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

of September 30, 2010 No. HK-21-28/11647

Association of taxpayers of Kazakhstan

Almaty, Ulitsa Auezova, 84, office 311

The Tax Committee of the Ministry of Finance of the Republic of Kazakhstan, having considered within competence the letter of August 10, 2010 No. 526-08/10, reports the following.

On the individual income tax

concerning the first question

By Item 2 of article 163 of the Code of the Republic of Kazakhstan «About taxes and other obligatory payments in the budget» (further - the Tax code) it is determined that if other is not provided by this Article, the income of the worker, taxable, any income gained by the worker from employer in cash or natural form including income gained in the form of material benefit and also on prisoners according to the legislation of the Republic of Kazakhstan between the employer and the third parties to agreements of civil nature under which the worker gains income specified in Articles 164, 165 Tax codes is.

According to the subitem 2) of Item 1 of article 164 of the Tax Code, the income of the worker, taxable, received by it in natural form, includes, including property value, received from the employer on a grant basis. Cost gratuitously of the performed works, the rendered services is determined in the amount of the expenses incurred in connection with such performance of works, rendering services.

Besides, according to the subitem 3) of Item 1 of article 164 of the Tax Code, the income of the worker, taxable, received by it in natural form, includes, including payment of the cost of goods by the employer, the performed works, the rendered services received by the worker from the third parties.

Thus, payment of such services by the employer as treatment in sanatorium, payment of the rates which are not connected with advanced training apartment renovation, the machines, etc. rendered to the worker by third parties, and also payment to the worker of the goods acquired by it at the expense of means of the employer, is the income of the worker and is subject to taxation by the individual income tax at payment source.

concerning the second question

According to the subitem 24) of Item 1 of article 156 of the Tax Code, from the income of physical person, taxable, are excluded, including expenses of the employer in case of the direction of the worker on the training, advanced training or retraining according to the legislation of the Republic of Kazakhstan in the specialty connected with productive activity of the employer made without registration of official journey of this worker in the amount of:

actually made expenses on payment of training, advanced trainings or retrainings;

actually made expenses on accommodation within the regulations established by the Government of the Republic of Kazakhstan;

actually made expenses on journey to the place of study in case of receipt and back after completion of training, advanced training or retraining;

the amounts of money appointed by the employer to payment to the worker in limits:

The 6-fold size of the monthly settlement indicator established by the Law on the republican budget and operating for January 1 of the corresponding financial year in days - during the term of training, advanced training or retraining of the worker within the Republic of Kazakhstan;

The 8-fold size of the monthly settlement indicator established by the Law on the republican budget and operating for January 1 of the corresponding financial year in days - during the term of training, advanced training or retraining of the worker outside the Republic of Kazakhstan.

At the same time, according to subitem 24-1) of Item 1 of article 156 of the Tax Code, from the income of physical person, taxable, are excluded, including actually made expenses of the employer on payment of training, advanced trainings or retrainings of the worker in case of the direction of this worker in official journey to other area for the purpose of training, advanced training or retraining according to the legislation of the Republic of Kazakhstan in the specialty connected with productive activity of the employer.

Based on Item 2 of Article 140 of the Labor code of the Republic of Kazakhstan the employer carries out professional training, retraining and advanced training of the workers or other persons who are not consisting with it in employment relationships:

directly in the organization;

in the organizations of education realizing educational programs of technical and professional, postsecondary, higher and postgraduate education.

Thus, we believe that in case of observance of the above-stated conditions, regulations of subitems 24), 24-1) Items 1 of article 156 of the Tax Code can be applied irrespective of training directly in the organization or in the organizations of education realizing educational programs of technical and professional, postsecondary, higher and postgraduate education is provided.

concerning the third question

According to Item 1 of Article 210 of the Labor code of the Republic of Kazakhstan, the shift method is special form of implementation of labor process out of the place of permanent residence of workers when their daily return to the permanent residence cannot be provided.

At the same time, according to Item 2 of Article 210 of the Labor code of the Republic of Kazakhstan, the employer shall provide the workers working with shift method during stay on subject to works by housing for ensuring their activity, delivery to place of employment and back, and also conditions for performance of works and inter-shift rest.

The employer provides conditions of stay of the worker on subject to works according to labor, collective agreements.

According to the subitem 11) of Item 3 of article 155 of the Tax Code the expenses connected with delivery of workers from the place of their residence (stay) in the Republic of Kazakhstan to place of employment and back are not considered as the income of physical person, including.

By the subitem 8) of Item 3 of article 155 of the Tax Code it is determined that are not considered as the income of physical person, including the expenses of the employer which are not connected with implementation of the activities directed to income acquisition, and not attributable to deductions which are not distributed to particular physical persons.

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