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

of May 27, 2010 No. HK-21-54/6069

The Tax Committee of the Ministry of Finance of the Republic of Kazakhstan reports the following.

According to Items 1 and 3 of article 267 of the Code of the Republic of Kazakhstan of 10.12.2008. "About taxes and other obligatory payments in the budget" (Tax code) of the organization, performing conversion of agricultural raw materials, make the tax discharge on value added (further - the VAT), the Tax code estimated according to Article 266, in the amount of, reduced by 70 percent.

At the same time according to the subitem 1) of Item 2 of article 267 of the Tax Code for the purpose of this Article the organizations which at least 90 percent of gross annual income make the income which is subject to obtaining (received) as a result of implementation of the following types of activity, except for of activities in the sphere of public catering treat the organizations performing conversion of agricultural raw materials:

production of meat and meat products;

conversion and conservation of fruit and vegetables;

production of vegetable and animal oils and fats;

conversion of milk and production of cheese;

production of products flour-grinding krupyanoy industries;

production of ready-made feeds for animals;

production of bread;

production of baby food and dietary foodstuff;

production of products of the krakhmalo-patochny industry

At the same time determination of types of activity for the purpose of application of the subitem 1) of Item 2 of article 267 of the Tax Code is performed according to the General qualifier of types of economic activity approved by the authorized state body performing state regulation in the field of technical regulation.

According to Item 3 of article 12 of the Tax Code of concept civil and other industries of the legislation of the Republic of Kazakhstan, used in this Code, are applied in that value in what they are used in these industries of the legislation of the Republic of Kazakhstan if other is not provided by the Tax code.

According to Item 1 of Article 33 of the Civil code of the Republic of Kazakhstan (further - RK Group) the legal entity the organization which has on the property right, of economic maintaining or operational management the isolated property is recognized and answers this property for the obligations, can acquire and perform on its own behalf the property and personal non-property rights and obligations, to be claimant and the defendant in court. The legal entity shall have separate balance or the estimate.

According to Item 1 of Article 19 of the Civil code citizens have the right to be engaged in business activity without formation of legal entity, except as specified, provided by this Code and other legal acts.

At the same time according to the subitem 3) article 1 of the Law of the Republic of Kazakhstan of 31.01.2006 No. 124-III "About private entrepreneurship" individual entrepreneurship - the initiative activities of physical persons directed to income acquisition, based on property of physical persons and performed on behalf of physical persons for their risk and under their property responsibility.

Besides, we pay attention that the concept gross annual income in the Tax code is used for the purposes of the corporate income tax.

So, according to Item 1 of article 81 of the Tax Code payers of the corporate income tax are legal entities - residents of the Republic of Kazakhstan, except for public institutions, and also the legal nonresident persons performing activities in the Republic of Kazakhstan through permanent organization or gaining income from sources in the Republic of Kazakhstan.

According to the subitem 1) of article 82 of the Tax Code subject to taxation by the corporate income tax is the taxable income.

According to article 83 of the Tax Code the taxable income is determined as difference between gross annual income taking into account adjustments, stipulated in Article 99 Tax codes, and the deductions provided by Section 4 of the Tax code.

And in case of the taxation of individual entrepreneurs for the purposes of the individual income tax the concept the income of the individual entrepreneur which determination is regulated by article 183 of the Tax Code is used.

Based on the above, we consider that the legal entities corresponding to the above-stated conditions have the right to use regulations of article 267 of the Tax Code.

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