Scope and Rates
VAT applies to taxable sales of goods and services within Kazakhstan and to imports of goods into Kazakhstan. Contributions to the authorized capital are not regarded as a taxable turnover for VAT purposes.
Taxable supplies of goods include:
- transfers of title to goods, including the sale, exchange and payment of salary (wage) in kind;
- free-of-charge transfers of goods;
- transfers of goods under a finance lease contract.
Taxable supplies of services are any supplies of services, both chargeable and non-chargeable, as well as the following:
- transfers of copyright or intellectual property.
- services performed by an employer for the benefit of an employee as a form of wages; and
- loan extension.
The standard rate of VAT is 12 percent.
Turnovers taxable at the zero rate include:
- export sales of goods;
- international transportation services;
- sales of goods in the territory of special economic zones under certain conditions.
There is a list of certain types of activities that under certain conditions are exempt from VAT, for example:
- certain services related to international transportation;
- turnovers associated with residential buildings;
- certain financial services;
- transfers of assets under finance leases, if the import of the assets is exempted from VAT
- services provided by non-profit organizations
- turnovers from sales of goods, work, services associated with medical and veterinary activities, the list of which is approved by the Government.
- import of certain assets, the list of which is approved by the Government, etc.
- An excise duty is imposed mainly when the sale of excisable goods takes place.
Registration as a VAT payer is required for individual entrepreneurs, Kazakh legal entities and foreign companies that conduct business activities through their representative or branch office in Kazakhstan, which have cumulative taxable revenues in excess of 30,000 MCI (“Monthly calculation index - currently, approximately USD 343,000) during a calendar year. Even if an entity is not required to register for VAT purposes, it may usually do so voluntarily by submitting an application to the appropriate tax committee.
A company carrying out commercial activities in Kazakhstan in absence of tax registration may be penalized in the amount of 30 percent of turnover occurred in the period after the date when the company’s obligation to register for VAT purposes has arisen.
Foreign companies that do not have a registered representative or branch office in Kazakhstan are not eligible for VAT registration in Kazakhstan.
There is no concept of fiscal representatives in Kazakhstan.
There is no VAT grouping concept in Kazakhstan.
VAT returns should be submitted quarterly. Submission of the VAT Declaration is due by the 15th day of the second month following the reporting quarter.
Taxpayers may submit their VAT returns electronically via the special software.
No, there are none.
The Kazakhstan National Bank’s exchange rate is applicable effective on the date of the invoice.
No, it is not possible in Kazakhstan.
Not applicable, no VAT is refunded to companies who are not a registered VAT payer in Kazakhstan.
VAT paid to the suppliers on the purchase of goods or services is not creditable if the goods or services are used for VAT exempt sales. VAT on representation expenses and on business trips can be credited within the established limits.
International Supplies of Goods and Services
Export sales are subject to 0 percent VAT.
Generally, a company should submit the following documents in order to justify the right to apply a zero-percent VAT rate:
- a foreign-trade contract
- a copy of the customs declaration with the written statement (stamps) of both the customs authorities where the goods were placed under export and the customs authorities at the Customs Union border
- copies of transport, shipping and/or other documents with the written statement (stamps) of the customs authorities at the border (located at the place from where the goods actually leave the customs territory) confirming export of goods.
In cases where the documents have not been located, output VAT should be charged and paid to the Tax Authorities at the 12 percent rate.
Services are subject to exemption from VAT if the services are deemed provided outside of Kazakhstan. The place of provision of services is determined in accordance with Kazakh tax law.
The VAT base for imported goods includes the declared customs value of the goods and any excise duties, customs duties, and customs clearance fees payable upon customs clearance of the goods. Importers must pay import VAT before goods are cleared through customs. VAT exemptions at the time of import are available for certain types of equipment, pharmaceuticals, raw materials and spare parts.
Services are subject to VAT if they are deemed provided in Kazakhstan. There are special rules for determining the place of supply of cross-border services for VAT purposes depending on the nature of these services.
Under the general rule the services are deemed to be supplied in Kazakhstan if the supplier of services is a Kazakh legal entity or a foreign legal entity which has the place of management in Kazakhstan or which conducts business activity in Kazakhstan through a permanent establishment (if the services are provided through this permanent establishment).
There is a list of services which are deemed to be supplied at the location of the business activity of the purchaser of services. These services include: consulting, accounting, audit, legal, advocacy, engineering, information processing services, etc. Where such services are rendered by a non-resident not registered for VAT purposes in Kazakhstan, a Kazakh buyer of these services is required to self-assess and pay VAT to the budget via a reverse-charge mechanism.
No other tax invoices except for VAT invoices should be issued by Kazakh taxpayers.
A VAT invoice (a schet-faktura) in an established format must be issued upon sale of goods / provision of services / performance of works / transfer of property rights.
A VAT invoice should contain, in particular, the following data:
- a serial number and date of the invoice
- the name, address and identification numbers of the seller and buyer
- the name of the delivered (shipped) goods (description of the executed works, rendered services) and unit of measurements (if it’s possible to indicate)
- the value of goods (works, services), property rights for the entire quantity of delivered goods (shipped) on the invoice (executed works, rendered services), transferred property rights net of tax
- the VAT rate
- the VAT amount
- the value of the entire quantity of delivered (shipped) goods (executed works, rendered services), transferred property rights under the invoice including VAT.
Incorrect VAT invoices (i.e. invoices with missing details or including errors) may result in the Tax Authorities challenging a purchasers right to recover the VAT charged on the invoice.
Currently, the Ministry of Finance of the Republic of Kazakhstan is working on the implementation of electronic invoicing. The commencement of electronic invoicing is scheduled on 1 July 2014.
Self-billing where a customer prepares the invoice for the supplier is not possible in Kazakhstan.
In case of foreign trade activities it is allowed to specify the sales consideration/amount and the VAT in a foreign currency in addition to the amounts in Kazakh tenge.
Transfers of Business
No, there is none.
Options to Tax
No special tax regime that replaces VAT and other tax payments is available in Kazakhstan.
Head Office and Branch transactions
The head office and the branch constitute one legal entity, therefore, the transactions between them do not constitute sales and, consequently, are not subject to VAT.
A VAT payer is allowed to adjust its output VAT for VAT related to its bad debt receivable from Kazakh entities and representative or branch offices of foreign companies in Kazakhstan if such receivables are unpaid within 3 years from the date of its origin.
Transactions between related parties that are registered as VAT payers in Kazakhstan can be subject to transfer price adjustments if such transactions directly relate to the subsequent export of goods.
Underpayment of taxes triggers the following major types of sanctions:
- penalties for tax underpayment / non-payment imposed over the assessment of underpaid tax (penalties and late payment interest)
- penalties for other types of incompliance with tax law (e.g., non-registration, presenting false information to the tax authorities, non-filing tax returns etc.)
- tax penalties may be imposed on companies and individual entrepreneurs
- administrative penalties (the amount depends on the violation) – may be applied to company’s management
- criminal proceedings (penalties, imprisonment and others) – may be initiated against the company’s management for violation of tax law.
How often do tax audits take place?
There are the following types of tax audits in Kazakhstan:
- Comprehensive (not more than once a year)
A thorough inspection of compliance with all (or most) taxes and other obligatory payments to the state budget / tax authorities
- Thematic (not more than twice a year with respect to the same tax)
A review of the compliance restricted to particular taxes or obligatory payments to the Budget/ tax authorities
A review of a company’s affairs to assist in the audit of the transactions with a third party as part of the audit of that third party
Are there audits done electronically in your country (e-audit)? If so, what system is in use?
The Kazakh tax authorities may conduct a desk audit electronically by comparing the data that a taxpayer reported on its various tax reports (e.g. revenue reported for income tax purposes with sales reported for VAT purposes). The tax authorities may also compare the data that a taxpayer reported on its VAT declarations with the corresponding data that the taxpayer’s suppliers and/or buyers reported on their VAT declarations.
Is it possible to apply for formal or informal advance rulings from the (indirect) tax authority?
Yes, however the clarifications of the Kazakh tax authorities are not legal binding.
Are rulings and decisions issued by the tax authorities publicly available in your country?
The Kazakh tax authorities’ clarifications on application of the tax legislation are generally publicly available in Kazakhstan.
The main differences with EU VAT may be described as follows:
- no VAT grouping
- no separate VAT registration i.e. a company needs to be a Kazakh taxpayer in order to be in a position to apply for a VAT registration.
- recovery of input VAT is possible only for the Kazakh taxpayers etc.
No, except for the VAT exemption and zero rates mentioned earlier.