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The bank expresses you the respect and asks you to consult on the tax matters regarding the VAT.

The bank plans to turn pledged property into the property on its current estimated value because the announced biddings were acknowledged cancelled in view of participation in them less than two buyers.

Today the pledger refuses to provide to Bank the invoice where the current estimated value of mortgage property will be broken into the asset amount excluding VAT and VAT amount.

In view of the above-stated circumstances and article 231 of the Tax Code, the Bank had following questions:

Whether 1) there is at Bank obligation on payment of the VAT at the time of transfer of mortgage property to property because the pledger refuses to provide to Bank the invoice,

2) If this obligation at Bank does not arise at the time of transfer of mortgage property to property when and at the rate of what amount selling (the price at which the Bank realizes) or balance sheet (cost at which the Bank turns mortgage property) the Bank shall pay the VAT,

Concerning No. 1. According to the subitem 1 of Item 1 of article 230 of the Code of the Republic of Kazakhstan "About taxes and other obligatory payments in the budget" (further - the Tax code) leviable turnover is the revolution made by the taxpayer on value added:

1) on sales of goods, works, services in the Republic of Kazakhstan, except for the free turnover specified in article 232 of the Tax Code.

And according to item 4 of Article 238 of the Tax code "By Transfer of Mortgage Property (Goods) by the Pledger the Size of Leviable Turnover at the Pledger Is Specified proceeding from the Cost of Implementable Mortgage Property (Goods), but the Amounts of the Borrowed Funds Received on the security of This Property (Goods) without Inclusion of the Value Added Tax in Them Are Not Lower".

Thus, at the time of transfer of mortgage property to property, obligations on calculation and payment of the VAT arise at the pledger on the amount of implementable mortgage property (goods), but the amounts of the borrowed funds received on the security of this property (goods) without inclusion of the value added tax in them are not lower.

Concerning No. 2. According to Item 2 of article 237 of the Tax Code if shipment of goods is not performed, date of making of turnover on realization is day of transfer of property on goods to the receiver.

The size of leviable turnover is determined by Item 1 of article 238 of the Tax Code on the basis of the cost of implementable goods, works, services proceeding from the prices and rates applied by the parties of the transaction without inclusion in them of the value added tax if other is not provided by this Article and the legislation of the Republic of Kazakhstan on transfer pricing.

Based on the above follows that the obligation on calculation and payment regarding the value added tax, arises in day of transfer of property on goods to the receiver, at the rate of the cost of implementable goods.

At the same time, we pay attention that according to the subitem 5 of Item 1 of article 20 of the Tax Code bodies of Tax Service shall perform explanation within the competence and give comments on origin, execution and the termination of the tax liability.

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.


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