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

Article 298. Statement of participation (control) in a controlled foreign company

1. A resident shall be obliged to submit an application for participation (control) in a controlled foreign company no later than March 31 of the year following the reporting tax period.

An application for participation (control) in a controlled foreign company shall be submitted as of December 31 of the reporting tax period to the tax authority in the form established by the authorized body.

The provisions of this paragraph shall not be applied to the residents who meet the requirements of subparagraph 1) of paragraph 1 of Article 296 of this Code.

2. A resident shall submit an application for participation (control) in a controlled foreign company to the tax authority at the place of residence or location.

3. In case of incomplete information, inaccuracies or errors in submitted statement of participation (control) in a controlled foreign company, a resident has the right to submit an amended statement with account of updated information.

4. If a tax authority has information, including that from the competent or authorized body of a foreign country received due to the exchange of information for tax purposes in accordance with an international treaty to which the Republic of Kazakhstan is a party, evidencing that the resident owns participatory interests directly or indirectly or constructively, or has direct or indirect or constructive controlling interest in a controlled foreign company, and if such a resident failed to submit a statement of participation (control) in a controlled foreign company within the established time limits in accordance with this article, the tax authority shall send to this resident taxpayer a notice of elimination of violations of the tax legislation of the Republic of Kazakhstan, containing the following information:

1) the name or the last name, first name, patronymic (if it is indicated in an identity document) of the resident to whom the notice is sent;

2) the name of a controlled foreign company or permanent establishment of a controlled foreign company concerning which the tax authority has information evidencing that the resident owns participatory interests directly or indirectly or constructively, or has direct, indirect or constructive controlling interest in a controlled foreign company;

3) the numbers of state and (or) tax registration of a controlled foreign company or permanent establishment of a controlled foreign company (if any tax registration);

4) description of grounds, available to the tax authorities, allowing to recognize a resident as owning a participating interest or controlling interest in a controlled foreign company;

5) the demand to submit a statement of participation (control) in a controlled foreign company;

6) the demand to submit a corporate or individual income tax declaration reflecting a tax obligation in it in accordance with Article 297 of this Code.

5. If a resident admits violations indicated in the notice of elimination of violations of the tax legislation of the Republic of Kazakhstan, he/she/it shall submit to the relevant tax authority a statement of participation (control) in a controlled foreign company within thirty business days from the receipt of the notice of elimination of violations of the tax legislation of the Republic of Kazakhstan, a tax declaration regarding the inclusion of a tax obligation, arising in accordance with Article 297 of this Code, for the period of ownership of participating interests directly or indirectly or constructively or of direct or indirect or constructive controlling interest in a controlled foreign company.

6. In case of disagreement with the violations indicated in the notice, a resident submits one of the following documents:

1) written explanation of the revealed violations in hard or soft copy - to the tax authority that sent a notice of elimination of violations of the tax legislation of the Republic of Kazakhstan;

2) a complaint against actions (inaction) of tax officials that sent a notice of elimination of violations of the tax legislation of the Republic of Kazakhstan - to the authorized body or court.

In this case, the resident is obliged to submit, along with explanations, documents proving that he/she/it does not own participatory interests directly or indirectly or constructively or that he/she/it has no direct or indirect or constructive controlling interest in a controlled foreign company.

7. The tax authority is obliged to consider the explanations and supporting documents provided by the resident.

8. A resident taxpayer is recognized to own participatory interests directly or indirectly or constructively or have direct or indirect or constructive controlling interest in a controlled foreign company if one of the following conditions is observed:

in case of no complaint against actions (inaction) of tax officials that sent the notice, and in case of the taxpayer’s failure to execute the notice;

in case of no grounds denying the information, specified in paragraph 4 of this article, on the resident’s ownership of participatory interest directly or indirectly or constructively, or on direct or indirect or constructive controlling interest in a controlled foreign company pursuant to the consideration of explanations and supporting documents of the resident taxpayer, which are and (or) were available to the tax authority.

If in accordance with this chapter, a resident is recognized as owning participatory interests directly or indirectly or constructively or as having direct or indirect or constructive controlling interest in a controlled foreign company, the provisions of this chapter shall apply to such a resident. In this case, a tax authority sends to such a resident taxpayer a decision to recognize him/her/it as directly or indirectly or constructively owning participatory interests or having direct or indirect or constructive controlling interest in a controlled foreign company within three business days from the decision on such recognition.

9. A resident taxpayer who is recognized as owning participatory interests directly or indirectly or constructively or having direct or indirect or constructive controlling interest in a controlled foreign company has the right to appeal against this decision to the authorized body within fifteen business days from the receipt of such a decision.

10. The provisions of paragraph 8 of this article also apply to cases that simultaneously meet the following requirements:

1) a resident is refused to satisfy the complaint by:

court;

a higher-level tax authority;

the authorized body;

2) if the taxpayer fails to execute the notice of elimination of violation of the tax legislation of the Republic of Kazakhstan or there is a tax authority’s decision to recognize the resident taxpayer as owning participatory interests directly or indirectly or constructively or having direct or indirect or constructive control interest in a controlled foreign company.

11. The provisions of paragraphs 4 - 10 of this article shall also apply to cases when a resident submitted a statement of participation (control) in a controlled foreign company on time, but failed to provide information on one or more controlled foreign companies.

Footnote. Article 298 as amended by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (shall be enforced from 01.01.2020).

Chapter 31. LOSSES