New package of amendments to the Tax Code

On 21 December 2022, the President signed the Law on introduction of amendments to the Tax Code (the “Law”).

The following major amendments were introduced:

Automatic application of tax conventions in respect of non-residents’ income in the form of dividends, interest, royalties (effective from 1 January2023)

An additional condition was introduced for the automatic application of double tax treaties in respectof non-residents’ income in the form of dividends, interest and royalties. In case such incomeis paid to a related party, a tax resident ofthe country with which the double taxtreaty has been amended byMLI provisions, a tax agent has the right to applythe treaty protection ifthe following conditions are met:

1. income is subject to inclusion in taxable income ofa non-resident and is taxable in the country of its residence without the right to exclude / decrease / adjust such income from taxable income in a reporting period, and (or) refund in a reporting and (or) subsequent periods oftax paid from such taxable income; and 
2. the nominal taxrate, which is applied when taxing such income in the country of residence of the non-residentin the reporting period is at least15%.

Taxation of advance payments receivedby non-residents (effective from 1 January2023)

Advance payment liabilities towards entities registered in foreign countries were included in the list ofincome ofnon-residents from sources in Kazakhstan if the following conditions are simultaneouslymet: 

• no double taxation treaty has been concluded with the non-resident’s state; 
• term of an agreement(a contract) is more than two years.

Taxation of goods temporarilyimported to Kazakhstan (effective from 1 January2023)

If goods temporarilyimported in Kazakhstan are located within the country for more than two years from the date of their import, then import of such goods will be recognized as taxable import and will be subjectto VAT on imported goods from the date ofregistration of such goods. 

Amendments in relation to the mechanism of payment of mineral extractiontax (effective from January1, 2023)

The mechanism ofpaymentof mineral extraction tax will be revised, reserves will be recorded exclusivelyaccording to the Kazakhstan Code for the Public Reporting ofExploration Results, Mineral Resources and Mineral Reserves (KAZRC Code) adopted on the basis ofCRIRSCO standards.

A subsoil user will be obliged to disclose information on the physical volume of mineral raw materials or solid minerals extracted by the subsoil user for the past(reporting) yearto the authorized bodyfor the geological study of the subsurface.

For the purposes of determining the object of taxation, the extracted mineral raw materials are determined within the framework ofthe state balance effective as of the day preceding the dayof transition to inventory accounting under the KAZRC Code.

Violations identified by the results of cameral control(effective from January 1, 2023)

• For violations with a medium level ofrisk, an explanation is provided with the attachment ofextracts from registers and (or) documents confirming the reliabilityof tax reporting data; 
• For violations with a high level of risk, an explanation is provided with copies ofdocuments confirming the fact of financial and economic activities related to the violation; 
• Failure to fulfill a high level risk notification within the prescribed period also entails a restriction on the discharge ofthe electronic invoice.

Please note that this package ofamendments to the Tax Code comes into force together with the previous amendments datedJuly21, 2022, described in our taxand legal alert #155.

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