On 12 December 2023 the Law on amendments to the Tax Code of the Republic of Kazakhstan was adopted.

Below is a brief overview of several important changes that could affect certain aspects of doing business, as well as how to interact with the tax authorities.

Clarification of the 3% limitation on deductions for costs acquired from a non-resident related party

From January 1, 2023, provisions were introduced into the Tax Code limiting the deduction of expenses incurred when purchasing services from a non-resident related party. (3% limitation).

These provisions have been modified by the current amendments.

Now, the 3% limitation applies only to expenses incurred for the purchase of services from a non-resident—a related party registered in a country with favorable taxation (previously – in any state).

The amendment is effective retroactively, from 1 January 2023.

Important changes in cameral control procedure

Recognition of a notification on a high-risk violation as non-fulfilled

The amendments changed Article 96.4 of the Tax Code: Tax authorities now have the right to recognize a notification of high-risk violations as unfulfilled when they disagree with the circumstances stated in the taxpayer’s explanation.

The amendment enteres into force from 12 February 2024.

Procedure for issuing a decision on recognizing a notification as unfulfilled

The amendments changed the procedure for issuing a decision recognizing a notification as unfulfilled: Now, no decision is issued if the notification is not fulfilled in accordance with the procedure and deadlines set out in Article 96, paragraph 2, of the Tax Code.

Documents attached to the explanation

Prior to the amendments, when a taxpayer submitted an explanation to a notification on cameral control with a medium degree of risk, it had to attach to its explanation extracts from tax and (or) accounting registers (records) and (or) documents related to the specified violations, confirming the accuracy of data entered in the tax returns.

Under the amended version of paragraph 2-1 of Article 96 of the Tax Code, attaching the above-mentioned documents to an explanation is a taxpayer's right and not an obligation.

Suspension of debit transactions on bank accounts

Under the amendments to subparagraph 7) of paragraph 1 of Article 118 of the Tax Code, debit operations on bank accounts of a taxpayer will be suspended only in the case of failure to fulfill the notification on cameral control.

However, the recognition by the tax authority of a notification on the elimination of violations as unfulfilled does not serve as a ground for the suspension of debit transactions on bank accounts.

Important changes in the Thematic Audit

The amendments introduce changes to paragraph 1 of Article 142 of the Tax Code. Now a thematic audit may be assigned in the following cases:

1. on issues relating to determining tax liability on a net settlement with a taxpayer subject to e invoice issuance restrictions
2. if there is a confirmation of the presence of violations specified in the tax authority’s notification on elimination of violations identified as a result of cameral control, in accordance with the procedure specified in Article 96 of the Tax Code.¹

Exemption from CIT for income in the form of dividends on securities

The amendments provide for an exemption from CIT of a resident legal entity's income, in the form of dividends received on securities, if the securities are, on the dividends' accrual date, on the official list of stock exchanges operating in the Republic of Kazakhstan, regardless whether the securities were traded on the exchange.

Exemption from taxation of income in the form of interest on state equity securities is removed

The amendments changed subparagraph 3 of paragraph 2 of Article 288 and subparagraph 6 of paragraph 9 of Article 645 of the Tax Code, which excluded the exemption from taxation of income in the form of remuneration on state securities.

From 1 January 2030 such income is subject to income tax.

A possibility is introduced to defer payment of a state duty through the courts

Effective from 1 January 2024, there will be a new procedure to postpone, for up to 1 year, payment of a state duty in courts.

At the same time, such postponement is granted if there are certain grounds, as stipulated in Article 51-2 of the Tax Code (e.g., failure to pay the legal entity money for goods delivered, work performed, services rendered by it).

The deferral is not possible for large business entities.

New entity for payment of fees for the use of land plots

The amendments add a new article to the Tax Code, 564-1; it provides a procedure for calculating and paying fees for subsoil plots on the basis of a license for the exploration or extraction of solid minerals.

1. In the old version, a thematic audit could be assigned in the event of a taxpayer's (tax agent's) failure to comply with a cameral control notification.↩