ORDER OF THE TAX COMMITTEE OF THE MINISTRY OF FINANCE OF THE REPUBLIC OF KAZAKHSTAN

of June 24, 1997 No. 123

According to the Law of the Republic of Kazakhstan "About modification and amendments in the Presidential decree of the Republic of Kazakhstan which is valid the law "About taxes and other obligatory payments in the budget" of 31.12.96 N61-I since July 1, 1997 is cancelled cash method in tax accounting and taxpayers shall apply method of charges. For the purpose of the organization of work on transition to method of charges in tax accounting according to the order of the Government of the Republic of Kazakhstan "About transition to method of charges in tax accounting" of June 20, 1997 I order to N1001:

1. Approve the enclosed Procedure for transition to method of charges in tax accounting (further - the Procedure).

2. To Tax Administrations on areas and Almaty:

- in two-day time to bring the Procedure to local tax authorities and taxpayers;

- to monthly represent data to the Tax Committee on execution of the repayment schedule by taxpayers of difference of the amounts formed upon transition from cash method to method of charges.

3. To managements of the Tax Committee to carry out work on explanation of the Procedure and application of method of charges in tax accounting.

4. To management on forced collection of taxes and obligations to the budget (R. H. Mukhamedov) to publish the Procedure in mass media in five-day time.

5. To impose control of execution of this order on the chief of organizational and methodical management B. Zh. Tleulesov.

PROCEDURE FOR TRANSITION TO THE METHOD OF CHARGES IN TAX ACCOUNTING

I. General provisions

According to the Presidential decree of the Republic of Kazakhstan which is valid the law "About taxes and other obligatory payments in the budget" since July 1, 1997 the cash method in tax accounting is cancelled and taxpayers shall apply method of charges according to the transactions made after July 1, 1997. According to the tax legislation "method of charges" is the accounting method on which the income and deductions are considered from the moment of performance of works, provision of services, shipment and receipt of property, irrespective of payment time. Thus, it means that the income and deductions are accepted in that accounting period which they treat, irrespective of time of receipt and payment of money.

According to the order of the Government of the Republic of Kazakhstan "About transition to method of charges in tax accounting" of June 20, 1997 N1001 to the taxpayers applying cash method in tax accounting is prolonged payment due date of difference of the amounts of the taxes formed upon transition from cash method to method of charges till December 31, 1997 without charge of penalty fee for untimely fee of tax in the budget.

Upon transition in tax accounting the taxpayer needs to determine independently difference of the amounts of taxes (the value added tax, excise, the income tax from legal entities) as of June 30, 1997. The difference of the sums of taxes calculated by the taxpayer for cash method and method of charges is delayed taxes.

The taxpayers applying till July 1, 1997 cash method in tax accounting shall for the first half of the year of the current year provide to bodies of Tax Service of the declaration for the value added tax and excises, and also predesign for the income tax from legal entities on cash method. For determination of difference of the amounts of taxes as of June 30 of the current year taxpayers in addition represent by method of charges to bodies of Tax Service:

- the declaration on the value added tax no later than July 15, 1997;

- the declaration on excises no later than July 15, 1997;

- predesign of the income tax from legal entities no later than August 15, 1997.

Taxpayers shall bring in the budget of difference of the amounts of taxes no later than December 31 of tax year according to the schedule of their repayment established by the taxpayer independently and declared in accordance with the established procedure in bodies of Tax Service for place of registration along with submission of the declaration for June on the value added tax, excises and calculation for the income tax from legal entities (appendices 1, 2).

The taxpayers having the accounts receivable formed as a result of suspension of satisfaction of requirements of creditors for the separate decisions of the Government of the Republic of Kazakhstan made according to the legislation of the Republic of Kazakhstan need to determine the amount of the income and expenses by the specified debts for the purpose of the taxation by method of charges and the taxes which are due on them.

Payment of the receivable amounts of taxes of the budget for the specified debts is made in process of their repayment without charge of penalty fee for untimely fee of tax.

Since August 1 of the current year at the scheduled time for submission of the declaration and predesigns taxpayers shall represent to tax authorities of the data on execution of the repayment schedule of general difference of the amounts of taxes, from them on debts, paid amounts and difference of the amounts of the taxes which are subject to payment in the budget.

II. Value added tax and excise

For reflection of movement of difference of tax amounts on value added and excise the taxpayer needs to open separate analytical schet2 to accounts 633 "Value added tax", 634 "Other" (68 "Calculations with the budget").

2 Sub-accounts - according to the Master plan of accounts of financial accounting analytical accounts or accounts of the subsequent procedures.

Upon transition to method of charges in tax accounting the taxpayer needs to make additional accounting entries for June on account termination 331 "The value added tax to compensation" (17 "The value added tax on the acquired values", 18 "The value added tax on the realized values") on tax amount on value added according to the tax invoices shown to buyers (customers) for shipped goods (works, services) and unpaid as of June 30, 1997, on the debit of account 301 "Accounts to obtaining" from account 633 credit "Value added tax" and to determine remaining balance on the separate analytical account of account 633 "Value added tax" (68 "Calculations with the budget").

The difference of tax amounts on value added in tax accounting is determined by the taxpayer as difference of the amounts reflected on line 12 "The net amount of the VAT added for the accounting period" or 13 "Excess of tax amount, carried in offsetting, over the amount added for the accounting period" in the declarations on the value added tax estimated on cash method and method of charges.

At the same time in case of creation of the declaration on the value added tax by method of charges turnovers on sales of goods, performance of works and rendering services, except the turnovers on realization considered in case of creation of the declaration on the value added tax on cash method join also the cost of the shipped and unpaid goods (works, services) as of June 30, 1997.

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