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Kazakhstan: CFC rules; defining large taxpayers; VAT amendments

Kazakhstan: CFC rules; defining large taxpayers; VAT

Changes to the tax law during 2019 reflect the following items:


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Concerning controlled foreign companies (CFCs)

  • Until 1 January 2020, companies registered in country that is a tax treaty partner with Kazakhstan will not be regarded as CFCs.
  • A tax resident determines a reduction of a CFC’s financial profit for Kazakh tax purposes on a proportional basis, depending on the share of the CFC income taxed in Kazakhstan compared to the total amount of the CFC revenues reflected in the financial statements.
  • A tax resident is not entitled to credit income tax withheld from a CFC’s Kazakh-source income against the resident’s corporate income tax liabilities in Kazakhstan, if the CFC is registered in a “tax haven.”
  • The deadline for submitting a resident’s tax declaration reflecting the CFC’s income tax liabilities, if the CFC’s audited financial statements are not available on the date of the filing deadline, has been extended. In this instance, the CFC’s tax liabilities on an additional corporate income tax declaration is due within 60 business days after the date of approval of the CFC’s audited financial statements, but not later than 31 March of the second year following the reporting year.

Concerning large taxpayers

  • The list of the “large taxpayers” subject to state monitoring (that is, included on a list of those companies having an amount of annual tax liabilities exceeding 2 million the monthly index factor) has been expanded.

Concerning value added tax (VAT)

  • A new system of “control VAT accounts” is available as an incentive for certain taxpayers.
  • Taxpayers operating through control VAT accounts may obtain VAT refunds without undergoing a tax audit of their VAT records. The tax authorities verify the amount of the excess VAT claimed for refund on the basis of data available in their information systems.
  • Taxpayers are not required to account separately for VAT amounts flowing through a control VAT account.
  • Taxpayers operating through control VAT accounts are exempt from the requirement to collect their foreign currency proceeds to confirm the amount of VAT claimed for a refund upon an exportation of goods.
  • A branch of a VAT-payer is entitled to open and operate a separate control VAT account for the branch’s settlements upon the branch’s electronic VAT invoices.
  • Taxpayers subject to the state monitoring are entitled to simultaneously apply a simplified VAT refund procedure, as well as a control VAT account and (or) a generally established procedure for a refund of the remaining VAT amounts.

Concerning tax administration

  • Second-tier banks and banking organizations are required to provide to the tax authorities information regarding the opening and closing of VAT accounts, as well as information on balances and cash flows on such accounts in accordance with the procedure established by the tax authorities.

Concerning administrative penalties

The amendments increased administrative penalties for certain tax offenses such as concealing a taxable object, for an understatement of taxes, and for a fictitious invoice.

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