Schneider Group - Tax Update on Income from Foreign Sources

We would like to acquaint you with the new  requirements of government revenue agencies (hereinafter "GRA")  implemented to control revenues from foreign sources in the framework of the  Law of the Republic of Kazakhstan "On amendments and additions to some  legislative acts of the Republic of Kazakhstan on payments and payment  systems” number 12-VІ ЗРК of July 26, 2016 (hereinafter - the  "Law"). This law came into force on October 10, 2016.

The new requirements  of the Law

Individuals  and legal entities upon receipt of money and other property from foreign  states, foreign organizations, foreigners, and stateless persons (hereinafter  - "foreign sources") shall be obliged:

- To provide notification to GRA about the  transaction within 10 days of the transaction. Be sure to provide data  regarding future funds and property to be received from foreign sources

-  To provide GRA with information regarding  receipt and expenditure of funds and other property obtained from foreign  sources, in the order, timing and form established by the authorized body

 

Furthermore,  information and materials that is published and distributed by individuals at  the expense of foreign sources must contain:

-  Information about the persons who made the  order

-  Information on the manufacture,  distribution and disposal of information and material

 

Additionally,  the authorities plan to develop tax registers to reflect the information on  funds and other properties obtained from foreign sources, as well as how  these funds and other properties were spent.

 

Individuals  and legal entities shall submit information about the receipt and expenditure  of funds and other properties obtained from foreign sources to the GRA not  later than the 15th day of the second month following the reporting quarter.

 

Currently,  4 normative legal acts are being developed which will regulate the form,  timing and notification of information to the tax authorities regarding the  receipt of funds or other property, as well as the procedure for maintenance  of the aforementioned tax registers.

 

Who is affected by the  new requirements

The new requirements apply under the  following conditions simultaneously:

-  The operation is carried out with a foreign  entity, exceeding 10 monthly calculation indices (hereinafter -  "MCI[1]")

-   The activities of the recipient of funds  and other property are aimed at:

   ·  Legal assistance, including offering legal information  and advice to, and protection and representation of the interests of, citizens  and organizations

    · Studying and conducting public opinion polls (except  for public opinion polls and surveys conducted for commercial purposes), as  well as distribution and publication of their       results

    · Collecting, analyzing and disseminating information,  except when the indicated activity is carried out for commercial purposes

 

Also, the law prescribes the range of  persons to whom these obligations do not apply.

 

Administrative  responsibility

GRA also undertakes to maintain a database  on the abovementioned persons and the received information.

Violation of the aforementioned  requirements is an administrative offence.

-  Failure to report or the untimely reporting  of the receipt of funds and other property from foreign sources results in  the following fines:

   · For individuals - 50 MCI

   · For small and non-profit organizations - 100 MCI

   · For medium-sized companies - 200 MCI

   · For large enterprises - 350 MCI

 

- The submission of incorrect or false  information results in the following fines:

   · For individuals - 100 MCI

   · For small and non-profit organizations - 200 MCI

   · For medium-sized companies - 400 MCI

   · For large enterprises - 700 MCI

 

- Repeated violations of the aforementioned  results in the following fines:

   · For individuals - 150 MCI

   · For small and non-profit organizations - 250 MCI

   · For medium-sized companies - 450 MCI

   · For large enterprises - 1,000 MCI with prohibition of  activity

 

- For violation of the rules surrounding the  publishing of materials results in:

   · A warning

   · If the violation is repeated within the space of one  year – fines of 25 MCI

In case of additional questions, SCHNEIDER  GROUP will be happy to assist you.

Natalya  Kim

Senior  Tax Expert

KimNL@schneider-group.com

Tel. + 7 (727) 355 44 48

[1] 2121 Tenge in 2016

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