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Kazakhstan: VAT-related “pilot projects”

Kazakhstan: VAT-related “pilot projects”

The tax administration in Kazakhstan can initiate “pilot projects” with respect to tax, and the following two pilot projects have been implemented concerning value added tax (VAT):

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  • A tax-free system for foreign travellers making purchases at a trade center in Almaty
  • A project to improve VAT administration

Tax-free project

The tax-free pilot project applies with respect to certain purchases made at the Esentai Mall trade center in Almaty and at the Almaty International Airport. Under this project, the operator of the tax-free system reimburses individual buyers for the amount of VAT paid in Kazakhstan, if certain conditions are satisfied such as:

  • The buyer is a citizen of a foreign country that is not a member state of the Eurasian Economic Union.
  • The buyer purchased goods that are non-food products, and acquired them from an entity engaged in trading activities at the trade center.
  • The buyer presented a “tax-free document” (a receipt) that was properly completed and stamped by the state revenue authorities.
  • The total price of the purchased goods as indicated on the receipts exceeds 20 times the monthly index factor.
  • The buyer exported the purchased goods outside the Eurasian Economic Union through a checkpoint at the border of Kazakhstan in the Almaty International Airport
  • The period from the receipt date to the date of application for the VAT refund did not exceed three months.

This pilot project began 15 August 2019 and will last until 1 July 2022.

VAT administration project

The second pilot project concerns improvement of VAT administration procedures, and focuses on electronic VAT invoices. Taxpayers that may participate in this pilot project include:

  • VAT-payers with a high degree of “tax risk”
  • Taxpayers that purchase goods, works or services from VAT-payers with a high degree of tax risk

Under this pilot project, the state revenues authorities are allowed to conduct a desktop review of the participants before the tax reporting deadlines and to request that taxpayers with a high degree of tax risk to provide documentation confirming the transaction or service performance.

Participants in this pilot program must resolve violations that the state revenue authorities uncovered during a desk audit within five business days after receiving notification and must submit copies of any requested documents. If a taxpayer fails to comply, the state revenue authorities can limit the taxpayer’s access to the information system for electronic VAT invoices.

A notification is regarded as being executed if the taxpayer:

  • Recalls an electronic VAT invoice previously issued—if the taxpayer agrees with the violations specified by the notification
  • Provides an explanation and copies of documents that confirm the fact of the transaction—that is, if the taxpayer disagrees with the violations specified on the notification

If the taxpayer complies, the tax authorities will remove the bar that limits the taxpayer’s access to the information system of electronic VAT invoices within three business days.

This pilot project was launched 18 October 2019 and will last until 1 July 2021.

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