The concept of VAT, the place of VAT taxation system in the Republic of Kazakhstan

In the national taxation system, a significant place is occupied by the value added tax – VAT. As the main source of the revenue side of the budget, it is a form of exemption in the budget a certain part of the value added at all stages of production and circulation of goods, works and services, as well as deductions for imported goods. Value added tax payable to the budget, calculated as the difference between the amounts of value added tax accrued for goods, works and services, and the amount of tax payable for the acquisition of goods, works or services. Value added tax was first introduced in France in 1954. At the time of the introduction of VAT in Kazakhstan this tax has been successfully used in 43 countries, and its application is a prerequisite for entry into the States the European Economic Community. The value added tax was one of the new elements introduced in the tax system of the Republic of Kazakhstan in December 1991. It bore the imprint of all the processes that take place while in the post-Soviet society. It was at this time, Kazakhstan has gained the official status of a sovereign state. Financial and credit system which has passed the legacy of the "union" of the past bore the imprint of the old administrative system and does not meet the requirements of the young state, which has become the market on the path of economic development. Therefore, one of the first legislative acts adopted by the Supreme Council of the Republic were the laws "On the tax system in the Republic of Kazakhstan" and "On the budget system of the Republic of Kazakhstan", which was valid not easy reformed financial system, and created a new, taking into account the progressive trends in the global tax practice. The key to the improvement of the system has been the introduction of value added tax, instead of the earlier sales tax.

               The collection of value added tax had significant advantages: taxation base has expanded significantly due to its use in all stages of production. A weighty argument in favor of this tax has become a global experience of the tax system. The practice of developed foreign countries has shown that the indirect taxes gradually evolve to a single, evenly distribute the value added tax, does not burden any group of products and reforming financial proportions in the national economy. Based on the classification of taxes according to the degree evaluation object of taxation, value added tax applies to real taxes. Paying it is determined only by the nature of transaction and does not take into account the financial condition of the subject of taxation. Value-added tax in the tax system applies to indirect taxes, i.e. charged with consumer goods, works and services by including in the price. Value added tax reflects the economic realization of the state property. With it, the state withdraws part of the net income from the production and trade intermediaries for the opportunity to produce their net income. As with all indirect taxes, value added tax performs predominantly fiscal role, when administered also pursued the goal of the state budget a reliable and effective source of income. It is one of the most effective means of preventing the inflationary devaluation of the budget, since it directly connects the tax revenues with rising prices. The value added tax is governed by the scope of consumption, and the main purpose of its use in highly developed industrialized countries is the desire to reduce the effective demand in order to avoid the so-called "warm up the economy."

             The change of VAT rate for the period from 1995 to current time can be seen in the following table:

Who is a VAT payer?

According to article 228 of the Code of the Republic of Kazakhstan "On taxes and other obligatory payments to the budget" (Tax Code) of 10 December 2008 № 99-IV as amended as of 01.01.2012, payers of value added tax are:

1.      persons, which made statement on the registration account for the value added tax in the Republic of Kazakhstan:

a.       individual entrepreneurs;

b.      resident legal entities, except for government agencies;

c.       non-residents operating in the Republic of Kazakhstan through a branch office;

d.      trustees, performing turnovers on realization of goods, works, services under contracts of trust management with founders of trust management or with beneficiaries in other cases of emergence of trust management;

2.      persons, importing goods into the territory of the Republic of Kazakhstan in accordance with the customs legislation of the Customs Union and (or) the customs legislation of the Republic of Kazakhstan.

Statement on the registration account for the value added tax is made in accordance with Articles 568, 569 of the Tax Code.

What is subject to VAT?

Subject to VAT, pursuant to Article 229 of the Tax Code, are taxable turnover and taxable import.

Who must necessarily stand on account of registration as a VAT payer?

In accordance with the provisions of Article 568 of the Tax Code, mandatory registration shall apply to resident legal entities and non-residents operating in the Republic of Kazakhstan through a branch office, individual entrepreneurs,

·         if turnover exceeds in a calendar year a minimum turnover of 30 000 times the monthly calculation index established by the law on the national budget and applicable as of January 1 of the corresponding fiscal year.

·         if turnover exceeds in a calendar year a minimum turnover, the above-mentioned persons are obliged in person to submit to the tax authority at the location, the tax statement on the register at the value-added tax no later than ten working days after the end of the month in which there was exceeding the minimum turnover.

In case of not posing to the VAT registration, there shall be applied some fines.

Responsibility for not posing to the VAT registration

Paragraphs 8 and 9 of Article 568 of the Tax Code provides for liability for not posing to the VAT registration. If the person did not submit tax application for the registration, the tax authority no later than 5 business days from the date of detection of such a taxpayer sends him a notice on elimination of violations of the tax legislation of the Republic of Kazakhstan. If after notification of the tax authority, the taxpayer within 30 days has not made the statement on the VAT, the tax authority shall issue an order to suspend spending operations on a taxpayer's bank accounts.

            Also, according to paragraph 3 of Article 269 of the Code of the Republic of Kazakhstan on Administrative Offences violation of the taxpayer deadline for submission of tax declarations to the authority of government revenue on statement on the VAT registration subject to a fine:

·         on small businesses - 10% of the amount of taxable turnover for the period of not posing to registration;

·         on medium-sized businesses - 15% of the amount of taxable turnover for the period of not posing to registration;

·         on large businesses - 30% of the amount of taxable turnover for the period of not posing to registration.

Required documents

Paragraph 7 of Article 568 of the Tax Code contains a list of documents to be submitted for registration in the VAT. It includes:

1)      Application for registration in the VAT.

2)      A notarized copy of the document confirming the place of the taxpayer. (A document confirming the ownership of immovable property or the written consent of the individual, the right of ownership of which the property is situated); the period between the dates of notarization copy of the document confirming the location of the taxpayer, and its submission to the tax authority may not exceed 10 working days.

3)      Copies of documents confirming the prevailing excess of the minimum taxable turnover of the taxpayer. (Acts of the executed works, rendered services and other documents testifying to the fact of the turnover).

What are VAT rate in current time?

According to the provisions of Article 268 of the Tax Code, there are two VAT rates:

1)      the total rate of 12% applied to the size of the taxable turnover and taxable imports;

2)      the so-called zero rate applicable to the turnover with the sale of goods for export.

At the same time, according to article 242 of the Tax Code, the export of goods is the export of goods from the customs territory of the Customs Union, carried out in accordance with the customs legislation of the Customs Union and (or) the customs legislation of the Republic of Kazakhstan.

What is the tax period for VAT?

According to article 269 of the Tax Code, the tax period for VAT is a calendar quarter.

What is the VAT tax reporting?

VAT tax reporting provided by a VAT payer in the form of a declaration to the tax authority at the location for each tax period not later than the 15th day of the second month following the reporting tax period,

Obligation to submit a VAT report does not apply to persons importing goods into the territory of the Republic of Kazakhstan in accordance with the customs legislation of the Customs Union and (or) the customs legislation of the Republic of Kazakhstan, which not made a statement on the registration account for the value added tax.

In what terms is made payment of VAT to the budget?

In general, in accordance with paragraph 1 of Article 271 of the Tax Code, VAT taxpayer is obliged to pay the tax to the budget at the location for each tax period no later than the 25th day of the second month following the reporting tax period.

The article is written by Sabdenaliyev Dias

 ZAN Company                                                   .

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