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

Article 664. The order for adjusting financial statements of a non-resident legal entity when applying the method of proportional distribution of expenses in individual cases

1. A non-resident legal entity is obliged to adjust the data of financial statements, which are used when calculating the amount of managerial and general administrative expenses to be recognized as deductibles of a permanent establishment, in the following cases:

if the duration of taxable periods in the Republic of Kazakhstan and those in the country of residence of such a non-resident differ;

if dates of the beginning and ending of taxable periods in the Republic of Kazakhstan and those in the country of residence of such a non-resident differ, whereas the indicated taxable periods are of the same duration.

To adjust the data of the non-resident’s financial statements, it is necessary to apply the adjustment factor (F) that reconciles a taxable period in the country of residence of such a non-resident with that in the Republic of Kazakhstan.

2. The factor (F) is defined as the ratio of the number of months of a taxable period in the country of residence of such a non-resident, included in a taxable period in the Republic of Kazakhstan, to the number of months of a taxable period in the country of residence of the non-resident.

If a taxable period in the Republic of Kazakhstan includes two taxable periods in the country of residence of such a non-resident in full or in part, two factors (F1, F2) are applied.

3. The data of financial statements of a non-resident legal entity are adjusted as follows:

F1хFS(CR)1 + F2хFS(CR)2,

where F1 = TP(CR)1/TP(CR)3; F2 = TP(CR)2/TP(CR)3,

wherein:

TP(CR)1 - the number of months of one taxable period in the country of residence of a non-resident, included in a taxable period in the Republic of Kazakhstan;

TP(CR)2 - the number of months of the other taxable period in the country of residence of a non-resident, included in a taxable period in the Republic of Kazakhstan;

TP(CR)3 - the total number of months of a taxable period in the country of residence of a non-resident;

FS(CR)1 - financial statements of a non-resident in the country of residence for one taxable period in the country of residence of a non-resident, included in a taxable period in the Republic of Kazakhstan;

FS(CR)2 - financial statements of a non-resident in the country of residence for the other taxable period in the country of residence of a non-resident, included in a taxable period in the Republic of Kazakhstan.