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

Article 243. Deductions with regard to individual types of expenses

1. Losses of goods incurred by a taxpayer, except for the cases provided for in paragraph 2 of this article, shall be deductible within the natural loss rates established by the legislation of the Republic of Kazakhstan.

2. Losses incurred by a natural monopoly entity for the purposes of providing regulated services (goods, works) are subject to deduction up to the amount of technical loss rates and (or) with account of restrictions established in accordance with the legislation of the Republic of Kazakhstan.

3. The taxpayer’s expenses in the amount of the book value of goods not earlier allocated to deductibles, in connection with the loss of, damage to which or with the occurrence of an insured event with respect to which, compensation for damages was received from a person that did damage or an insurance organization, also in the form of an insurance payment, are deductible up to the amount of the compensation received in the period in which the amount of compensation for damage was received.

For the purposes of this Section:

deterioration of goods means deterioration of all or certain qualities (properties) of the goods, as a result of which the given goods cannot be used in profit-oriented activities;

loss of goods means an event that resulted in the destruction or loss of goods. The loss of goods incurred by a taxpayer to the extent of natural loss rates established by the legislation of the Republic of Kazakhstan is not a loss.

4. Subject to deduction are the taxpayer’s expenses for compulsory employees’ periodic (during their working life) medical examinations and pre-shift, post-shift and other medical examination (check-up), for maintenance or services for the organization of medical posts in cases stipulated in an agreement, a collective agreement, the legislation of the Republic Kazakhstan.

5. Subject to deduction are the taxpayer’s expenses for providing employees with working conditions that meet the safety, health and hygiene requirements, including sanitary and epidemiological requirements, for providing employees with the opportunity to rest and eat in a specially equipped place in accordance with the labor legislation of the Republic of Kazakhstan, labor, collective agreements or the employer’s acts.

6. Subject to deduction are the taxpayer’s expenses for providing catering services to employees, for pre-school education and training, social protection and social security of children, the elderly and the disabled.

7. Subject to deduction are awarded or recognized penalties (fines, penalties), unless otherwise provided for in Articles 246 and 264 of this Code.

8. If terms of a transaction provide for the quality guarantee of goods sold, works performed, services rendered by a taxpayer, the amount of the taxpayer’s actual expenses for elimination of defects in goods sold, works performed, services rendered during the warranty period under the transaction, shall be allocated to deductibles in accordance with this Code.

9. Unless otherwise established by this Article, the cost of purchased goods, works, services shall include the following expenses for VAT:

the amount of VAT not taken as an offset in accordance with Paragraph 1 of Article 402 of this Code;

the amount of VAT that may not be taken as an offset in accordance with Subparagraph 2) of Paragraph 2 of Articles 409 and 410 of this Code;

the amount of VAT adjustment taken as an offsettowards the reduction in the cases specified in Subparagraphs 1) and 4) of Paragraph 2 of Article 404 of this Code.

A VAT payer shall has the right to deduct the amount of:

1) VAT that may not be taken as offset n accordance with Article 408 and Subparagraph 3) of Paragraph 2 of Article 409 of this Code, if such tax shall not be taken into account in the accounting for the cost of purchased goods, work, services;

2) VAT adjustment taken as an offset towards the reduction in the case specified in Subparagraph 1) of Paragraph 2 of Article 404 of this Code with regard to fixed assets, inventories, works, services used in a profit-oriented activity;

3) reduction of VAT taken as an offset, in the case specified in Subparagraph 4) of Paragraph 2 of Article 404 of this Code, except for transfer of non-depreciable assets as a contribution to the authorized capital.

The deduction provided by Subparagraph 1) of part two of this Paragraph shall be made in the tax period in which VAT, which shall not be taken as an offset.

The deductions provided for in subparagraphs 2) and 3) of part two of this paragraph shall be made in the tax period in which the amount of value added tax to be offset is subject to adjustment.

The amounts of downward adjustment of VAT to be taken as an offset in the case specified in Subparagraphs 1) and 4) of Paragraph 2 of Article 404 of this Code with regard to non-depreciable assets shall be accounted for in accordance with Paragraph 6 of Article 228 of this Code.

If a payer of corporate income tax is a subsoil user carrying out activity under a production sharing agreement (contract) as part of a simple partnership (consortium) and the fulfillment of tax obligations for VAT is imposed on the operator in accordance with Paragraph 3 of Article 426 of this Code, then subject to deduction is VAT provided by part two of this Paragraph in the amount attributable to the specified subsoil user according to the operator’s VAT declaration.

The provisions of this Article shall not apply to VAT on goods, works, services, the value of which shall be allocated to deductibles in accordance with Paragraph 3 of Article 258 of this Code.

10. Subject to deduction are membership fees paid by a taxpayer to:

1) associations of private business entities in accordance with the legislation of the Republic of Kazakhstan in the field of entrepreneurship in the amount not exceeding the monthly calculated index, established by the law on the republican budget and effective as of January 1 of a relevant financial year, per employee based on the average number of employees over a year;

2) the National Chamber of Entrepreneurs of the Republic of Kazakhstan in the amount not exceeding the maximum amount of mandatory membership fees approved by the Government of the Republic of Kazakhstan.

The provisions of subparagraphs 1) and 2) of part one of this paragraph shall also apply in case of payment of membership fees in the reporting tax period for the previous and (or) preceding the previous tax periods.

11. Subject to deduction are the taxpayer’s expenses for assessed social contributions to the State Social Insurance Fund in the amount determined by the legislation of the Republic of Kazakhstan.

12. The taxpayer's expenses on accrued contributions to the social health insurance fund shall be deductible in the amount established by the legislation of the Republic of Kazakhstan.

13. The value of goods transferred free of charge for advertising purposes (also in the form of donations) is allocated to deductibles in a taxable period in which such goods were transferred, if a unit value of such goods does not exceed 5 times the monthly calculation index established for a relevant financial year by the law on the republican budget and effective as of the date of such transfer.

14. Subject to deduction are expenses incurred by an electric power transmission organization in connection with the provision of gratuitous services for the transmission of electric power to entities using renewable energy sources.

14-1. It was valid until 01.01.2022 in accordance with the Law of the Republic of Kazakhstan dated 12.27.2019 No. 295-VІ.

Note!

Paragraph 14-2 shall be valid from 01.01.2022 to 01.01.2024 in accordance with the Law of the Republic of Kazakhstan dated 21.12.2022 No. 165-VII.

14-2. Subject to deduction are the National Infrastructure Operator’s expenses in connection with provision of services of the main railway network for the carriage of passengers by rail to a railway carrier engaged in the carriage of passengers, baggage, cargo, mail, on gratuitous basis, including with the application of a temporary reduction factor of 0 to the tariff for regulated services of the main railway network when transporting passengers by rail in accordance with the legislation of the Republic of Kazakhstan.

15. A taxpayer engaged in the production and (or) sale of goods under a trade name, trademark and (or) service mark, which such a taxpayer owns and (or) uses (including on the basis of a license or sublicense contract (agreement) in the manner prescribed by the legislation of the Republic of Kazakhstan, and (or) international treaties ratified by the Republic of Kazakhstan, shall deduct expenses for activities aimed at maintaining and (or) increasing sales volumes of such goods, regardless of the existence of ownership right to it.

16. For the purposes of this Section, when this Code imposes the fulfillment of a tax obligation for trust management activity on a trust manager, the expenses of such a trust manager, for the purposes of deduction, are determined with account of the provisions of Articles 40, 42, 43, 44 and 45 of this Code.

17. Mandatory pension contributions of the employer paid by the taxpayer in favor of the employee are subject to deduction within the limits established by the legislation of the Republic of Kazakhstan on pension provision.

Footnote. Article 243 as amended by the Law of the Republic of Kazakhstan dated 02.04.2019 No. 241-VI (shall be enforced from 01.01.2018); No. 295-VІ dated 27.12.2019 (shall be enforced since 01.01.2020); dated December 10, 2020 No. 382-VI (enforcement, Article 2); dated 11.07.2022 No. 135-VII (enforcement, see art. 3); dated 21.12.2022 No. 165-VII (enforcement, see art. 4).