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

Article 690. Taxable item

1. For a taxpayer applying a special tax regime with a fixed deduction, a taxable item is taxable income, defined as the difference between income with account of the adjustments provided for by paragraph 4 of Article 691 of this Code and the deductions provided for in this Clause.

2. The income of a legal entity or individual entrepreneur consists of income (to be) received by these persons in and outside the Republic of Kazakhstan within a taxable period.

3. For the purposes of this Clause, the following shall not be considered as income:

1) the value of property received as contribution to the authorized capital;

2) in case of distribution of the property of a legal entity under liquidation or reduction of the authorized capital, the value of property (to be) received by a shareholder, including that (to be) received in return for the earlier contributed one, in the amount of the paid authorized capital attributable to the number of shares, in proportion to which the property is distributed;

3) in case of distribution of the property of a legal entity under liquidation or reduction of the authorized capital, and also in case of return of a participatory interest or part thereof in a legal entity to a founder, participant, the value of property (to be) received by a participant, founder, including that (to be) received in return for the earlier contributed one, in the amount of the paid authorized capital attributable to a participatory interest, in proportion to which the property is distributed, but not exceeding the amount of expenses for its acquisition and (or) payment of contributions to the authorized capital made by a participant, in whose favor the property is distributed;

4) the value of property, which an issuer receives from the placement of its shares;

5) for a taxpayer transferring property - the value of property transferred free of charge;

6) the amount of penalty and fines written off in accordance with the tax legislation of the Republic of Kazakhstan;

7) the value of goods received free of charge for advertising purposes (also in the form of a gift), if the unit value of such goods does not exceed 5 times the monthly calculation index established for a relevant financial year by the law on the national budget and effective as of the date of such receipt;

8) the amount of reduction of the tax obligation in cases provided for by this Code;

9) unless otherwise provided by Section 7 of this Code, income arising from a change in the value of assets and (or) liabilities recognized as income in accounting in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial statements, except for those to be received (have been received) from another person;

10) increase in retained earnings by reducing reserves for revaluation of assets in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

11) income arising in connection with the recognition of an obligation in accounting in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, in the form of a positive difference between the amount of the obligation subject to fulfilment and the cost of this obligation, recognized in accounting;

12) the value of property, including works, services received in accordance with paragraph 8 of Article 243 of this Code;

13) excess of the amount of the positive exchange rate difference over the amount of the negative exchange rate difference;

14) income from writing off obligations;

15) income from doubtful obligations;

16) the following expenses incurred by an individual lessee that is not an individual entrepreneur in case of property rent (lease) of a dwelling, a residential unit (apartment) – if these expenses are not included in the rent for:

the maintenance of common property of a condominium unit in accordance with the housing legislation of the Republic of Kazakhstan;

the payment of utility services provided for by the Law of the Republic of Kazakhstan “On Housing Relations”;

the repair of a dwelling, a residential unit (apartment);

17) income from the disposal of fixed assets.

In this case, a taxpayer applying a special tax regime with a fixed deduction does not keep record of fixed assets.

4. For the purposes of this Clause, the following income is not considered as income of an individual entrepreneur if it is received in the form of:

1) dividends, interests, winnings earlier levied with individual income tax at source of payment, given documents confirming the withholding of such tax at source of payment;

2) targeted social assistance, benefits and compensations paid out of the state budget, the size of which is established by the legislation of the Republic of Kazakhstan;

3) scholarships;

4) charitable assistance;

5) the value of property received in the form of humanitarian aid;

6) property income;

7) the income of an employee;

8) the amount of compensation for material damage awarded by a court decision.

Footnote. Article 690 as amended by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (shall come into effect from 01.01.2018).