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

Article 270. Disposal of fixed assets

1. Unless otherwise established by this article, disposal of fixed assets is:

1) termination of recognition of these assets in accounting as fixed assets, investment in real estate, intangible and biological assets, except for cases of termination of recognition as a result of full depreciation and (or) impairment, transfer under a property lease (rent) agreement;

2) transfer of assets under a lease agreement;

3) allocation of these assets to assets held for sale, inventories;

4) with respect to fixed assets indicated in subparagraph 5) of paragraph 1 of Article 266 of this Code - termination of a property lease (rent) agreement, if the asset recognized in accounting after termination of the property lease (rent) agreement is not allocated to fixed assets.

For tax purposes, recognitionof disposal of fixed assets means the exclusion of disposed assets from fixed assets.

2. Unless otherwise established by this article, the cost balance of a subgroup (group) is reduced by the book value as of the date of disposal 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:

1) of fixed assets being disposed of;

2) of an asset accounted for after the termination of a property lease (rent) agreement - in respect of fixed assets specified in subparagraph 5) of paragraph 1 of Article 266 of this Code.

3. When selling fixed assets, except for transfer under a lease agreement, the value balance of a subgroup (group) is reduced by the selling price ex VAT.

If the sale and purchase agreement, including the sale and purchase agreement of an enterprise as a property complex, does not specify the sale price in terms of fixed assets, the cost balance of the subgroup (group) is reduced by the book value of the retired fixed 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, as of the date of sale.

When transferring fixed assets under a lease agreement, the value balance of a subgroup (group) is reduced by the value at which the leased asset is transferred in accordance with such an agreement.

4. In case of fixed assets’ transfer free of charge, the value balance of a subgroup (group) is reduced by the value of transferred assets specified in a certificate of transfer of the said assets, but not less than the book value of the said assets according to accounting data as of the date of transfer.

5. When transferring fixed assets as a contribution to the authorized capital, the value balance of a subgroup (group) is reduced by the value determined in accordance with the civil legislation of the Republic of Kazakhstan.

6. Unless otherwise provided by this paragraph, upon disposal of fixed assets as a result of reorganization by merger, acquisition, separation or spin-off, the value balance of the subgroup (group) of the reorganized legal entity shall be reduced by the book value of the transferred assets indicated in the transfer deed or separation balance sheet.

In case of reorganization by separating a legal entity in accordance with the decision of the Government of the Republic of Kazakhstan or by separating from a legal entity that is on the monitoring of large taxpayers at the date of reorganization, as well as in case of reorganization by merger, accession, taxpayers shall have the right for tax accounting purposes to reflect in the transfer act the value of the transferred fixed assets according to tax accounting data of the reorganized legal entity:

1) for fixed assets of group I - the residual value of fixed assets calculated in the manner specified in paragraph 3 of Article 267 of this Code;

2) for fixed assets of II, III, IV groups, subject to the transfer of all fixed assets of the group - the value of the value balance of the group, calculated in the manner specified in paragraph 8 of Article 267 of this Code. The provisions of this sub-paragraph shall also apply to the value balances of groups formed in accordance with the rules for maintaining separate tax accounting provided for in Article 194 of this Code.

The value balance of a subgroup (group) of a legal entity reorganized by merger, acquisition, as well as spin-off in the cases specified in part two of this paragraph shall be reduced by the value of the transferred fixed assets according to tax accounting data, reflected in the transfer act in accordance with this paragraph.

7. In case of seizure of property by a founder or a participant, the value balance of a subgroup (group) is reduced by the value agreed by founders, participants.

8. In case of loss, damage to fixed assets, in connection with which the recognition of an asset in accounting is terminated:

1) in cases of insurance of fixed assets - the value balance of a subgroup (group) is reduced by a value equal to the amount of insurance payments to an insurant by an insurance organization under an insurance contract;

2) without insurance of fixed assets of group I - the value balance of relevant subgroups is reduced by the residual value of fixed assets calculated in accordance with the procedure specified in paragraph 3 of Article 267 of this Code;

3) without insurance of fixed assets, except for fixed assets of group I, disposal is not stated.

8-1. was valid until 01.01.2023 in accordance with the Law of the Republic of Kazakhstan dated 11.07.2022 No. 135-VII.

9. When a lessee returns a leased asset to a lessor the value balance of a subgroup (group) is reduced by positive difference between the initial value at which the asset was recognized in tax accounting and the value of the leased asset included in the amount of lease payments for the period running from the date of receipt until the date of return of the leased asset.

10. When transferring fixed assets into trust management, the value balance of a group (subgroup) is reduced:

1) by the residual value of fixed assets – with respect to group I;

2) for II, III and IV groups – by the book value 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, as of the date of sale.

11. A trust manager terminating his/her obligations for trust management reduces the value balance of a group (subgroup):

1) by the residual value of fixed assets calculated in accordance with the procedure specified in paragraph 3 of Article 267 of this Code – with respect to group I;

2) with respect to groups II, III and IV:

when transferring all the assets of a group - by the value of the group’s value balance, calculated in the manner specified in paragraph 8 of Article 267 of this Code;

in other cases - by the initial value of transferred assets, determined in accordance with Article 268 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 a reporting 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.

12. When transferring fixed assets to a concessionaire under a concession contract, the value balance of a group (subgroup) of a concession grantor is reduced:

1) by the residual value of fixed assets, calculated in accordance with the procedure specified in paragraph 3 of Article 267 of this Code – with respect to group I;

2) by the value in accordance with the procedure determined by the authorized body – with respect to groups II, III and IV.

13. When transferring fixed assets to a concession grantor upon termination of a concession contract, the value balance of a group (subgroup) of a concessionaire is reduced:

1) by the residual value of fixed assets, calculated in accordance with the procedure specified in paragraph 3 of Article 267 of this Code – with respect to group I;

2) by the value in accordance with the procedure determined by the authorized body – with respect to groups II, III and IV.

14. In case of temporary cessation of use of fixed assets in profit-oriented activities:

1) disposal of fixed assets of group I used in seasonal production is not stated;

2) with respect to other fixed assets of group I, the value balance of respective subgroups is reduced by the residual value of fixed assets calculated in the manner specified in paragraph 3 of Article 267 of this Code. The subgroup’s value balance is decreased when taxable periods for temporary taking an asset out of serviceand its putting into operation after temporary cessation of use do not coincide;

3) the disposal is not stated with regard to groups II, III and IV.

Temporary cessation of use of fixed assets is their temporary taking out of servicewithout ceasing recognition of such assets in accounting as fixed assets, investment in real estate, intangible and biological assets.

For the purposes of this paragraph, fixed assets of group I used in seasonal production are fixed assets of group I that simultaneously meet the following requirements:

they cannot be used at the end of a reporting period due to the requirements specified in technical documentation concerning operation in certain temperature modes;

they participate in production process during a certain period of a calendar year, but not less than three months in connection with climatic, natural or technological conditions;

in a reporting taxable period, they were used in profit-oriented activities.

15. In case of disposal of a fixed asset from a subsoil user under a contract for exploration and production or production of hydrocarbons on complex projects (with the exception of onshore gas projects), the cost balance of the subgroup (group) is reduced by the book value determined in accordance with international financial reporting standards and (or) legal requirements of the Republic of Kazakhstan on accounting and financial statements as of the date of disposal, taking into account the previously applied conditional coefficient, established by paragraph 2-1 of Article 268 of this Code.

Footnote. Article 270 as amended by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (effective from 01.01.2018); dated 11.07.2022 No. 135-VII (enforcement, see art.3); dated 21.12.2022 No. 165-VII (shall be enforced from 01.01.2023).