10.07.2024
Important changes in tax law of Republic Kazakhstan
05.04.2024
Liechtenstein is excluded from the List of Offshore Zones
The List of offshore zones established for the purposes of banking and insurance activities, activities of professional participants in the securities market and other licensed activities on the securities market, joint-stock investment funds and organisations engaged in microfinance activities has been updated. The list consists of 51 states and certain territories.
Liechtenstein is excluded from the List
Offshore zones are states and territories which provide a favourable tax regime and (or) do not provide for the disclosure and provision of information when carrying out financial transactions.
The new List was approved by the Resolution of the Board of the Agency of the Republic of Kazakhstan on Regulation and Development of Financial Market No. 18 dd. 29.03.2024 and came into force on 15.04.2024.
Source: IS Paragraph
21.05.2024
Changes in transfer pricing
It was earlier announced that on 25.03.2024 the President of Kazakhstan signed the Law of the RK “On introducing amendments and additions to some legislative acts of the Republic of Kazakhstan on transfer pricing”, which came into force on 27.05.2024.
One important amendment requires all members of an international group of companies to submit a request for participation in an international group of companies, irrespective of whether there is an obligation to submit cross-country, core, local, and revenue reporting obligations. The following are other important changes that should be noted.
Hierarchy of transfer pricing (TP) methods has been eliminated
At the same time, the comparable uncontrolled price method is prioritised when selecting the TP method. If the comparable uncontrolled price method cannot be applied, one of the four methods shall be used, the most appropriate one, given the nature of the transaction.
The procedure for determining the range of prices and the range of profitability using the value of market prices and financial data for the three preceding calendar years for the purposes of determining the market price is established. Previously, the range was determined on the basis of marginal minimum and maximum values.
A new procedure has also been introduced for determining the gross and operating profitability of costs, sales and assets by relating the value of gross profit from sales of goods (work, services) to the value of the cost of goods (work, services) sold or to the revenue from such sales.
New interrelated party criteria for persons and/or related parties have been introduced
The conditions for determining the interconnectedness of the parties have been expanded to strengthen control over the withdrawal of capital when:
- paying more than 50% of the original value of the products for the use of an intangible asset and/or intellectual property right;
- supplying more than 50% of the total value of raw materials, materials or initial products used for the production of finished goods;
- generating more than 50% of another person's revenue for the reporting calendar year in international business transactions;
- exceeding the debt of more than 50% of the equity capital or at least 10% of the total debt, the repayment of which is guaranteed by the other person on the date of conclusion of the transaction or revision of the main terms of the transaction;
- granting the right to act as an agent, distributor or dealer of the company in the purchase or sale of goods (works, services) in accordance with a written agreement.
Control framework for TP has been expanded
Monitoring of international business transactions applies not only to goods, works and services, but potentially to all international business transactions, including those involving shares and/or interests.
The criterion for determining domestic transactions to be controlled in relation to TP is supplemented by the provision “the parties to the transaction have different corporate tax rates”. Accordingly, certain transactions between Kazakhstan taxpayers related to international business transactions may be controlled in the following cases:
- the parties have different CIT rates
- the parties have tax losses or incentives
- the parties are engaged in the sale of minerals
The range of companies providing three-tier reporting has been expanded
The obligation to submit local statements may arise for taxpayers who have not previously submitted them due to the fact that they were not members of an international group.
Under the amendments, statements will now be provided by a party to a transaction on controlled transactions with certain interrelated parties. However, it should be remembered that statements include only material transactions with turnovers exceeding 250,000 monthly calculation indices (МCI).
Changes on cost adjustment under TP
Value adjustments following a tax audit will be made by the tax authorities using the median value under certain conditions. That is, if the results of a tax audit indicate that transaction prices deviate from market values in transactions with related parties, the adjustment for TP will be determined on the basis of the median value of market data.
However, independent adjustment by the taxpayer will be made using a price range and/or profitability (margin) range.
Source: zakon.kz
02.07.2024
Exemption from the obligation to submit an income tax return: amendments to the Tax Code
According to the amendments made to the version of the Tax Code, effective from 01.01.2023 to 01.01.2024, a number of persons are exempted from submitting the Declaration of Assets and Liabilities.
The following non-residents are exempt from submitting the Declaration of Assets and Liabilities) who were:
- employees of state institutions and their spouses, as well as employees of quasi-public sector entities and their spouses;
- heads, founders (participants) of legal entities and their spouses, individual entrepreneurs and their spouses.
The amendments entered into force on 13.07.2024.
Source: zakon.kz