Amendments to legislation

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Tax and legal alert / Issue 1 / January 2015 Amendments in subsurface use legislation p. 1 / Amendments to administration of tax appeals р. 2 / New Code on Administrative Offences р.

3 Amendments to legislation This issue includes changes to the subsurface use law as well as administration of tax appeals.

1 Tax and legal alert / Issue 1 / January 2015 Amendments in subsurface use legislation p. 1 / Amendments to administration of tax appeals р. 2 / New Code on Administrative Offences р. 2 / Outsourcing of tax audits to audit firms during liquidations р. 2 / Tax audits p. 3 / National Chamber of Entrepreneurs р. 3 / List of countries with preferential taxation р. 3 / VAT refund p. 3 Amendments to legislation This issue includes changes to the subsurface use law as well as administration of tax appeals. Amendments to subsurface use legislation On 29 December 2014 the President signed the law on amendments to subsurface use legislation which aims at improvement of the legislation, in particular: simplification of the procedure for provision of subsurface use rights; introduction of auction as a method to select a winner of a tender; optimization of provisions of a model contract; decrease of required expertise (number of experts) on contracts; exclusion of feasibility study from the list of mandatory project documents; exemption from an obligation to negotiate changes in contracts when changes of production volumes are within 20% of project amounts for solid minerals subsurface users; regulation of subsurface use issues on expansion of the contract area;

2 establishment of deadlines on elimination of offences in cases of expansion of contract area; establishment of deadlines on elimination of offences of subsurface users. The law came into force on 11 January Amendments to administration of tax appeals Starting from 27 November 2014 there is a requirement for payment of a state duty for submission of appeals, cassation complaints and applications for revision of court acts on tax disputes. Previously the state duty on application on tax audit appeals at the level of 1% of assessed taxes, including penalties, was charged only once. Now the state duty is payable at multiple levels of the appeal in amount of 50% of the duty paid initially. 2 The changes should have become effective starting from 1 January This position is supported by the letter of the Vice-Minister of National Economy Mr. M. Kussainov. We, together with other organizations, are proposing changes to allow a refund of state duties paid by companies prior to 1 January In addition, starting 27 November 2014 individuals who represent a party in a court case should have a law degree. 2 Also, now the tax authorities are prohibited to seize property which is restricted for disposal (e.g. pledged as collateral). 3 New Code on Administrative Offences On 1 January 2015 the new Code on Administrative Offences came into force. 4 The provisions of the new Code have some differences from previously including: decrease of administrative fines assessed on small businesses; change in conditions under which a taxpayer is exempt from administrative liability; allocation of certain types of administrative offences and their investigation to the tax authorities, except for offences associated with excisable goods turnover; extension of taxpayers rights to appeal administrative acts and arrangements; elimination of administrative offence in case of violation of customs declaration rules, in particular when they: Tax audits are a result of incorrect classification of goods by state official; are a self-correction of offences revealed during desktop customs control within 10 business days; involve voluntarily disclosure and elimination of offences within one year after the release of goods and before the start of field customs inspection. 5 Outsourcing of tax audits during liquidations to audit firms Starting from 1 January 2015 audit firms are allowed to perform liquidation tax audits of certain legal entities and individual entrepreneurs that discontinue their operations, if the following conditions are met: aggregate annual income of the taxpayer being liquidated during the statute of limitation period is no more than 60,000 MCI (approximately USD 644,000); the taxpayer has a tax audit report prepared by an audit firm dated no more than 20 days before submission of the application on discontinuing of its operations to the tax authorities. 2 PwC

3 Tax liabilities and other obligatory payments identified as a result of the tax audit should be paid within 10 calendar days after receipt of the report. 5 The procedure for conducting such audits is not yet adopted. This is necessary for implementation. Tax audits On 1 January 2015 planned tax audits of companies were cancelled. 6 1 January 2015 was the deadline ending the moratorium for inspections of small and medium sized businesses. 6 Other issues List of countries with preferential taxation On 1 January 2015 a new list of countries with preferential taxation was adopted. Luxembourg was excluded from the list following signing of the Convention between Kazakhstan and Luxembourg for the avoidance of double taxation. 7 VAT refund The State Revenue Committee of the Ministry of Finance in cooperation with AmCham and PwC are working on changes in VAT refund procedure. National Chamber of Entrepreneurs (NCE) On 1 January 2015 NCE was renamed the National Chamber of Entrepreneurs of Kazakhstan Atameken. A scale relating to large and medium sized businesses was introduced to decrease membership fees. 8 3 PwC

4 References 1. The Law of the Republic of Kazakhstan 271-V dated 29 December 2014 On on subsurface use issues 2. The Law of the Republic of Kazakhstan 254-V dated 17 November 2014 On on further simplification of the administration of justice, lessening of bureaucratic procedures 3. The Law of the Republic of Kazakhstan 257-V dated 28 November 2014 On on tax issues 4. The Law of the Republic of Kazakhstan 272-V dated 29 December 2014 On amendments and changes to the Code of the Republic of Kazakhstan on administrative offences 5. The Law of the Republic of Kazakhstan 269-V dated 29 December 2014 On on drastic measures to improve business environment in the Republic of Kazakhstan 6. Presidential Decree 757 dated 27 February 2014 On drastic measures to improve business environment in the Republic of Kazakhstan 7. Decree of the Ministry of Finance of the Republic of Kazakhstan 595 dated 29 December 2014 On ratification of the list of countries with preferential taxation PwC

5 Let s talk For a deeper discussion of how this issue might affect your business, please contact: Tax and Legal Services Michael Ahern, Partner michael.ahern@kz.pwc.com Timur Zhursunov, Partner timur.zhursunov@kz.pwc.com Elena Kaeva, Partner elena.kaeva@kz.pwc.com Richard Bregonje, Partner richard.bregonje@kz.pwc.com Omon Tursunov, Director omon.x.tursunov@kz.pwc.com PwC Kazakhstan 34 Al-Farabi Ave. Building A, 4th floor Almaty, Kazakhstan, Tel : +7 (727) Fax : +7 (727) Alexey Zhukov, Director zhukov.alexey@kz.pwc.com 6 Sary-Arka Street Business Centre Arman, 16th floor Astana, Kazakhstan, T: +7 (7172) F: +7 (7172) PwC

6 2015 PwC. All rights reserved. Not for further distribution without the permission of PwC. "PwC" refers to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm's professional judgment or bind another member firm or PwCIL in any way. This and all other Tax and Legal Alerts have been prepared by PricewaterhouseCoopers Tax & Advisory LLP, a Kazakhstan limited liability partnership. Each Tax and Legal Alert is effective as of its given date and not any other date. Each Tax and Legal Alert has been prepared for general information on matters of interest only and does not constitute professional advice. You should not act upon the information contained in any Tax and Legal Alert without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in any Tax and Legal Alert and, to the maximum extent permitted by law, PwC (as defined above), PwCIL (as defined above), PricewaterhouseCoopers Tax & Advisory LLP and all of their respective members, partners, employees, representatives and agents (collectively, the PwC Parties ) do not accept or assume any liability, responsibility, obligation or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this or any other Tax and Legal Alert or for any decision based thereon. The PwC Parties do not accept or assume any liability, responsibility, obligation or duty of care to update this or any other Tax and Legal Alert or provide any information on changes or events occurring after the date of this or any other Tax and Legal Alert.

Overview of key amendments to tax legislation in 2017

Tax and Legal Alert PwC Kazakhstan Overview of key amendments to tax legislation in 2017 April 2017 In brief Further to our seminars and webinars, in this issue of our alert we summarize significant amendments