Almaty GMT +6
EY
Esentai Tower, 77/7 Al-Farabi Avenue Almaty 050060 Kazakhstan
Indirect tax contacts
Doniyorbek S. Zulunov +7 (727) 259-7209 doniyorbek.zulunov@kz.ey.com
Meiras T. Medeubayev +7 (701) 959-0580 meiras.medeubayev@kz.ey.com
A. At a glance
Name of the tax
Value-added tax (VAT)
Local name Nalog na dobavlennuyu stoimost (NDS) (Russian) Kosylgan kun salygy (KKS) (Kazakh)
Date introduced 24 December 1991
Trading bloc membership Eurasian Economic Union (EAEU) between Kazakhstan, Armenia, Belarus, Kyrgyzstan and Russian Federation
Administered by Ministry of Finance (http://www.minfin.gov.kz)
State Revenue Committee of the Ministry of Finance (http://kgd.gov.kz)
VAT rates
Standard 12%
Other Zero-rated (0%) and exempt
VAT number format
Number from certificate of registration for VAT (series with five digits and number of VAT registration certificate with seven digits)
VAT return periods
General Quarterly Imports of goods from Monthly Belarus, Kyrgyzstan, Armenia and Russian Federation
Thresholds
Registration Annual turnover of 20,000 times the minimum calculated index – (MCI ) (approx. USD140,000)
Recovery of VAT by non-established businesses No
B. Scope of the tax
VAT applies to the following transactions:
• Supplies of goods, work and services in/from Kazakhstan
• Imports of goods
For VAT purposes, taxable turnover is the total of practically all types of supplies (for example, sales, exchanges or gifts) of goods, work and services. Goods include practically all forms of property or property rights. Taxable supplies of services are any supplies of work or services that are made for consideration or made free of charge or anything that is performed for consideration and is not a supply of goods.
Goods, works and services are subject to VAT if, under the place of supply rules, they are deemed to be supplied in Kazakhstan.
The place of supply of goods is deemed to be the following:
• Goods sent by the supplier, the recipient or a third party: the place where the transportation of the goods begins
• For all other cases: the place where the goods are handed over to the purchaser
The place of supply of work and services is based on the nature of the executed transactions. Work and services connected with immovable property (for example, buildings and installations) are deemed to be supplied in Kazakhstan if such property is located in Kazakhstan. The place of supply of certain services that are provided outside Kazakhstan is deemed to be in Kazakhstan if the purchaser of such services is in Kazakhstan. Such services include, but are not limited to, the following:
• The transfer of rights to use items of intellectual property, for example, maintenance and soft ware updates
• Provision of access to online resources
• Consulting
• Audit
• Engineering
• Legal
• Accounting
• Design
• Advertising and marketing services
• Staff provision
• The leasing of movable property (other than means of transport)
• Agency services connected with the purchase of goods, work and services
• Consent to limit or terminate entrepreneurial activities for consideration
• Communication services
• Radio and television services
• Rent of freight wagons and containers
C. Who is liable
Taxable persons are legal entities, individual entrepreneurs, individuals who participate in private practice and nonresident legal entities, having registered a presence in Kazakhstan (e.g., a branch), that are registered for VAT purposes as well as importers of goods into Kazakhstan. In addition, see the Digital economy subsection below for details on special rules for nonresident providers of e-commerce sales of goods and electronically supplied services.
Exemption from registration. The VAT law in Kazakhstan does not contain any provisions for exemption from VAT registration.
Voluntary registration and small businesses. Voluntary VAT registration is possible in Kazakhstan. However, individuals, who are not individual entrepreneurs; government agencies; nonresidents acting without a branch or representative office (except for those mentioned in the Digital economy subsection below), structural subdivisions of resident legal entities (e.g., through a branch) and gambling businesses do not have the right to voluntarily register for VAT purposes.
Group registration. Group VAT registration is not allowed in Kazakhstan.
Non-established businesses. Foreign legal entities, which do not have a registered branch/repre sentative office in Kazakhstan, cannot be registered for VAT in Kazakhstan. The rules are the same for supplies of goods and services, and business-to-business (B2B) and business-to-con sumer (B2C) supplies. In addition, see the Digital economy subsection below for details on special rules for nonresident providers of e-commerce sales of goods and electronically supplied services.
If a foreign business has a branch/representative office in Kazakhstan, then it can register for VAT voluntarily (no thresholds). However, where a foreign business has a branch/representative office, then it must register for VAT where its turnover exceeds during the calendar year 20,000 times the MCI (approx. USD140,000). The registration procedure is as per the details below. Once registered for VAT, the foreign business can recover input tax on local supplies (subject to normal rules).
Tax representatives. Tax representatives are not required in Kazakhstan.
Reverse charge. If a nonresident that is not registered for VAT purposes in Kazakhstan renders services for which the place of supply is Kazakhstan to a Kazakhstan purchaser and if the pur chaser is a taxable person, the purchaser must self-assess and pay VAT through a reverse-charge mechanism. A Kazakhstan purchaser of the services can offset the amount of the reverse-charge VAT paid, subject to the general offset procedure.
Domestic reverse charge. There are no domestic reverse charges in Kazakhstan.
Digital economy. Nonresident providers of electronically supplied services for B2B supplies are not required to register and account for VAT in Kazakhstan. Instead, the customer is required to self-account for the VAT due via the reverse-charge mechanism (see the Reverse-charge subsection above).
Nonresident providers of e-commerce B2C sales of goods and electronically supplied services are required to register and account for VAT in Kazakhstan with effect from 1 January 2022. Nonresident providers will be required to conditionally VAT register in Kazakhstan and pay VAT liabilities to the state budget of Kazakhstan.
The basic definitions of such supplies are as follows:
• Services in electronic form: services provided to individuals through telecommunications net works and the internet
• Electronic trade in goods: entrepreneurial activity involving the sale of goods to individuals via an internet platform
• Internet platform: an information system on the internet organizing electronic trade in goods
There is no threshold for conditional VAT registration of such nonresidents in Kazakhstan. For conditional VAT registration, a nonresident provider must send a confirmation letter by post to the Kazakhstan tax authorities with the following details:
• The full name of the entity
• Tax registration number (or its equivalent), if the nonresident has such a number in its country of incorporation or country of residence
• Number of state registration (or its equivalent) in the nonresident’s country of incorporation or country of residence
• Bank details to be used for the payment of VAT on electronic trade in goods or provision of electronic services to individuals
• Postal details (official email address, address in the nonresident’s country of incorporation or country of residence)
Also, for conditional VAT registration, a nonresident provider must mail a paper confirmation letter to the Kazakhstan tax authorities with, among other things, a list of details, including merchant ID data used for the receipt of payments and/or money transfers. A merchant ID is a unique set of symbols identifying a foreign company as the recipient of payment and/or a money trans fer using payment systems.
A nonresident provider must assess the VAT liability when carrying out e-commerce sales of goods and electronically supplied services to individuals if one of the following conditions is met:
• The buyer (an individual) lives in Kazakhstan.
• The bank in which a bank account is opened or used by an individual buyer to pay for services, or the electronic money operator through which the buyer (an individual) pays for services, is located in Kazakhstan.
• The network address of the buyer (an individual) that is used for the purchase of services is registered in Kazakhstan.
• The buyer uses a telephone number with the international country code assigned to Kazakhstan to purchase or pay for electronic services.
The value of e-commerce sales of goods and electronically supplied services to individuals in foreign currency must be converted into KZT (the Kazakhstani tenge, Kazakhstan’s domestic currency) at the market exchange rate set on the last working day preceding the date of receipt of payment for the goods or services.
A nonresident provider is generally not required to file VAT returns. However, a nonresident provider must pay the assessed VAT no later than the 25th day of the second month following the quarter in which goods and services were sold.
Nonresident providers are not required to issue Kazakhstan’s statutory VAT invoices for e-com merce sale of goods and electronically supplied services to individuals.
VAT will not be assessed on e-commerce sales of goods and electronically supplied services to individuals if:
• The value of goods or services is included in the customs value under the legislation of the Eurasian Economic Union (EAEU) (Kazakhstan, Armenia, Belarus, Kyrgyzstan and Russian Federation) or the customs legislation of Kazakhstan, according to which VAT on imported goods is paid to the state budget of Kazakhstan and is not refundable.
• The value of such goods or services is included in the amount of taxable imports, according to which VAT on imported goods from EAEU countries is paid to the state budget of Kazakhstan and is not refundable.
Additionally, VAT will not be assessed or paid for e-commerce sales of goods and electronically supplied services to individuals for the portion exceeding the value and/or weight norm deter mined under the customs legislation of the EAEU and/or Kazakhstan, according to which cus toms duties and taxes are paid in Kazakhstan in the form of a cumulative customs payment and are not refundable.
Online marketplaces and platforms. There are no other special rules that apply to online market places or platforms, except for the ones mentioned above.
Registration procedures. VAT registration, a process separate from tax registration, is either com pulsory or voluntary.
Resident legal entities, branches or representative offices of nonresident legal entities and private entrepreneurs must register for VAT if their turnover during the calendar year exceeds 20,000 times the MCI. The threshold is approx. USD140,000 for 2022. The MCI is established by the state budget law for each year. For 2022, the MCI is KZT3,063 (approx. USD7).
Legal entities that are not subject to compulsory VAT registration have the right to submit an application for VAT registration to the tax authority at their location in person or electronically.
Whether the applicant is required to register or is registering voluntarily, several rules are the same:
• The tax authority shall, within one working day from the submission of an application for VAT registration, register the taxable person by issuing a certificate of VAT registration.
• The applicant becomes a taxable person from the date of submission of the application.
In addition, see the Digital economy subsection above for details on special rules for nonresident providers of e-commerce sales of goods and electronically supplied services.
Deregistration. A taxable person may submit an application for VAT deregistration to the local tax authorities if the following conditions are simultaneously met:
• The taxable turnover for the calendar year preceding the year in which the tax application is submitted did not exceed approx. USD140,000.
• The taxable turnover for the period from the beginning of the current calendar year in which the tax application is submitted did not exceed approx. USD140,000.
The following documents should be submitted for VAT deregistration:
• An application for VAT deregistration
• A liquidation VAT declaration
Tax authorities should deregister a taxable person within five working days from the date of submission of a tax application. The date of VAT deregistration shall be the date of submission of the tax application to the tax authority.
The tax authorities will deregister the taxable person without notification if, for example:
• The VAT declaration is not submitted within six months after the due date established by the Tax Code.
• The taxable person is declared to be in abeyance.
• The registration of the legal entity is recognized to be invalid based on a court decision that has taken effect.
Changes to VAT registration details. A taxable person must notify changes to its registration details to the tax authorities based on a tax application for changing the registration data of a taxable person. Such an application must be submitted to the tax authority at the location of the taxable person (tax agent) no later than 10 working days from the date of the change.
The tax authorities make changes to the registration data of a taxable person within three working days from the date of receipt of the information from the national registers of identification num bers, authorized state bodies, banks or organizations engaged in certain types of banking opera tions, or a tax application for registration.
D. Rates
The term “taxable supplies” refers to supplies of goods, work and services that are liable to a rate of VAT, including the zero-rate.
The VAT rates are:
• Standard rate: 12%
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for the zero rate or an exemption.
For imports of goods by individuals under the simplified procedure, VAT may be paid as part of the aggregate customs payment, the amount of which is determined in accordance with the cus toms law of Kazakhstan.
Examples of goods and services taxable at 0%
• Export sales of goods, except for those that are exempt from VAT
• International transportation services
• Sale of oil and lubricants by airports when fueling aircraft of a foreign air carrier performing international flights
• Sale of refined gold to the National Bank or for export
• Sale of goods to the territory of Special Economic Zones
The term “exempt supplies” refers to supplies of goods, work and services not liable to VAT and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Turnover associated with land for residential purposes and residential buildings
• Specified financial services
• Services rendered by noncommercial organizations
• Services in the areas of culture, science and education
• Goods and services related to medical and veterinary activities
• Import of certain assets (a list is issued by the government)
• Goods imported by individuals not for entrepreneurial purposes (subject to certain limitations)
• Turnovers related to international transportation services
• Import of goods from the territory of a Eurasian Economic Union member country within the same legal entity (e.g., intra-entity transaction)
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Kazakhstan.
E. Time of supply
The time of supply is the date that a sale of goods, work or services is completed, which is the date on which the goods are shipped (transferred), work is performed or services are rendered. The date of the performance of work or the rendering of services is the date of signing of an act of acceptance for work performed or services rendered.
For goods that are not shipped, the date of completion of a sale is the date on which ownership of the goods is transferred to the purchaser.
Deposits and prepayments. There are no special time of supply rules in Kazakhstan for deposits and prepayments. As such, the general time of supply rules apply (as outlined above).
Continuous supplies of services. The time of supply for certain continuous supplies is the last day of the calendar month in which the goods are delivered, work is performed or services are rendered.
Goods sent on approval for sale or return. There are no special time of supply rules in Kazakhstan for supplies of goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above).
Reverse-charge services. The reverse-charge mechanism is triggered by the purchase of certain services from a nonresident entity based on one of the following documents:
• Act of works (services) acceptance
• In the absence of the above, a document (except for the VAT invoice), confirming the perfor mance of the work, with the document prepared in compliance with the Kazakhstan legislation on accounting and financial reporting
The date of signing of one of the above documents should be considered as the time of supply, when VAT is due to be accounted for on the supply by way of the reverse-charge mechanism.
Leased assets. There are no special time of supply rules in Kazakhstan for supplies of opera tional leases. As such, the general time of supply rules apply (as outlined above).
However, the time of supply rules for supplies of financial leases depends on the type of the arrangement, as per the following:
• The date of receipt of the periodic lease payment established by the leasing agreement, without taking into account the amount of remuneration
• The date of transferring the property to financial leasing
Imported goods. The time of supply is the date of importation of goods on to Kazakhstan.
F. Recovery of VAT by taxable persons
The VAT liability of a taxable person equals the output tax (VAT charged by a taxable person) less input tax (VAT paid by a taxable person to its suppliers) in a reporting period.
VAT paid on services, work and goods purchased by a taxable person (input tax), including reverse-charge VAT paid and VAT paid at customs, is generally available for offset (credit) in determining a taxable person’s VAT liability to the budget. However, offsetting is not available for VAT incurred for the purpose of making supplies that are either exempt or deemed to be supplied outside Kazakhstan.
The excess of input tax over output tax may generally be carried forward for offset against future VAT liabilities.
The time limit for a taxable person to reclaim input tax in Kazakhstan is three to five years, depending on the category of the taxable person. For further details, see the Statute of limitations subsection below, under Section J. Penalties.
Nondeductible input tax. Input tax is not allowed for offset if purchased goods, works or services are used for nontaxable supplies. In such cases, the respective input tax is not deductible for VAT but could be considered for deduction for corporate income tax purposes.
Examples of items for which input tax is nondeductible
• Receipt of goods, work and services not related to taxable turnover
• Receipt of passenger cars that are purchased as fixed assets
• The VAT invoice does not meet the set requirements of the Tax Code
• Goods and services purchased in petty cash for an amount exceeding 1,000 MCI (inclusive of VAT) irrespective of the frequency of the payment
• Purchase of goods, work and services from suppliers recognized by courts as invalid
•
Purchase of goods, work and services that are recognized by courts as executed by private busi ness entities without an actual intent to carry out entrepreneurial activities
Examples of items for which input tax is deductible (if related to a taxable business use)
• Capital assets
• Intangible and biological assets
• Investments in immovable property
Partial exemption. Input tax directly related to a taxable person’s taxable supplies is recoverable in full, whereas input tax directly related to exempt supplies is not recoverable at all and must be expensed for corporate income tax purposes.
Where a taxable person makes both taxable and exempt supplies, the input tax incurred in rela tion to both supplies (i.e., overheads, like office rent expenses) must be allocated accordingly to the extent the input tax incurred relates to the taxable and exempt supplies made.
The statutory method of apportionment is a pro rata calculation, based on the value of taxable supplies made in the total turnover of the business. The allocation can be calculated by using either the mentioned proportional method or the separate (direct) method. The method that the taxable person uses should be chosen by the VAT payer and stated in the tax accounting policy of the taxable person. Approval from the tax authorities is not required to use the partial exemp tion statutory method in Kazakhstan. Special methods are not allowed in Kazakhstan.
Capital goods. There are no special input tax recovery rules for capital goods. As such, normal input tax rules apply (as outlined above).
Refunds. Generally, in practice, obtaining refunds requires significant effort. However, the rules prescribe a procedure for refunds under certain conditions.
Under the Tax Code of the Republic of Kazakhstan, currently in effect, the following amounts are refundable to a taxable person from the budget:
• Input tax exceeding the amount of tax assessed not related to zero-rated turnover, up to the amount of reverse-charge VAT paid
• VAT paid to the suppliers of goods and services that were used for the purposes of zero-rated turnovers (subject to certain conditions below)
• VAT paid to suppliers of goods, work and services that were acquired using a grant
• VAT paid by diplomatic and equivalent representations accredited in Kazakhstan and by persons who are members of the diplomatic, administrative and technical staff of these representa tions, including members of their families who reside with them, to suppliers of goods, work and services acquired in Kazakhstan
•
The amount of any cash overpayment of VAT to the budget
Under current tax legislation, the excess of input tax related to zero-rated turnover is refundable if the following conditions are met simultaneously:
• The taxable person sells zero-rated goods, work and services on a continuous basis.
• Zero-rated sales account for at least 70% of the total taxable sales of the taxable person for the tax period in which the zero-rated sales occurred and for which a refund of excess VAT is claimed in a VAT return.
Excess VAT must be refunded to a taxable person on the basis of a refund claim made in the VAT return for a tax period.
Excess VAT confirmed by a tax audit must be refunded:
• Within 55 calendar days – for the taxable persons who have zero-rated sales account for at least 70% of the total taxable sales for the tax period in which the zero-rated sales occurred and for which a refund of excess VAT is claimed in a VAT return
• Within 155 calendar days – in all other cases
A simplified VAT refund could apply if (i) a taxable person has been on tax authorities’ monitor ing of large taxable persons for at least 12 consecutive months (70% of excess VAT is refunded without tax audit) and (ii) a producer of its own goods, which are approved by a competent authority (50% of excess VAT is refunded without tax audit) or (iii) taxable persons who converted at least 50% of the foreign exchange earnings received from the export of goods for tax able period.
Pre-registration costs. Input tax incurred on pre-registration costs in Kazakhstan is not recover able.
Bad debts. If part or all the amount of the claim for realized goods, works and services is considered a doubtful claim, the taxable person has the right to reduce the amount of its taxable turnover on such a claim after three years from the beginning of the tax period, which is as follows:
• A period of fulfillment of the requirement for the realized goods, work, services, if such term is defined
• The day of transfer of the goods, performance of work, rendering of services, term of execution of the requirement, which is not defined
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Kazakhstan.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses in Kazakhstan is not recoverable.
H. Invoicing
VAT invoices. In general, a VAT invoice is a compulsory document for taxable persons. No input tax deduction is allowed without an appropriate VAT invoice.
The cost of goods, work and services and the amount of VAT must be stated in the VAT invoice in the national currency of Kazakhstan, except for goods, work and services sold under foreigntrade contracts and in other circumstances provided for by law.
Nonresident providers of e-commerce sales of goods and electronically supplied services to individuals (B2C supplies) are not required to issue Kazakhstan’s statutory VAT invoices. See the Digital economy subsection above for further details.
Credit notes. A credit note is an additional VAT invoice issued by a supplier of goods, work and services in some circumstances, such as in the following cases:
• Adjustment of taxable turnover as described below
• Noncompliance with the conditions for transferring property to financial leasing for the pur pose of applying tax benefits
The adjustment of the amount of taxable turnover shall take place in the tax period in which such adjustment took place.
The amount of taxable turnover can be adjusted if the cost of goods, work or services changes in certain circumstances, including the following:
• The goods are returned in whole or in part
• The conditions of a transaction change
• The price or amount of compensation for goods, work or services sold is changed
• The price discounts, sales discounts
• The return of packaging included in sales turnover
• Other cases, as a result of which there is a change in the amount of turnover
Adjustments to the amount of taxable turnover can be made if both of the following conditions are satisfied:
• Accounting primary documentation is available
• A corrected VAT invoice is issued or a receipt of a cash register (which is available in specified cases)
Electronic invoicing. Electronic invoicing is mandatory for all taxable persons in Kazakhstan. Issuance of an electronic VAT invoice is only possible by using the official online system of the tax authorities, which is specifically designated for receiving and processing of electronic VAT invoices. Electronic VAT invoices have an established format and should be signed by means of electronic signature. Generally, electronic invoices should be issued within 15 calendar days from the date of a taxable turnover.
Simplified VAT invoices. Simplified VAT invoicing is not allowed in Kazakhstan. As such, full VAT invoices are required.
Self-billing. Self-billing is not allowed in Kazakhstan.
Proof of exports. To confirm the applicability of zero-rated VAT for turnover, the supplier must collect supporting documents that are stipulated in the tax law of Kazakhstan.
Foreign currency invoices. Values in VAT invoices should be indicated in the domestic currency, which is the Kazakhstani tenge (KZT). In certain cases, the invoice can additionally indicate the values in foreign currency.
Supplies to nontaxable persons. There are no special rules for VAT invoices issued to private con sumers, and as such, full VAT invoices must be issued for all supplies.
Records. Records that must be held for VAT purposes in Kazakhstan include VAT returns, VAT invoices supplies and received, contracts and acts of acceptances.
Record retention period. Records must be held currently for three years for general taxable per sons and five years for (i) taxable persons that are subject to tax monitoring; (ii) taxable persons who carry out activities in accordance with subsoil use contracts; (iii) Kazakhstani residents who have controlled foreign companies.
For records dated 2019 and prior years, the record retention period is five years for all taxable persons.
Electronic archiving. All VAT returns and VAT invoices must be kept and archived electronically within the online system for electronic VAT return filing and have their own status (i.e., draft, filed, received). Other original support documents should be stored in paper (e.g., contracts, invoices, acts of acceptance) during the statute of limitations period.
I. Returns and payments
Periodic returns. Taxable persons must file a VAT return with the tax authorities for each tax period by the 15th day of the second month following the reporting tax period (quarter).
A VAT return for the import of goods into Kazakhstan from Eurasian Economic Union (EAEU) member countries must be filed with the tax authorities by the 20th day of the month following the tax period (month). Nonresident providers of e-commerce sales of goods and electronically
supplied services to individuals (B2C supplies) are generally not required to file VAT returns. See the Digital economy subsection above for further details.
Periodic payments. The VAT due for the VAT return must be paid to the budget by the 25th day of the second month following the reporting tax period.
The VAT due for the import of goods into Kazakhstan from other EAEU member countries, must be paid to the budget by the 20th day of the month following the tax period (month).
VAT on imported goods must be paid within deadlines specified by the customs law of Kazakhstan for the payment of customs payments.
VAT is paid online by bank transfer to the bank account of the Ministry of Finance.
Nonresident providers of e-commerce sales of goods and electronically supplied services to individuals (B2C supplies) must pay the assessed VAT no later than the 25th day of the second month following the quarter in which goods and services were sold. See the Digital economy subsection above for further details.
Electronic filing. Electronic filing is allowed in Kazakhstan, but not mandatory. However, while not mandatory, electronically filing is widely used in Kazakhstan. There is a special online system designated for electronic filing of VAT returns (http://cabinet.salyk.kz site or SONO software).
All taxable persons can file tax returns and some tax applications via this online system provided they have obtained a special electronic key (electronic signature).
Payments on account. Payments on account are not required in Kazakhstan.
Special schemes. Import VAT. Taxable persons may pay a remaining amount of import VAT on certain goods by the offset method or take the amount of import VAT already paid.
Annual returns. Annual returns are not required in Kazakhstan.
Supplementary filings. Import and Export filing. The Tax Code includes certain procedures and monthly compliance requirements for exports and imports of goods to and from Kazakhstan from and to other countries in the EAEU (Armenia, Belarus, Kyrgyzstan and Russian Federation). An application (Form 328.00) and VAT return (Form 320.00) for import of goods into Kazakhstan from other EAEU Member States must be filed with the tax authorities within the established deadlines.
Correcting errors in previous returns. Taxable person can adjust the amount of taxable turnover and errors/omissions in previously filed returns by filing an additional tax return for prior peri ods within the statute of limitation period (see the Statute of limitations subsection below) stating the amounts of adjustments. Such corrections can be submitted online or on paper.
Digital tax administration. Virtual warehouse module. With effect from 1 January 2019, the full module of “virtual warehouse” is introduced and obligatory for the reporting of goods included into the list of exceptions (e.g., motor vehicles, certain household equipment, sugar). The “vir tual warehouse” was created for the purposes of systematization of inventory accounting, auto matic calculation of inventory ending balance and monitoring of the transfer of goods from entry into Kazakhstan to the final consumer.
With effect from 1 April 2020, inventory handling procedures should be maintained through the “virtual warehouse” for certain other categories of goods (e.g., alcohol, tobacco products, oil products). Before this date, reporting through the “virtual warehouse” was obligatory only for goods that were included into the list of exceptions (based on the reduced rates envisaged by the World Trade Organization (WTO).
The list of goods for which electronic invoices should be issued through the “virtual warehouse” will increase starting 1 April 2022 and 1 November 2022. At the time of preparing this chapter, this list is not yet available.
Accompanying notes. Electronic accompanying note (electronic waybill) should be issued upon the movement, supply and/or shipment of certain goods in/from Kazakhstan. The accompanying note should be submitted by taxable persons in the “Virtual Warehouse” module of the elec tronic invoicing informational system and signed with an electronic digital signature. Issuance of accompanying notes is obligatory for certain goods. The list of goods for which it is obligatory to issue accompanying notes is established by authorized body.
J. Penalties
Penalties for late registration. The penalty for late registration is 50 MCI (approx. USD353).
In addition, a fine of 15% is charged on the amount of turnover earned during the period of nonregistration (for which the taxable person was required to register from).
Penalties for late payment and filings. The penalty for failure to file a tax return: for a first time leads to a warning, while if committed repeatedly within a year leads to penalties (i) for small enterprises or noncommercial organizations in the amount of 30 MCI (approx. USD210), (ii) for medium enterprises in the amount of 45 MCI (approx. USD318) and (iii) 70 MCI (approx. USD495) for large enterprises.
The penalty for understatement of tax payments: (i) for small enterprises or noncommercial organizations in the amount of 20%, (ii) for medium enterprises in the amount of 50% and (iii) 80% for large enterprises of the underpaid tax.
The annual interest rate charged on late payments is equal to 1.25 times the official base rate estab lished by the National Bank of the Republic of Kazakhstan.
Penalties for errors. The penalty for the issue of fictitious invoice is up to 100% for small enter prises, 200% for medium enterprises and 300% for large enterprises of the VAT amount indicated in the invoice.
The penalty for nonpayment of tax for export and import of goods, work and services in the Eurasian Economic Union: up to 50 MCI (approx. USD353).
The penalty for non-issuance of electronic VAT invoice: for a first time leads to a warning, while if committed repeatedly within a year to a penalty up to 40 MCI to 150 MCI (approx. USD278 to USD1,060).
No specific penalty applies for the failure to notify or late notification to the tax authorities of changes to a taxable person’s VAT registration. However, it is likely that the taxable person will be sent a warning for the first offense and then a small fine may be charged for further offenses. For further details, see the subsection above Changes to VAT registration details.
Penalties for fraud. Additional assessments made by the state revenue authorities as a result of a tax audit may serve as grounds for initiation of criminal proceedings and imposition of criminal liability on the management of the taxable person.
Personal liability for company officers. Company officers can be held personally liable for errors and omissions in VAT declarations and reporting in Kazakhstan.
Criminal liability applies for certain tax offenses in Kazakhstan. If underpaid tax exceeds 50,000 MCI (approx. USD353,060), a criminal investigation may be initiated. Violations may result in prosecution of company officers who are thought to be responsible.
Statute of limitations. The statute of limitations in Kazakhstan is three years, and it is five years for certain categories of taxable persons.
The statute of limitation is currently three years for general taxable persons and five years for (i) taxable persons that are subject to tax monitoring, (ii) taxable persons who carry out activities in accordance with subsoil use contracts and (iii) Kazakhstani residents who have controlled foreign companies.
The statute of limitation for 2019 and prior years is five years for all taxable persons.