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

of August 17, 2009 No. HK-21-25/7844

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

According to Item 2 of article 249 of the Code of the Republic of Kazakhstan of 10.12.2008. «About taxes and other obligatory payments in the budget» (Tax code) if other is not provided by this Item, transfer of right of possession and (or) use, and (or) the order of the parcel of land, and (or) lease of the parcel of land, including the sublease, are exempted from the value added tax (further - the VAT).

Are not exempted from the VAT:

payment for transfer of the parcel of land for the parking or storage of cars, and also other vehicles;

transfer of right of possession and (or) use, and (or) the order of the parcel of land occupied with the residential building (part of the residential building) which is not relating (not relating) to the residential building and also lease of such parcel of land, including the sublease.

The turnover size on realization exempted from VAT liability according to this Item is determined as increase in value in case of realization of the parcels of land according to the procedure, stipulated in Article 87 Tax codes.

For the purpose of this Article treat the assets which are not subject to depreciation, including, the parcels of land.

At the same time the surplus is determined as difference between realization value of the assets which are not subject to depreciation, and their original cost, except as specified, provided by items 4 and the 9th this Article.

Thus, in your case the turnover size on realization exempted from VAT liability will equal to zero.

According to Item 2 of article 260 of the Tax Code in the presence of leviable and free turnovers the VAT belongs in offsetting at the choice of the payer of the VAT by pro rata or separate method.

At the same time the chosen method of determination of the VAT carried in offsetting is not subject to change within calendar year.

According to article 261 of the Tax Code by the pro rata VAT method, carried in offsetting, it is determined proceeding from specific weight of leviable turnover in the total amount of turnover.

Thus, in case of application by the taxpayer of pro rata method of reference in offsetting, the increase in value in case of realization of the parcel of land participates in the amount of the exempted turnover.

At the same time, we pay your attention that according to the subitem 6) of Item 1 of article 20 of the Tax Code bodies of Tax Service shall provide to the taxpayer (tax agent) information on the operating taxes and other obligatory payments in the budget.

Such explanations and comments do not belong to regulatory legal acts, are not obligatory for execution and are subject to assessment by court taking into account their compliance to regulations of the tax legislation.

Vice-chairman of the Tax Committee

Ministries of Finance of the Republic of Kazakhstan A. Kipshakov

 

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