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

of April 14, 2014 No. HK-21/2967 I

Concerning rehabilitation and bankruptcy, the taxation

The Tax Committee of the Ministry of Finance of the Republic of Kazakhstan in connection with changes and additions in the Tax code made by the Law of the Republic of Kazakhstan of March 7, 2014 No. 177-V "About modification and amendments to some legal acts of the Republic of Kazakhstan concerning rehabilitation and bankruptcy, the taxation" (further - the Law), informs the following.

1. On the taxation of banking sector

1.1. Since January 1, 2014 Item 2 of article 90 of the Tax Code is added with subitems 7), 8) according to which are not recognized the income from decrease in the size of provisions (reserves) in the amount of provisions (reserves), earlier carried on deductions, in case of reduction of the size the requirement to the debtor in the following cases:

1) reduction in financial accounting of the size of the requirement to the debtor in the form of unpaid overdue loan (loan) and remuneration on it, receivables by documentary calculations and guarantees;

Reduction of the size of the requirement to the debtor in connection with forgiveness of bad debt on the credit (I will occupy) 2) also to remuneration on it within maximum amount which is determined by application of coefficient of 0,1 to the amount of principal debt by the credits (loans) and remunerations on them for the beginning of tax period (this regulation is effective till January 1, 2016).

1.2. By article 4 of the Law for the period from January 1, 2013 to January 1, 2015 it is suspended paragraph two of Item 1-2 of article 106 of the Tax Code and determined that for suspension the size of dynamic reserve is determined according to the procedure, established by National Bank of the Republic of Kazakhstan but to approval of authorized body.

2. On the taxation of the insurance, reinsurance organizations

2.1. Additions are made to Item 2 of Article 106, article 106-1 of the Tax Code according to which the insurance, reinsurance organizations can perform deduction of expenses on creation of insurance reserves on occurred, but to unclaimed losses.

2.2. Articles 24, 583 Tax codes are added with new Items 6-1, 7-1, which provide interaction of bodies of Tax Service with National Bank of the Republic of Kazakhstan during tax audit.

So, the National Bank of the Republic of Kazakhstan at the request of authorized body during tax audit concerning the checked taxpayer represents the conclusion about compliance of the size of insurance reserves on not earned premiums, not event to the losses declared, but not settled losses which occurred, but nezayavleniy losses to the requirements established by the legislation of the Republic of Kazakhstan on the insurance and insurance activity, according to the procedure, established by authorized body together with National Bank of the Republic of Kazakhstan.

3. On the taxation of physical persons

Since January 1, 2014 Item 3 of article 455 of the Tax Code is added with the subitem 29) by which it is determined that the income which arose in connection with discharge of the credit is not considered as the income of physical person (I will borrow) in cases of recognition of the physical person - the borrower based on the become effective judgment is unknown absent, incapacitated; establishments of disability of I or II groups, and also in case of death; lack of other income, except social payments; lack of property; sales of pledged property extrajudicially at the price are lower than the amount of primary obligation.

This letter is sent for management in work.

At the same time it is necessary to pay attention to different terms of introduction of regulations, the stipulated in Clause 5 Laws.

To tax departments to take measures for bringing this letter to data of taxpayers, including by its placement at information stands in the centers for acceptance and information processing, and also the websites of territorial tax authorities.

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