On taxes and other obligatory payments to the budget (Tax Code)

Article 232. Income from decreasing the amount of created provisions (reserves)

1. Income from decreasing the amount of provisions (reserves) created by a taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraphs 1, 3, 6 and 7 of Article 250 of this Code, unless otherwise provided for by this article, is recognized as:

1) the amount of provisions (reserves) allocated to deductibles in a reporting taxable period and (or) previous taxable periods in the amount proportionate to that of claim satisfaction – upon the satisfaction of a claim by a debtor;

2) the amount of provisions (reserves) allocated to deductibles in a reporting taxable period and (or) previous taxable periods, in case of reduction in the size of claims to a debtor under a settlement agreement, contract of novation, of assignment of claim by concluding a cession agreement and (or) on other grounds provided for by the legislation of the Republic of Kazakhstan, in the amount proportionate to the amount of reduction in the size of claims;

3) amounts of reductions allocated to deductibles in a reporting taxable period and (or) previous taxable periods for provisions (reserves) as a result of a change in the estimate of expected credit losses.

Paragraph 2 is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

2. Income from decreasing the amount of provisions (reserves) created by a taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraph 2 of Article 250 of this Code is recognized as:

1) the amount of provisions (reserves) allocated to deductibles in a reporting taxable period and (or) previous taxable periods in the amount proportionate to that of claim satisfaction - upon the satisfaction of a claim by a debtor;

2) the amount of provisions (reserves) allocated to deductibles in a reporting taxable period and (or) previous taxable periods, in case of reduction in the size of claims to a debtor under a settlement agreement, contract of novation, of assignment of claim by concluding a cession agreement and (or) on other grounds provided for by the legislation of the Republic of Kazakhstan, in the amount proportionate to the amount of reduction in the size of claims;

3) amounts of reductions allocated to deductibles in a reporting taxable period and (or) previous taxable periods for provisions (reserves) as a result of a change in the estimate of expected credit losses.

4) as accounted for as of December 31, 2026 in accordance with international financial reporting standards, the amounts of provisions (reserves) deductible in a reporting taxable period and (or) previous taxable periods against doubtful and bad assets provided by a bank’s subsidiary for the acquisition of doubtful and bad assets of its parent bank. The amounts of provisions (reserves) specified in this subparagraph are included in the bank’s total annual income for a taxable period falling on 2026.

Paragraph 2-1 shall be valid from 01.0.01.2020 to 01.0.01.2027 in accordance with the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI.

2-1. A bank that has the right to deduct the amount of expenses for creation of provisions (reserves) in accordance with paragraph 1 of Article 250 of this Code shall not recognize as income from a decrease in the amount of provisions (reserves) the amount of provisions (reserves) deducted in the reporting and (or) previous tax periods, in case of debt forgiveness on a credit (loan) in the manner and on the terms established by this paragraph.

The provisions of this paragraph shall apply to a bank, in respect of which, by a court resolution, a restructuring has been carried out, more than 90 percent of the voting shares of which as of December 31, 2013 belong to the national managing holding, or a legal entity that was previously such a bank.

The provisions of this paragraph shall apply to the credit (loan) debt against which the bank has created provisions (reserves) deducted in the reporting and (or) previous tax periods in accordance with paragraph 1 of Article 250 of this Code, which consists of:

outstanding principal debt;

outstanding interest accrued after December 31, 2012;

debt related to credit (loan).

This paragraph shall apply in case of forgiveness of a debt on a credit (loan) and (or) debt associated with a credit (loan) if the following conditions are simultaneously met:

1) the credit (loan) was issued before October 1, 2009;

2) the debtor under the credit (loan) and (or) debt associated with the credit (loan) is indicated in the list (lists) of debtors, whose debt is subject to forgiveness, approved before July 1, 2019 by the management body of the bank or a legal entity , which was previously such a bank, specified in part two of this paragraph, and submitted to the authorized body no later than August 1, 2019;

3) forgiveness of debt on a credit (loan) and (or) debt associated with a credit (loan) is made within the amount specified in the list (lists) of debtors whose debt is subject to forgiveness, approved before July 1, 2019 by the management body of the bank or a legal entity that was previously such a bank, specified in part two of this paragraph, and submitted (presented) to the authorized body no later than August 1, 2019;

4) there is one and (or) more documents on credit (loan):

issued to a non-resident:

an application to a law enforcement body of a foreign state to initiate criminal proceedings against a debtor - an individual and (or) an official or a person who had an opportunity to otherwise directly or indirectly determine the decisions taken by the debtor - legal entity;

a claim to the court of the Republic of Kazakhstan or a foreign state for the recovery of a debt, for the foreclosure of a pledge and (or) restoration of lost rights to a pledge;

an effective bailiff’s resolution or another document of a foreign state on the return of a writ of execution to the bank, in the event that the debtor and third parties bearing joint and several or subsidiary liability to the specified bank together with the debtor do not have property, including money, securities, or income subject to foreclosure and the measures taken to identify his property or income have been unsuccessful;

effective court ruling of a foreign state on refusing to collect a debt, restore lost rights to a pledge, to foreclose on property, including money, securities, or the debtor's income;

effective court ruling of a foreign state on declaring the debtor bankrupt and (or) a ruling on the completion of bankruptcy proceedings;

document of the competent authority of a foreign state on exclusion of the debtor or pledgor from the register of legal entities in connection with liquidation;

issued to a resident:

application to the law enforcement body of the Republic of Kazakhstan on initiation of criminal proceedings against the debtor - an individual and (or) an official or a person who had the opportunity to otherwise directly or indirectly determine the decisions taken by the debtor - legal entity;

a document confirming implementation of measures by law enforcement bodies of the Republic of Kazakhstan at the request of the bank or initiation of criminal proceedings.

The presence of the documents referred to in this subparagraph is not required for credits (loans) issued to non-residents:

when the amount of outstanding debt on the loan is forgiven after the sale of the pledged property, which fully secured the principal debt as of the date of the mortgage agreement conclusion, from an out-of-court auction at a price below the principal debt amount;

when the bank assigns the right to claim at a discount on a credit (loan) to a third party that is a non-resident on the date of assignment of the right to claim, if the value of the right to claim on the credit (loan) for which the assignment was made is equal to the market value of the bank's right to claim, determined in appraisal report conducted in accordance with the legislation of the Republic of Kazakhstan on valuation activity or a foreign state under an agreement between the appraiser and such a third party or a bank or a person representing the interests of a bank or appointed by a court of a foreign state to manage property in the interests of such a bank. For the purposes of this paragraph, the discount is a negative difference between the value of the right to claim on a credit (loan), on which the bank has made an assignment, and the value of the right to claim on a loan;

in case of documentary confirmation by the bank's management body of the impossibility of applying to a law enforcement body or a court of a foreign state due to the absence of:

agreements on legal assistance between the Republic of Kazakhstan and such a foreign state in criminal and (or) civil cases;

the original of the agreement confirming the issuance of the credit (loan);

when part of the debt is forgiven to a debtor who is a non-resident as of the debt forgiveness date, which is determined as the difference between the amount of debt on a credit (loan) and the market value of the bank's right of claim specified in part two of this paragraph, determined in the assessment report carried out in accordance with the law of the Republic of Kazakhstan on valuation activity or a foreign state under an agreement between the appraiser and the debtor or such a bank, in cases if:

there is an amendment to the agreement signed with the debtor, under which a credit (loan) was issued, providing for the forgiveness of a part of the debt, subject to repayment of the remaining part of the debt (hereinafter referred to as debt balance);

by the bank specified in part two of this paragraph:

in accordance with paragraph 1 of this article, income is recognized from a decrease in the amount of created provisions (reserves) in the amount of the debt balance;

the adjustment of income provided for by Articles 286 and 287 of this Code has not been made;

the amount of expenses on provisions (reserves) against the amount of the balance of the debt created after forgiveness of a part of the debt is not deductible;

5) there is information on credit (loan) in a credit bureau on the amount of debt on such a credit (loan), provided by the bank in accordance with the legislation of the Republic of Kazakhstan on credit bureaus and formation of credit histories;

6) there is a primary accounting document for a credit (loan), on the basis of which provisions (reserves) are created for such a credit (loan), allocated to deductions in accordance with paragraph 1 of Article 250 of this Code;

7) there is information on the credit (loan) in the credit register provided by the bank to the National Bank of the Republic of Kazakhstan in the manner prescribed by the legislation of the Republic of Kazakhstan.

Alongside this, in the list of debtors on credits (loans), the debt on which is subject to forgiveness, for each credit (loan) the following shall be indicated:

1) credit file number;

2) the date of issue of the credit (loan);

3) full name as indicated in the identity document and (or) name of the borrower (co-borrower);

4) the maximum amount of debt subject to forgiveness, in terms of interest accrued after December 31, 2012, and the principal debt under the credit (loan).

The provisions of this paragraph shall not apply to credits (loans) issued to a bank employee, spouse (wife) and close relatives of a bank employee.

3. Was valid until 01.01.2020 in accordance with Law of the Republic of Kazakhstan No. 121-VI dated 25.12.2017.

4. Was valid until 01.01.2020 in accordance with Law of the Republic of Kazakhstan No. 121-VI dated 25.12.2017.

This wording of item one of paragraph 5 is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).

5. The amounts of provisions (reserves) allocated to deductibles in a reporting taxable period and (or) previous taxable periods in case of a decrease in the amount of claims to the debtor are not recognized as income from decreasing the amount of provisions (reserves) created by a taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraphs 1, 2, 3, 6 and 7 of Article 250 of this Code, in case of:

1) removal from the National Register of Business Identification Numbers in connection with the liquidation of a debtor-legal entity by a court decision on the grounds established by the laws of the Republic of Kazakhstan;

2) declaring a debtor-individual missing, incapacitated, partially incapacitated or dead by a final and binding court judgment;

3) categorizing a debtor-individual as a I, II disability group member, as well as in case of death of a debtor-individual;

This wording of subparagraph 4) is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).




4) a legally effective decision of a law enforcement officer on the return of an execution document to the taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraphs 1, 2, 3, 6 and 7 of Article 250 of this Code, if a debtor and third parties bearing joint or secondary liability to the taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraphs 1, 2, 3, 6 and 7 of Article 250 of this Code, have no property, including money, securities or income that can be foreclosed on, and the measures, provided for by the legislation of the Republic of Kazakhstan on Enforcement Proceedings and Status of Law Enforcement Agents, taken to identify his/her/its property or income have been ineffective;

This wording of subparagraph 5) is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017 (for the suspended wording, refer to the archival version of the Tax Code of the Republic of Kazakhstan as of 25.12.2017).




5) a final and binding court judgment to refuse the taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraphs 1, 2, 3, 6 and 7 of Article 250 of this Code to foreclose on the debtor’s property, including money, securities or income;

6) deregistration as an individual entrepreneur in connection with declaring a debtor-individual entrepreneur bankrupt in accordance with the legislation of the Republic of Kazakhstan on rehabilitation and bankruptcy;

7) assignment by a second-tier bank, a mortgage organization, an organization engaged in microfinance activities (with the exception of a pawnshop), of the rights of claim on a loan (loan, mortgage loan, mortgage housing loan, microcredit) to legal entities specified in the Laws of the Republic of Kazakhstan “On Banks and Banking activities in the Republic of Kazakhstan”, “On Real Estate Mortgage” and “On Microfinance Activities”, in terms of the negative difference between the value of the right to claim a loan (loan, mortgage loan, mortgage housing loan, microcredit), for which an assignment has been made by a second-tier bank, a mortgage organization, an organization engaged in microfinance activities (with the exception of a pawnshop), and the value of the right to claim a loan (loan, mortgage loan, mortgage housing loan, microcredit) to be received by a second-tier bank, a mortgage organization, an organization engaged in microfinance activities (with the exception of a pawnshop) from the debtor, on the date of assignment of the right to claim for a loan (loan, mortgage loan, mortgage housing loan, microcredit) in accordance with the primary documents of a second-tier bank, mortgage organization, organization engaged in microfinance activities (with the exception of a pawnshop);

8) reduction in accounting of the amount of claim to the debtor in the form of an unpaid overdue credit (loan, mortgage loan, mortgage housing loan) and interest on it, receivables on documentary settlements and guarantees in accordance with international financial reporting standards and (or) legal requirements of the Republic of Kazakhstan on accounting and financial reporting by a taxpayer entitled to deduct the amount of expenses for the creation of provisions (reserves) in accordance with paragraphs 1 and 7 of Article 250 of this Code, in the absence in the reporting tax period of full or partial termination of the right of such a claim of the taxpayer to the debtor in accordance with the legislation of the Republic of Kazakhstan;

9) reducing the amount of claim against the debtor in connection with forgiveness by the taxpayer, having the right to deduct the amount of expenses for creation of provisions (reserves) in accordance with paragraphs 1, 3 of Article 250 of this Code, bad debt on a credit (loan, mortgage loan, mortgage housing loan ) and interest on it within the maximum ratio of the total amount of bad debts forgiven for the tax period on credits (loans, mortgage loan, mortgage housing loan) and interest on them to the amount of the principal debt on credits (loans, mortgage loans, mortgage housing loans) and remuneration on them as of the tax period start. In this case, the maximum size of such a ratio is equal to coefficient 0.1;

10) reduction of the size of a claim to the debtor of a home loan (mortgage loan) subject to refinancing within the program for refinancing home loans (mortgage loans) approved by the National Bank of the Republic of Kazakhstan in connection with the forgiveness of bad debts with respect toa credit (loan) and interest thereon up to the maximum ratio of total amount of bad debts with respect to credits (loans) and interest thereon forgiven in a taxable period to the amount of principal credits (loans) and interest thereon as of the beginning of the taxable period by a taxpayer entitled to deduct the amount of expenses for creating provisions (reserves) in accordance with paragraph 3 of Article 250 of this Code. In this case, the maximum ratio is equal to 0.1;

11) was valid until 01.01.2020 in accordance with Law of the Republic of Kazakhstan No. 121-VI dated 25.12.2017.

12) was valid from 01.01.2020 to 01.01.2021 in accordance with the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI.

6. Income from the reduction of insurance reserves of an insurance, reinsurance company is recognized as a negative difference between the amount of insurance reserves previously deducted, calculated in accordance with the legislation of the Republic of Kazakhstan on insurance and insurance activities for unearned premiums, avoided losses, reported but unsettled losses, incurred, but not reported losses at the end of the reporting taxable period and the amount of such reserves at the end of the previous taxable period.

Paragraph 7 shall be valid from 01.01.2020 to 01.01.2027 in accordance with the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI.

7. The provisions of paragraphs 1 and 5 of this article shall apply to a legal entity that was previously a bank, restructured by a court resolution, whose more than 90 percent of the voting shares as of December 31, 2013 belong to the national managing holding.

Footnote. Article 232 as amended by the Law of the Republic of Kazakhstan dated 02.04.2019 No. 241-VI (shall be enforced from 01.01.2018 г.); No. 262-VI dated 03.07.2019 (shall be enforced since 01.01.2020); dated 10.12.2020 No. 382-VI (enforcement, Article 2); dated 20.12.2021 No. 85-VII (shall be enforced from 01.01.2022); dated 21.12.2022 No. 165-VII (shall be enforced from 01.01.2023).