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

Article 268. Receipt of fixed assets

1. Fixed assets increase the value balance of groups (subgroups) by the initial value of the said assets at their receipt, including that under a lease agreement and also from their transfer from inventories.

Recognition of receipt of fixed assets for the purposes of taxation means the inclusion of received assets in fixed assets.

2. Unless otherwise provided by this article, the initial cost of fixed assets is defined as the sum of expenses incurred by the taxpayer as of the date of the fixed asset recognition in accordance with paragraph 1 of Article 266 of this Code. Such expenses include the costs of a fixed asset acquisition, production, construction, assembly and installation, as well as other expenses that increase its value in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, except:

costs (expenses) not subject to deduction in accordance with subparagraphs 2), 3), 4) and 5) of Article 264 of this Code;

depreciation allowances.

2-1. A subsoil user under a contract for exploration and production or production of hydrocarbons on complex projects (with the exception of onshore gas projects) shall determine the initial cost of assets in the manner prescribed by this article, using the appropriate coefficient provided for in paragraph 6 of Article 258 of this Code.

3. Unless otherwise provided by this paragraph, the initial cost of a fixed asset received by transfer from reserves or assets held for sale is its book value determined as of the date of such receipt in accordance with international financial reporting standards and (or) legal requirements Republic of Kazakhstan on accounting and financial reporting.

The initial cost of a fixed asset, earlier derecognized as a fixed asset, received by transfer from reserves or assets held for sale, is its book value determined as of the date of such receipt in accordance with International financial reporting standards and (or) requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, not exceeding the cost indicated in paragraph 2 of Article 270 of this Code.

4. In the event of gratuitously received fixed assets, the initial value of fixed assets is their value included in the total annual income in accordance with Article 238 of this Code in the form of property received gratuitously, inclusive of the actual expenses that increase the value of such assets upon initial recognition in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, with the exception of costs (expenses) not included in the initial value of fixed assets on the basis of paragraph 2 of this article.

5. When a state enterprise receives from a state institution fixed assets assigned on the basis of the right of economic management or operational management of such an enterprise, the initial value of the fixed assets is the book value of the received assets indicated in the deed of transfer of the said assets, inclusive of the actual costs increasing the value of such assets upon initial recognition in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, with the exception of costs (expenses) not included in the initial value of fixed assets on the basis of paragraph 2 of this article.

6. When received as a contribution to the authorized capital, the initial value of a fixed asset is the value of the asset specified in the transfer certificate or, in the absence of such a certificate, in another document confirming the actual contribution and the value of the asset, inclusive of the actual costs increasing the value of such assets upon initial recognition in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, except for costs (expenses) not included in the initial value of fixed assets on the basis of paragraph 2 of this article.

The value of assets received in payment for a contribution to the authorized capital is accounted for up to the amount of the contribution to the authorized capital, against which the asset was applied.

7. Upon receipt of a fixed asset in connection with reorganization by merger, accession, division or spin-off of a taxpayer, the initial cost of such an asset shall be its book value indicated in the deed of transfer or separation balance sheet, except for the cases provided for in parts two and three of this paragraph, inclusive of actual costs that increase the value of such an asset upon initial recognition in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, except for costs (expenses) not included in the initial cost of fixed assets on the basis of paragraph 2 of this article.

The value balance of a subgroup (group) of a newly emerged legal entity created by merger, or a legal entity to which another legal entity has joined, shall be increased by the value of the transferred fixed assets according to tax accounting data if such value is reflected in the transfer deed in accordance with part two of paragraph 6 of Article 270 of this Code.

The value balance of a subgroup (group) of a newly emerged legal entity created by separation in accordance with a decision of the Government of the Republic of Kazakhstan, or by separation from a legal entity that is monitored by large taxpayers at the date of reorganization, shall include the value of transferred fixed assets according to tax accounting data in the event reflection of such value in the deed of transfer in accordance with parts two and three of paragraph 6 of Article 270 of this Code.

8. When a trust manager receives fixed assets into trust management, the initial value of such fixed assets is:

1) that determined in accordance with paragraph 10 of Article 270 of this Code – if these assets were held as fixed ones by the transferor;

2) that determined based on the data in a transfer certificate of the said assets - in other cases.

9. Upon receipt of fixed assets from a trust manager in connection with the termination of obligations for trust management, the initial value of such fixed assets is:

1) that determined in accordance with paragraph 11 of Article 270 of this Code - if these assets were held as fixed ones by that trust manager;

2) that determined in accordance with paragraph 10 of Article 270 of this Code, reduced by the amount of depreciation allowances. In this case, depreciation allowances are calculated for each taxable period of trust management preceding areporting taxable period, proceeding from the maximum depreciation rate prescribed by this Code for a relevant group of fixed assets applied to the initial value reduced by the amount of depreciation allowances for previous periods - in other cases.

10. When fixed assets are received by a concessionaire (by a successor or a legal entity established by the concessionaire exclusively for implementation of a concession agreement) under a concession agreement, the initial value of such fixed assets is the value determined in accordance with paragraph 12 of Article 270 of this Code, and with no such value – the value in accordance with the procedure determined by the authorized body.

11. In case of receipt of fixed assets by a concession grantor upon termination of a concession agreement, the initial value of such fixed assets is that determined in accordance with paragraph 13 of Article 270 of this Code.

12. The initial value of fixed assets of an insurance, reinsurance company as of January 1, 2012 is the book value of fixed assets, investments in real estate, intangible assets, determined in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting excluding revaluations and impairments as of that date.

13. Fixed assets earlier disposed of due to temporary cessation of use in profit-oriented activities are subject to inclusion at the disposal value in the value balance of the fixed assets’ group in the taxable period in which such fixed assets are put into operation for use in profit-oriented activities, with account of expenses to be allocated to increase in the value of such assets in accordance with Article 272 of this Code.

14. Assets, for which preferences are canceled,shall be included in the value balance of a group (subgroup) in the cases specified in paragraph 4 of Article 276 of this Code at their initial value determined in accordance with this article.

15. An object of preferences, after expiration of three taxable periods following the taxable period in which this object was put into operation, in addition to the assets specified in paragraph 13 of this article, shall be included in the value balance of a group (subgroup) at zero value in the case specified in paragraph 6 of Article 276 of this Code.

16. The initial value of the fixed asset specified in subparagraph 4) of paragraph 1 of Article 266 of this Code shall be the expenses of repair, reconstruction, modernization, maintenance and other expenses incurred by the taxpayer in respect of the property received under a property lease (rent) agreement, except for a leasing agreement. In accordance with this paragraph, those expenses shall be accounted for which are incurred until the day of their recognition in accounting as a long-term asset, increasing its value in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting standards.

17. The initial value of a fixed asset received under a lease agreement is that at which the leased asset is received.

18. When a lessee returns a leased asset to a lessor, the initial value of a fixed asset is positive difference between the value at which the leased asset is transferred under the lease agreement and the value of the leased asset included in the amount of lease payments for the period running from the date of transfer until the date of return of the leased asset.

Footnote. Article 268 as amended by the Law of the Republic of Kazakhstan dated 02.04.2019 No. 241-VI (shall be enforced from 01.01.2018); dated 10.12.2020 No. 382-VI (effective from 01.01.2018); dated 21.12.2022 No. 165-VII (shall be enforced from 01.01.2023).