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

Article 737. Features of payment

1. The mineral extraction tax shall be paid in monetary form, except for the case provided for in paragraph 2 of this article.

2. In the course of operating under a subsoil use contract, the monetary form of payment of the mineral extraction tax may be replaced by payment in kind in accordance with the decision of the Government of the Republic of Kazakhstan in the manner determined by an additional agreement concluded between the authorized state body and the subsoil user.

The procedure for in-kind payment of the mineral extraction tax established by this Code, as well as royalties and share of the Republic of Kazakhstan within production sharing established by subsoil use contracts specified in paragraph 1 of Article 722 of this Code, is established by Chapter 88 of this Code.
Article 738. The payers

The payers of the mineral extraction tax are subsoil users engaged in the extraction of hydrocarbons, mineral raw materials, groundwater and therapeutic muds, including the extraction of minerals from man-made mineral formations, on which the mineral extraction tax and (or) royalties have not been paid, within each individual concluded subsoil use contract, except for subsoil users operating exclusively under the license for prospecting.
Clause 1. The mineral extraction tax on hydrocarbons
Article 739. Taxable item

1. An item subject to the mineral extraction tax is the physical volume of hydrocarbons extracted by a subsoil user in a taxable period.

2. For the purposes of calculating the mineral extraction tax, the total volume of hydrocarbons extracted by a subsoil user in a taxable period is divided into:

1) oil sold for processing to an oil refinery located in the territory of the Republic of Kazakhstan - the volume of oil produced by a subsoil user under each individual subsoil use contract for a taxable period and sold by the subsoil user to an oil refinery located in the territory of the Republic of Kazakhstan or to a third party for subsequent sale to an oil refinery located in the territory of the Republic of Kazakhstan;

2) oil transferred for processing as customer-supplied raw materials to an oil refinery located in the territory of the Republic of Kazakhstan - the volume of oil produced by a subsoil user under each individual subsoil use contract for a taxable period and transferred by the subsoil user as customer-supplied raw materials for processing to an oil refinery located in the territory of the Republic of Kazakhstan, or sold to a third party for subsequent transfer as customer-supplied raw materials for processing to an oil refinery located in the territory of the Republic of Kazakhstan;

3) oil used by the subsoil user for own production needs - the volume of oil produced by the subsoil user under each individual subsoil use contract for a taxable period and used for own production needs within a taxable period;

4) oil transferred by the subsoil user in kind to pay the mineral extraction tax, the export rent tax, royalties and share of the Republic of Kazakhstan within production sharing to the recipient on behalf of the state in accordance with Chapter 88 of this Code;

5) crude gas sold on the domestic market of the Republic of Kazakhstan and (or) used for own production needs.

Unless otherwise established by this subparagraph, for the purposes of this Section, crude gas used for own production needs is recognized as crude gas extracted by a subsoil user under a subsoil use contract and used under this contract in accordance with the documents approved by the authorized body for hydrocarbons:

as a fuel in hydrocarbon treatment when carrying out subsoil use operations;

for technological and household needs;

for heating oil at the wellhead and for transporting oil from the place of production and storage to the place of transshipment to the main pipeline and (or) another mode of transport in accordance with approved project documents;

for the production of electricity used in subsoil use operations;

for reinjection into subsoil in the volume provided for by approved project documents, except for cases of reinjection into subsoil provided for in paragraph 5 of this article;

for the purposes of gas-lift (mechanized) method of operation of oil wells in the volumes provided for by project documents approved by the authorized body for hydrocarbons.

Crude gas used for own production needs is also recognized as crude gas extracted by a subsoil user under a subsoil use contract and used for reinjection into subsoil in order to maintain formation pressure in oil-and-gas zones under another subsoil use contract of the subsoil user in the volume provided for by the approved project documents;

6) associated gas used for production of liquefied petroleum gas in the volume attributable to liquefied petroleum gas sold on the domestic market of the Republic of Kazakhstan. In this case, such a volume of liquefied petroleum gas is approved by the authorized body for hydrocarbons and is mandatory for sale on the domestic market of the Republic of Kazakhstan in accordance with the legislation of the Republic of Kazakhstan on gas and gas supply;

7) crude gas used by a subsoil user that is an entity carrying out industrial and innovation activity, the implementation of which is stipulated by the Entrepreneurial Code of the Republic of Kazakhstan;

8) commercial hydrocarbons - the total volume of hydrocarbons extracted by a subsoil users for a taxable period under each individual subsoil use contract, less the volumes of oil, crude gas and associated gas specified in subparagraphs 1) - 7) of this paragraph, unless otherwise specified in this article.

3. In accordance with subparagraphs 5) and 6) of paragraph 2 of this article, the volume of crude gas used for own production needs and (or) associated gas used for production of liquefied petroleum gas is recognized as actual volume of such used natural and (or) associated gas within the limits specified in the documents approved by the authorized body for hydrocarbons.

4. To confirm the sale, specified in subparagraph 1) of paragraph 2 of this article, to an oil refinery located in the territory of the Republic of Kazakhstan or to a third party for subsequent sale to an oil refinery located in the territory of the Republic of Kazakhstan, and in subparagraph 2) of paragraph 2 of this article for transfer as customer-supplied raw materials for processing to an oil refinery located in the territory of the Republic of Kazakhstan, or sold to a third party for subsequent transfer as customer-supplied raw materials for processing to an oil refinery located in the territory of the Republic of Kazakhstan, a subsoil user is obliged to have original copies of commercial and shipping documents or their notarized copies confirming the physical volume and fact of acceptance by an oil refinery, located in the territory of the Republic of Kazakhstan, of a relevant volume of oil, and to confirm the sale, specified in subparagraph 1) of paragraph 2 of this article, to an oil refinery located in the territory of the Republic of Kazakhstan or to a third party for subsequent sale to an oil refinery located in the territory of the Republic of Kazakhstan - also original documents or their notarized copies of the actual purchase price paid by the oil refinery located in the territory of the Republic of Kazakhstan, for the relevant volume.

In case of no such original documents or their notarized copies, the relevant volume of oil is considered as commercial hydrocarbons, for the purposes of calculating the mineral extraction tax.

5. The mineral extraction tax is not paid on crude gas in the volume re-injected into subsoil in order to increase the oil recovery factor provided for in the approved project documents.