measures aimed at increasing the return of deposits (group of deposits, part of a deposit) in accordance with the design solutions (documents) approved in accordance with the procedure established by the legislation of the Republic of Kazakhstan, shall not be the grounds for revising an earlier decision.

      In the event of an increase in the initial approved reserves on the deposit put on the list of high-viscosity, watered, marginal or depleted according to the depletion criterion, the commission shall revise the earlier decision if, as a result of such an increase, the deposit (group of deposits, part of the deposit) does not meet the specified criterion, provided that the change in the criterion is not associated with the adoption by the subsoil user of measures aimed at increasing the return of the deposit (group of deposits, part of the deposit).

      The authorized body in the hydrocarbons shall annually provide data on recoverable reserves to the authorized budget planning body as of January 1 of the current calendar year for deposits (a group of deposits, part of a deposit) included in the list of high-viscosity, watered, marginal or depleted reserves.

      The subsoil user may direct to the authorized body an application to change the criterion (criteria) to which the deposit (group of deposits, part of the deposit) corresponds indicated in the list of high-viscosity, watered, marginal or depleted, in the manner established by this chapter.

Paragraph 2. Criteria for categorizing a hydrocarbon deposit (group of deposits, part of a deposit) as high-viscosity, watered, marginal or depleted

      27. A deposit (group of deposits, part of a deposit) can be categorized as high-viscosity, watered, marginal or depleted, provided that in the course of development in accordance with the approved design solutions one of the indicators of depletion, watering, marginality is achieved at the deposit (group of deposits, part of a deposit), or a deposit (group of deposits, part of a deposit) is characterized by high oil viscosity, which correspond to the following indices:

      1) depletion of a hydrocarbon deposit (each deposit separately for a group of deposits, part of a deposit) is 80 percent or more of the recoverable reserves approved in the prescribed manner.

      The depletion degree of a deposit (a group of deposits, a part of a deposit) is calculated using the following formula:

     


      Св - is the degree of depletion of oil reserves, expressed as a percentage of the approved recoverable oil reserves;

      Qн - cumulative oil production at the deposit (part of the deposit) as a whole, in tons;

      Qи - approved recoverable oil reserves in tons;

      2) watering of the production of hydrocarbon deposit (each deposit separately for a group of deposits, part of a deposit) is 85 percent or more.

      The watering of a deposit (part of a deposit) is calculated by the following formula

     


      Ом - the percentage of watering in the deposit (part of the deposit );

      QB - the volume of water produced for a period of at least ninety calendar days preceding the application filing date;

      Qж - the volume of extracted liquid for a period of at least ninety calendar days preceding the application filing date;

      3) the oil viscosity of the deposit (each deposit separately for a group of deposits, part of the deposit ) in reservoir conditions is 200 mPa * sec and more;

      4) the average flow rate of the wells of the deposit (each deposit separately for a group of deposits, part of the deposit ) is less than three tons per day.

      The average daily oil flow rate of one well in a deposit (part of a deposit ) is calculated using the following formula:

     


      qH -is the average daily oil flow rate of one well in a deposit (part of a deposit );

      QH - the volume of average daily oil production in a deposit (part of a deposit) in tons for a period of at least ninety calendar days preceding the application filing date;

      N -the average number of operating producing well stock of a deposit (part of a deposit) for the corresponding period.

  Appendix1
to the Rules of categorizing
a hydrocarbon deposit (group of
deposits, part of a deposit)
as low-profit, high-viscosity,
watered, marginal and depleted
and order of taxation in terms of
mineral extraction tax

Application for categorizing a hydrocarbon deposit (group of deposits) as high-viscosity, watered, marginal or depleted

      1. Full name of subsoil user (legal entity or an individual)

      __________________________________________________________________________

      _________________________________________________________________________.

      2. Location (postal address) ___________________________________________________

      _________________________________________________________________________.

      3. Business identification number or individual identification number

      _________________________________________________________________________.

      4. Subsoil use contract under which hydrocarbon production is carried out and it is planned to apply the procedure for categorizing a deposit (group of deposits, part of a deposit) as low-margin, high-viscosity, watered, marginal or depleted:

      4.1. Full name, parties to the contract, date of conclusion of the contract

      __________________________________________________________________________

      __________________________________________________________________________

      4.2. Date and registration number of the contract with the competent authority:

      _________________________________________________________________________;

      4.3. Name of the contract (deposit, group of deposits, part of a deposit):

      __________________________________________________________________________

      _________________________________________________________________________;

      4.4. Location of the contract area (deposit, group of deposits, part of a deposit)

      __________________________________________________________________________

      _________________________________________________________________________;

      4.5. Type of extracted mineral ________________________________________________

      _________________________________________________________________________.

      5. Grounds for applying (put the "X" sign in selected lines:

      low- profit

      high viscosity

      watered

      marginal

      depleted

      6. Contact person (full name, position, phone)

      __________________________________________________________________________

      __________________________________________________________________________

      Attachments:

      __________________________________________________________________________

      __________________________________________________________________________

      __________________________________________________________________________

      Full name of the person in charge, position

      __________________________________________________________________________

      Seal

      Date of application filing "___" ________ 20 __

  Appendix 2
to the Rules of categorizing
a hydrocarbon deposit (group of
deposits, part of a deposit)
as low-profit, high-viscosity,
watered, marginal and depleted
and order of taxation in terms of
mineral extraction tax

Mineral extraction tax rates for watered, marginal, depleted, high-viscosity hydrocarbon deposits (groups of deposits, parts of deposits)

      1. Mineral extraction tax rates on crude oil for high-viscosity deposits:

No.

Annual production volume

Rates in % at viscosity from 200 to 300 mPa*sec

Rates in % at viscosity from 300 mPa*sec and more

1

2

3

4

1.

up to 250000 tons inclusive

1,5

0,25

2.

up to 500000 tons inclusive

2,1

0,35

3.

up to 1000000 tons inclusive

2,4

0,4

4.

up to 2000000 tons inclusive

2,7

0,45

5.

up to 3000000 tons inclusive

3,0

0,5

6.

up to 4000000 tons inclusive

3,3

0,55

7.

up to о 5000000 tons inclusive

3,6

0,6

8.

up to 7000000 tons inclusive

3,9

0,65

9.

up to 10000000 tons inclusive

4,5

0,75

10.

over 10000000 tons

5,4

0,9


      2. Mineral extraction tax rates on crude oil for watered deposits:

No.

Annual production volume

Rates in % at watering from 85 to 95 %

Rates in % at watering from 95 % and more

1

2

3

4

1.

up to 250000 tons inclusive

1,00

0,25

2.

up to 500000 tons inclusive

1,40

0,35

3.

up to 1000000 tons inclusive

1,60

0,4

4.

up to 2000000 tons inclusive

1,80

0,45

5.

up to 3000000 tons inclusive

2,00

0,5

6.

up to 4000000 tons inclusive

2,20

0,55

7.

up to о 5000000 tons inclusive

2,40

0,6

8.

up to 7000000 tons inclusive

2,60

0,65

9.

up to 10000000 tons inclusive

3,00

0,75

10.

over 10000000 tons

5,40

0,9


      3. Mineral extraction tax rates on crude oil for depleted deposits:

No.

Annual production volume

Rates in % at depletion from 80 to 95 %

Rates in % at depletion from 95 % and more

1

2

3

4

1.

up to 250000 tons inclusive

1,5

0,25

2.

up to 500000 tons inclusive

2,1

0,35

3.

up to 1000000 tons inclusive

2,4

0,4

4.

up to 2000000 tons inclusive

2,7

0,45

5.

up to 3000000 tons inclusive

3

0,5

6.

up to 4000000 tons inclusive

3,3

0,55

7.

up to о 5000000 tons inclusive

3,6

0,6

8.

up to 7000000 tons inclusive

3,9

0,65

9.

up to 10000000 tons inclusive

4,5

0,75

10.

over 10000000 tons

5,4

0,9


      4. Mineral extraction tax rates on crude oil for marginal deposits:

No.

Annual production volume

Rates in% at well flow from
2 t..
to 3 t.
per day

Rates in % at well flow from
1 t.
to 2 t.
per day

Rates in % at well flow below1 t. per day

1

2

3

4

5

1.

up to 250000 tons inclusive

2,5

1,5

0,25

2.

up to 500000 tons inclusive

3,5

2,1

0,35

3.

up to 1000000 tons inclusive

4

2,4

0,4

4.

up to 2000000 tons inclusive

4,5

2,7

0,45

5.

up to 3000000 tons inclusive

5

3

0,5

6.

up to 4000000 tons inclusive

5,5

3,3

0,55

7.

up to 5000000 tons inclusive

6

3,6

0,6

8.

up to 7000000 tons inclusive

6,5

3,9

0,65

9.

up to 10000000 tons inclusive

7,5

4,5

0,75

10.

over 10000000 tons

9

5,4

0,9


  Appendix
to Resolution No.204
of the Government of the
Republic of Kazakhstan
dated April,18 2018

List
of some invalidated resolutions of the Government of the Republic of Kazakhstan

      1. Resolution No. 1528 of the Government of the Republic of Kazakhstan dated December 31, 2010 “On approval of the Rules for categorizing a subsoil use contract providing for the development of a hydrocarbon deposit as low-profit, as well as a hydrocarbon deposit (group of deposits, part of deposits) as high-viscosity, watered, marginal or depleted and mineral extraction tax rates for subsoil users developing watered, marginal, depleted, high-viscosity hydrocarbon deposits.

      2. Resolution No. 1248 of the Government of the Republic of Kazakhstan dated September 29, 2012 “On amendments to Resolution No. 1528 of the Government of the Republic of Kazakhstan dated December 31, 2010 “On approval of the Rules for categorizing a subsoil use contract providing for the development of a hydrocarbon deposit as low-profit, as well as a hydrocarbon deposit (group of deposits, part of deposits) as high-viscosity, watered, marginal or depleted and mineral extraction tax rates for subsoil users developing watered, low-margin, depleted, high-viscosity hydrocarbon deposits.” (CAPG of the Republic of Kazakhstan, 2012, No. 71, p.1050).

      3. Resolution No. 893 of the Government of the Republic of Kazakhstan dated November 12, 2015 “On amendments and additions to Resolution No. 1528 of the Government of the Republic of Kazakhstan dated December 31, 2010 “On approval of the Rules for categorizing a hydrocarbon deposit (group of deposits, part of a deposit) as low-profit, high-viscosity, watered, marginal and depleted and the procedure for taxation in terms of mineral extraction tax” (CAPG of the Republic of Kazakhstan, 2015, No. 57-58, p. 454).

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