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

Article 411. Additional amount of VAT subject to offset

1. The following persons are entitled to offset additional amount of VAT:

1) producers of agricultural products, products of aquaculture (fish farming), including peasant or farm enterprises – with regard to turnovers from the sale of goods that are a result of agricultural production activity, products of aquaculture (fish farming), processing of these own-produced products;

2) legal entities – on turnover of the sales of goods resulting from the processing of agricultural products, fish farming products or commercial fishing. Processing of agricultural products, fish products includes the following types of activities, with the exception of activities in public catering:

production of meat and meat products;

processing and canning of fruits and vegetables;

production of vegetable and animal oils and fats;

milk processing and cheese production;

production of flour and cereal industry products;

production of prepared animal feed;

bread production;

production of baby food and dietary foods;

production of starch products;

processing of hides and wool of farm animals;

processing of live fish;

yeast production;

production of chocolate, sugary confectionery foods, biscuits and long-term storage confectionery, subject to the conclusion of an agreement by the taxpayer in the manner determined by the authorized body in the agro-industrial complex development;

sugar production;

3) agricultural cooperatives on turnovers from:

the sale of own-produced agricultural products, products of aquaculture (fish farming), as well as those produced by members of such a cooperative;

the sale of products that are a result of processing of own-produced agricultural products, products of aquaculture (fish farming), purchased from a domestic producer of such products and (or) produced by members of such a cooperative;

the performance of works, rendering of services to members of such a cooperative, according to the list approved by the authorized body for the agro-industrial complex development in coordination with the central authorized body for state planning and the authorized body, for the purposes of their turnovers indicated in this subparagraph.

The provisions of this paragraph do not apply to turnovers from the sale of excisable goods and products of their processing.

For the purposes of applying this paragraph, the types of activities are identified in accordance with General Classification of Economic Activities, approved by the state body for state technical regulation.

4) established legal entities within two years from the date of state registration - in terms of sales turnover of goods resulting from the implementation of activities for the production of products in the manufacturing industry (with the exception of metallurgical industry).

At the same time, the manufactured products must meet the criteria for sufficient processing and be confirmed by a certificate of origin in accordance with the legislation of the Republic of Kazakhstan.

The provisions of this subparagraph shall be applied to products, the production of which is not available on the territory of the Republic of Kazakhstan or does not cover the needs of the Republic of Kazakhstan.

The authorized body in the field of state support for industrial activity, based on the information of relevant authorized bodies shall publish a list of products, the production of which is not available on the territory of the Republic of Kazakhstan or does not cover the needs of the Republic of Kazakhstan, in accordance with the classifier of products by type of economic activity, approved by the authorized state body exercising state regulation in the field of technical regulation, as of July 1, 2021, no later than July 20, 2021, and subsequently - annually as of January 1, no later than January 10 of the corresponding year.

The provisions of this subparagraph shall be applied to legal entities that put into operation for the first time on the territory of the Republic of Kazakhstan buildings, structures, machinery and equipment for carrying out activities for the production of products in the manufacturing industry (with the exception of metallurgical industry).

The provisions of this paragraph shall not be applied to turnovers for the sale of excisable goods and products of their processing.

The definition of types of activities for the purposes of applying this paragraph shall be carried out in accordance with the General classifier of types of economic activities, approved by the authorized state body exercising state regulation in the field of technical regulation.

2. The taxpayers, specified in paragraph 1 of this article, may apply the provisions of this article, provided that they maintain separate accounting for:

turnovers from the sale with regard to activities provided for in paragraph 1 of this article and other activities;

goods, works, services (to be) received that are used or will be used in the activities specified in paragraph 1 of this article and other activities.

The amount of VAT on goods received, work, services used simultaneously in the activity provided by Paragraph 1 of this Article, and other activity shall be allocated to the amount of VAT allowed to be offset and not allowed to be offset, determined according to the following formulas:

VATao 1 = VAToffх T txl / О tot;

VATao 2 = VAToff – VATao 1, where:

VATao 1 - the amount of VAT allowed to be offset, for the activity provided by Paragraph 1 of this Article. This amount may have a negative value;

VAToff - the amount of VAT to be offset, taking into account the adjustment for goods, work, services used simultaneously in the activity provided by Paragraph 1 of this Article, and other activity. This amount may have a negative value;

T txl - the amount of taxable turnover for taxable period for which separate accounting shall be carried out in accordance with this Article;

О tot - the total amount of turnover, defined as the amount of turnover of the activity specified in Paragraph 1 of this Article, and other activity;

VATao 2 - the amount of VAT allowed to be offset, for other activity. This amount may have a negative value.

In the presence of non-taxable turnovers, the amount of VAT allowed to be offset for other activities shall be determined taking into account Articles 408 and 409 of this Code.

For other turnover, such a payer of VAT shall has the right to determine the amount of VAT allowed to be offset by the proportional method in accordance with Article 408 of this Code.

3. The taxpayers specified in subparagraphs 1), 3) and 4) of part one of paragraph 1 of this Article shall not be entitled to apply the provisions of this Article if the person is a foreigner, a legal entity-non-resident carrying out activity in the Republic of Kazakhstan through a permanent establishment.

4. The additional amount of VAT subject to offset is calculated using the following formula:

VATao = (VATtax – VATabo– VATex) х 70%, where:

VATao - additional amount of VAT subject to offset;

VATtax - the amount of VAT accrued on the activity, provided for in paragraph 1 of this article, from taxable turnover from the sale;

VATabo - the amount of VAT allowed to be offset, determined in accordance with Articles 408, 409 and 410 of this Code. Such an amount is determined for the goods, works, services (to be) received, which are used or will be used in the activities specified in paragraph 1 of this article;

VATex - the amount of VAT subject to offset in excess over the amount of the tax assessed on an accrual basis, as of the beginning of a reporting taxable period, on the activity provided for in paragraph 1 of this article.

The obtained zero or negative value is not accounted for when calculating VAT for a taxable period.

Footnote. Article 411 as amended by the Law of the Republic of Kazakhstan dated 24.05. 2018 No. 156-VI (shall be enforced from 01.01.2018); dated 10.12.2020 No. 382-VI (see Article 2 for the procedure of entry into force); dated 24.06. 2021 No. 53-VII (shall be enforced from 01.07.2021); dated 21.12.2022 No. 165-VII (shall be enforced from 01.01.2023).

Chapter 47. INVOICE