The 2022 tax legislation changes

Dear Friends, 

With the onset of the New Year, w e w ant to inform you on the most important changes in the Kazakhstan tax legislation. Certain changes have already come into force since 1 January (some of them retroactively), w hereas others should be enforced in the nearest time or in a medium-term. 

We would like to emphasize that w e did not try to cover all changes in our alert. Hence, w e picked up only the most interesting ones. 

The tax statute of limitation 

Since 1 January 2022 the tax statute of limitation is five years for all large enterprises. For certain big companies it means that during 2022 the tax authorities could audit 2017 tax liabilities.

CIT 

A lot of questions and arguing w ere caused by a provision, based on w hich expenses on transactions of more than 1,000 MCI could be deducted only if e-invoices are available. 

As per the changes that came into force since the beginning of this year, corresponding expenses could be deducted if there is also a sales ticket containing an identification number of a recipient of goods, w orks, services. 

VAT

Threshold for mandatory VAT registration 

Threshold has been reduced from 30,000 MCI to 20,000 MCI. 

(Non)issuance of e-invoices 

Good changes for retailers. Since the beginning of this year issuance of e-invoices is not required upon sale of goods (a) from the List of Exclusions, (b) imported goods and (c) goods of non-VAT payers reflected in a Virtual Warehouse if such goods are sold to:

• individuals using purchased goods for ow n, family, home or any other purposes not related to business operations; 
• individuals or legal entities being subjects of micro-entrepreneurship. 

Google Tax 

Being led by example of other countries, Kazakhstan introduced VAT on electronically supplied services and electronically sold goods (so-called Google Tax). The tax w ill be assessed and paid by: 

• foreign providers rendering services to Kazakhstan individuals in electronic format; 
• foreign companies ow ning Internet platforms through which Kazakhstan individuals purchase goods. 

Second-tier banks and payment organizations are liable to provide the tax authorities w ith the information on payments to the above foreign entities. How ever, it is not clear at the moment how the tax authorities w ill use the obtained data. 

In general, Google Tax causes a lot of questions (mechanisms of assessment, payment method, etc.). We monitor legislative changes and w e w ill try our best to promptly inform you on the respective changes.

VATable import 

Now minimum prices apply to certain goods imported to Kazakhstan from the EAEU for determination of VATable import. 

Currently the List includes only certain types of spirits and alcohol, but the List could potentially be amended in future.

Simplified VAT refund 

Large enterprises (as per the List) converting at least 50% of proceeds from export sale of raw materials have a right for simplified VAT refund (not more than 80% of the excessive input VAT for a respective calendar quarter). 

Payment of VAT by offset 

The tax incentive has been prolonged till 1 January 2025. 

VAT control accounts 

There is no more such administrative control measure. Provisions on application of VAT control accounts have been deleted from the Tax Code. 

Sales tickets 

Since 1 January 2022 sales tickets should also be issued upon making mobile payments for goods, w orks and services. 

In addition, sales tickets should reflect identification numbers of buyers of goods, w orks and services upon their request.

Tax incentives 

Investment priority projects 

100% CIT reduction could be applied to income from conducting priority activities received from use of only those fixed assets, w hich have been put into operation as new production facilities, extended or modernized under investment priority contracts.

Astana Hub 

Currently, non-compliance w ith the Tax Code provisions prescribed for Astana Hub participants leads to cancellation of tax preferences since the date of registration in Astana Hub. How ever, as from 1 January 2023, this provision should be softened. Thus, in case of non-compliance w ith the Tax Code, tax preferences w ill be cancelled from the beginning of a calendar year w hen violations are made. 

Astana Hub and SEZ 

From 1 January 2023 the tax authorities jointly w ith an authority in the area of informatisation w ould define a methodology for determination of income from use of IP and provision of informatisation services to w hich 100% CIT reduction applies. 

As from 1 January 2023 a definition of losses from conducting IP activities w ould be introduced, i.e. “excess of deductions over annual aggregate income, including adjustments envisaged by Article 241 of the Tax Code”. Such losses w ould be determined in relation to each IP object separately and offset against future taxable income generated from relevant IP objects w ithin the tax statute of limitation. 

Tax reporting 

If there are no taxable objects, there is no need to submit Form 101.04 (WHT on income of non-residents). This provision has been introduced w ith retroactive effect (i.e. effective since 1 January 2018).

Taxpayer’s passport 

From 1 March 2022 entities conducting business operations in the area of public catering and trade should have a taxpayer's passport. The passport should be placed w here cash machines are located and it should be publicly available.

Special tax regimes 

As from 2023 taxpayers providing, inter alia, marketing services w ill not be able to apply special tax regime for small enterprises.

Tax administration 

Tax audits 

Full-scale tax audits initiated before 1 January 2022 should be completed w ithout inclusion of emission tax liabilities into the scope.

Banks’ obligations on provision of information 

Upon identification of transactions having signs of receiving income from business operations (as per special criteria jointly set w ith the National Bank), banks should provide the information on the follow ing individuals:

• persons holding important public positions and their spouses; 
• persons authorised to perform state functions and their spouses; 
• persons equalized to those w ho are authorised to perform state functions and their spouses; 
• persons obliged to provide declarations as per the Constitutional Law “On elections in Kazakhstan” and Law s “On countering corruption”, “On banks and banking activities”, “On insurance”, “On securities market”. 

Unblocking bank accounts 

Settlement of tax liabilities indicated in the tax authorities’ directive on blocking bank accounts serves as a basis for unblocking the accounts. 

Banks should unblock the accounts during the day w hen corresponding tax liabilities are settled w ithout w aiting for the cancellation of the tax authorities’ directive.

Traceability of goods’ turnover 

To implement the Agreement on mechanism for traceability of goods imported to the EAEU customs territory, a new form of state control is introduced (“Traceability of turnover of goods imported to the EAEU customs territory”).

The control is performed via organisation of a goods’ tracking system for tracing goods subject to tracing and transactions related to turnover of such goods by means of the national tracing system (i.e. E-Invoicing Electronic System). 

E-invoice is an accompanying document of the national tracing system. 

The tax authorities should ensure provision of data on goods’ subject to tracing and associated turnover transactions contained in the E-Invoicing System to the respective EAEU states. 

Thematic tax audits 

Such audits w ill also cover issues of availability and authenticity of identification means. This is related to marking of tobacco products and shoes (and, potentially, some other goods in future).

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