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

of December 22, 2009 No. HK-08-17/13080

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

According to Item 2 of article 272 of the Tax Code the excess of the VAT which developed on the goods, works, services acquired till January 1, 2009 is not subject to return from the budget except for of the excess formed in connection with purchase of goods of works, services which are used or will be used for the purpose of the turnovers assessed on zero rate.

According to Item 2 of article 25 of the Law of the Republic of Kazakhstan «About enforcement of the Code of the Republic of Kazakhstan «About taxes and other obligatory payments» (Tax code)» (further - the Law), on the turnovers on realization assessed on zero rate, the excess specified in Item 1 of this Article returns to the budget to the payer of the VAT according to the procedure, established by this Article, in case of simultaneous compliance to the following conditions:

the payer of the VAT enables permanent sales of goods, the works, services assessed on zero rate;

the turnover on realization assessed on zero rate for tax period in which the revolutions assessed on zero rate and on which the tax application for return of excess of the VAT is submitted are made constituted at least 70 percent in total leviable turnover on realization.

At the same time, as appears from your letter the export share in total turnover on realization constituted less than 70 percent.

Item 3 of article 25 of the Law provides that in case of failure to carry out of conditions, stipulated in Item 2 these Articles, excess of the VAT returns to the payer of the VAT regarding tax amount carried in offsetting on the realized goods to the performed works rendered to the services used for the purposes of the turnover on realization assessed on zero rate taking into account its tax liability on payment of the VAT for the previous tax periods.

Therefore, return of the excess formed till January 1, 2009 in connection with purchase of goods of works, services which are used for the purpose of the turnovers assessed on zero rate, made after January 1, 2009 shall be made regarding VAT amount, carried in offsetting, on goods, works, the services used for the purposes of the turnover on realization assessed on zero rate.

According to Item 1 of article 273 of the Tax Code return of excess of the VAT is performed to the taxpayer:

1) according to the procedure and terms which are established by this Article if other is not stipulated in Clause 274 Tax codes;

2) based on its requirement about return specified in the declaration on the VAT for tax period.

According to Item 2 of article 273 of the Tax Code if the payer of the VAT did not specify in the declaration on the VAT for tax period the requirement about return of excess of the VAT, then this excess becomes engrossed in reading on account of the forthcoming payments on the VAT or can be shown to return.

At the same time the payer the VAT has the right to return of excess of the VAT formed after January 1, 2009 during the term of limitation period, stipulated in Clause 46 Tax codes.

Thus, return of excess of the VAT formed till January 1, 2009 on goods, works, the services used for the purpose of the turnovers assessed on zero rate, made after January 1, 2009 is made based on the requirement about return specified in the declaration on the VAT.

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