ORDER OF THE GOVERNMENT OF THE REPUBLIC OF KAZAKHSTAN

of May 21, 2018 No. 282

About approval of criteria of reference of the field (group of fields on one contract for subsurface use, part of the field) firm types of minerals to category low-profitable, and also Rules of determination of level of profitability and level of internal profitability rate

According to item 4 of article 720 of the Code of the Republic of Kazakhstan "About taxes and other obligatory payments in the budget the Government of the Republic of Kazakhstan DECIDES:" (Tax code)"

1. Approve enclosed:

1) criteria of reference of the field (group of fields on one contract for subsurface use, part of the field) firm types of minerals to category of low-profitable;

2) Rules of determination of level of profitability and level of internal profitability rate.

2. Recognize invalid some decisions of the Government of the Republic of Kazakhstan according to appendix to this resolution.

3. This resolution becomes effective since January 1, 2018 and is subject to official publication.

Approved by the Order of the Government of the Republic of Kazakhstan of May 21, 2018 No. 282

Criteria of reference of the field (group of fields on one contract for subsurface use, part of the field) firm types of minerals to category of low-profitable

Note: calculation of level of profitability for the field is made by the subsoil user independently according to the Rules of determination of level of profitability and level of internal profitability rate approved according to item 4 of article 720 of the Code of the Republic of Kazakhstan "About taxes and other obligatory payments in the budget".  

Approved by the Order of the Government of the Republic of Kazakhstan of May 21, 2018 No. 282

Rules of determination of level of profitability and level of internal profitability rate

Chapter 1. General provisions

1. These rules of determination of level of profitability and level of internal profitability rate (further – Rules) are developed for the purpose of realization of item 4 of article 720 of the Code of the Republic of Kazakhstan "About taxes and other obligatory payments in the budget" (further – the Tax code).

2. Rules determine procedure for determination of level of profitability and level of internal profitability rate by the field (groups of fields on one contract for subsurface use, parts of the field) firm types of minerals (further – the field) and do not extend to fields on popular minerals.

3. In these rules the following concepts are used:

1) the interconnected parties – persons recognized as those according to the subitem 23) of article 264 of the Tax Code;

2) mineral raw materials – mineral raw materials and (or) solid minerals in the concepts used for the purpose of the taxation.

Other concepts and terms used in these rules are applied according to the tax code of the Republic of Kazakhstan.

Chapter 2. Reference of the field (group of fields on one contract for subsurface use, part of the field) firm types of minerals to category of low-profitable

4. For reference of the field to category low-profitable the subsoil user performing activities for the contract for subsurface use providing mining, including to the prisoner till January 1, 2009 corresponding to criteria of reference of the field (group of fields on one contract for subsurface use, part of the field) firm types of minerals to category low-profitable, approved according to item 4 of article 720 of the Tax Code (further – criteria of low-profitability), notifies the authorized body performing management in the sphere of ensuring receipts of taxes and payments in the budget.

At the same time the copy of the notification goes the subsoil user to tax authority in the place of registration accounting of the taxpayer.

5. The notification on reference of the field to category low-profitable the current incomplete calendar year moves no later than September 1 of calendar year in form according to appendix to these rules in time.

The notification on reference of the field to category low-profitable forthcoming calendar year moves not earlier than September 1, but no later than December 1 of the current calendar year.

6. Fields belong to the category low-profitable in case of their compliance to criteria of low-profitability and observance of conditions, stipulated in Item 5 these rules.

7. The income and expenses (deductions) on exchange difference, and also the income and expenses (deductions) of the subsoil user on remunerations are not considered when calculating of the planned level of profitability and internal profitability rate for the field.

Paragraph 1. Calculation of the planned profitability level for the field (groups of fields on one contract for subsurface use, parts of the field) firm types of minerals

8. Calculation of the planned profitability level for the field for calendar year is made based on forecast data of the subsoil user, including the prices of mineral raw materials, minerals, metal, conversion product for the corresponding tax period, based on production amounts, taking into account compliance with law of the Republic of Kazakhstan about transfer pricing as follows:

1) the planned level of profitability of the field on which the subsoil user realizes the extracted mineral raw materials including which underwent only primary conversion without subsequent conversion:

Rm = ChDm / SGDM * 100%, where:

Rm – profitability on the field;

ChDm – the net income on the field estimated according to this subitem;

SGDM – gross annual income on the field, including the income from realization of products. At the same time the income from realization of products is estimated on the actual sales prices.

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