General provisions

Changes in the statute of limitation for large enterprises

Starting January 1, 2022, the statute of limitation for “large-sized enterprises” (as classified under the Entrepreneurial Code of the Republic of Kazakhstan) is five years. (Previously, the general statute of limitation was three years, while a five-year statute of limitation applied to taxpayers subject to monitoring.)

As a reminder, the five-year statute of limitation also applies to subsurface users and residents of Kazakhstan qualifying for Controlled Foreign Companies regulations.

In addition, a separate provision was introduced for determining the statute of limitation for taxpayers who entered into an investment commitment agreement under the Entrepreneurial Code of the Republic of Kazakhstan.

Tracing of goods

Starting January 1, 2022, a goods traceability mechanism is in effect in Kazakhstan, following the ratification of the Agreement on the Traceability Mechanism for Goods Imported into the Customs Territory of the Eurasian Economic Union dated May 29, 2019.

In this respect, Taxpayers are now obliged to prepare accompanying documents electronically, as well as to provide complete and truthful information in relation to goods subject to traceability.

Liability is envisaged for failing to fulfil or improperly fulfilling the traceability obligations.

Digital Mining Fee

Starting January 1, 2022, “digital miners” should pay digital mining fee. The fee is charged quarterly in the amount of one Kazakhstani tenge per one kilowatt-hour of electrical energy consumed during digital mining.

Taxpayer’s Passports introduced

Starting March 1, 2022, a so-called “taxpayer’s passport” will be introduced for businesses. 

Under the introduced changes, this passport, to be produced by the state revenue authority, will take the form of a card containing the business entity’s information that is not a tax secret, and will be presented as matrix barcode (QR code).

Taxpayers engaged in public catering and trading activities are to post their passports at the location of their cash registers.

Taxpayer’s passports will include, inter alia, information about the presence / absence of a license for the storage and retail sale of alcoholic beverages. 

Changes in taxation of non-residents

«Google tax» 

From January 1, 2022 regulations on registration and payment of VAT by foreign companies providing e-services and performing e-trading of goods in favor of Kazakhstan individuals came into effect.

As a result, starting March 1, 2022 second-tier banks, organizations engaged in certain types of banking operations, as well as payment organizations are to provide information to the authorized body about payments / transfers made during the calendar year by individuals to foreign companies that are providers of e-services (in order to monitor the completeness and timeliness of VAT payments by such companies). 

VAT

Obligatory VAT registration threshold

Beginning January 1, 2022, the amount of turnover triggering the obligation to register as a VAT-payer was reduced from 30,000 times the MCI to 20,000.

Changes in the rules for issuing e-invoices

Issuance of an e-invoice is no longer required for the sale of goods listed in the list of exemptions, for imported goods or goods of non-VAT payers from the Virtual warehouse module if they are sold to the following persons:

1. Individuals (natural persons) who use the purchased goods for personal, family, household or other non-business purposes (final consumption),
2. Natural or legal persons that are microentrepreneurs in accordance with the Entrepreneurial Code of the Republic of Kazakhstan.

Simplified VAT refund procedure in case of converting foreign currency revenue 

Business entities included on the list approved by the government of the Republic of Kazakhstan are entitled to apply a simplified procedure for the refund of excess VAT, provided that they have converted at least 50 percent of their foreign currency proceeds received from exports during the tax period. No more than 80 percent of the excess VAT accrued during the accounting period is refundable under the simplified procedure.

Payment of VAT by offset method

From January 1, 2022, pesticides, breeding animals of all kinds and equipment for artificial insemination, as well as cattle were excluded from the list of imported goods for which VAT can be paid by the offset method, under amendments made to Article 427 of the Tax Code.

At the same time, the effect of Art. 427 (i.e., possibility to pay VAT by offset method) has been extended until January 1, 2025.

Taxation of individuals

Disclosure of business income of individuals

The Tax Code now contains a liability of second-tier banks and organizations engaged in certain types of banking operations to provide information to the tax authorities on individuals who are not registered as an individual entrepreneur or a private practice individual, on detected transactions that have signs of earning income from entrepreneurial activities according to certain criteria.

Tax return on income and property

Starting in 2022 the Tax Code obliges certain individuals listed in its Art. 630.1 (i.e., governmental authorities) to submit a tax return on income and property.

As a reminder, in 2021 the obligation to submit a tax return on assets and liabilities was introduced for such individuals.

Taxation of investment projects

Investment priority projects

The tax benefit for investment priority projects now applies only to income derived from priority activities through the operation of fixed assets that were introduced as a new production, that were expanded or were upgraded as part of an investment priority project. In practice, this means a narrowing of incomes subject to tax preferences.

Investment agreements

Similarly to investment priority projects, the tax benefit under investment agreements applies only to income derived from activities defined by the investment agreement that were obtained through the operation of fixed assets that have been introduced as a new production, that were expanded or were renewed as part of the investment agreement. Therefore, there was a narrowing of incomes subject to tax preferences.

Agreement on investment commitments

From January 1, 2022, a new type of investment project was introduced to the Tax and Entrepreneurial Codes— an Agreement on Investment Commitments.

As a result the Tax Code now provides for stability of the tax legislation (except for VAT, excise duty, environmental emission fee, PIT, WHT) for taxpayers who have concluded an Investment Obligation Agreement.

Other matters

Risk Management System

Non-confidential risk criteria have been excluded from the Tax Code. These criteria are set out in Order No. 252 of the Minister of Finance dated February 20, 2018 “On Approval of the Rules for the Application of the Risk Management System in relation to Criteria that are not Confidential Information.”

Exclusion of VAT control accounts 

Article 433 “Specifics of excess VAT refund for VAT payers applying VAT control accounts” was removed from the Tax Code, based on the results of analytical studies and the voluntary pilot application of the model of separate payments on the basis of VAT control accounts and application of blockchain technology, which showed itself to be ineffective.