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

Article 227. Income from sales

1. Income from sales is recognized as the amount of income generated by the sale of goods, works, services, except for income included in total annual income in accordance with Articles 228-240 of this Code, as well as income specified in paragraph 4 of Article 258 of this Code, in part not exceeding the amount of expenses specified in paragraph 1 of Article 258 of this Code.

2. Income from sales is determined in the amount of the value of goods, works, services, exclusive of the amount of VAT and excise duty.

3. The date of recognition of income from sales shall be determined in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

4. For the purposes of this Section, income from the provision of services includes:

1) income in the form of interest on a credit (loan, microcredit), repo transactions;

2) income in the form of remuneration for the transfer of property under a lease agreement;

3) royalties;

4) income from the rental (tenancy) of property, except for lease.

5. Income from sales is subject to adjustment in cases and in the manner established by the legislation of the Republic of Kazakhstan on transfer pricing.

Footnote. Article 227 as amended by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (effective from 01.01.2018).



Article 228. Income from increase in value

1. Income from increase in value is generated from:

1) the sale of non-depreciable assets, except for assets purchased for state needs in accordance with the laws of the Republic of Kazakhstan;

2) transfer of non-depreciable assets as a contribution to the authorized capital;

3) disposal of non-depreciable assets as a result of reorganization through merger, incorporation, division or separation.

2. For the purposes of this article, non-depreciable assets include:

1) land plots;

2) construction in progress;

3) uninstalled equipment;

4) assets with a service life of more than one year, not used in profit-orientedactivities, including long-term assets held for sale;

5) assets with a service life of more than one year not allocated to fixed assets in accordance with subparagraph 2) of paragraph 2 of Article 266 of this Code;

6) securities;

7) participatory interest;

8) investment gold;

9) fixed assets, the value of which is fully allocated to deductibles in accordance with the tax legislation of the Republic of Kazakhstan that was in effect until January 1, 2000;

10) assets put into operation within the framework of an investment project with regard to contracts concluded before January 1, 2009 in accordance with the legislation of the Republic of Kazakhstan on investments, the value of which is fully allocated to deductibles;

11) property attributed to social facilities in accordance with Article 239 of this Code.

3. As to non-depreciable assets, except for those provided for in paragraphs 4 and 5 of this article, the increase in each asset is recognized as:

1) a positive difference between the selling price and the initial value – upon sale;

2) a positive difference between the value of an asset determined on the basis of the value of a contribution to the authorized capital and the initial value - when transferred as a contribution to the authorized capital;

3) a positive difference between the value indicated in a transfer certificate or a separation balance sheet and the initial value - upon the disposal as a result of reorganization of a legal entity through merger, incorporation, division or separation.

4. As to debt securities, an increase in value for each security is recognized as:

1) a positive difference ex coupon between the selling price and the initial value, with account of amortization of a discount and (or) premium as of the date of sale - upon sale;

2) a positive difference ex coupon between the value of a debt security determined on the basis of the value of a contribution to the authorized capital and the initial value with account of amortization of a discount and (or) premium as of the date of transfer - when transferred as a contribution to the authorized capital;

3) a positive difference ex coupon between the value indicated in atransfer certificate or a separation balance sheet and the initial value with account of amortization of a discount and (or) premium as of the date of retirement – upon the disposal as a result of reorganization of a legal entity through merger, incorporation, division or separation.

5. As to assets indicated in subparagraphs 9) and 10) of paragraph 2 of this article, an increase in value for each asset is recognized as:

1) the cost of realization – upon sale;

2) the value of a contribution to the authorized capital - when transferred as a contribution to the authorized capital;

3) the value indicated in a transfer certificate or a separation balance sheet - upon the disposal as a result of reorganization of a legal entity through merger, incorporation, division or separation.

6. The initial cost of the assets specified in subparagraphs 1) - 6) and 8) of paragraph 2 of this article shall be determined in the following order:

a set of costs for acquisition, production, construction

or

if the assets were received as a contribution to the authorized capital, - the value of the contribution to the authorized capital,

or

if the assets were received as a result of reorganization - the value indicated in the deed of transfer or separation balance sheet,

or

in the event that the assets were received by a shareholder (participant, founder) as a result of the distribution of property during the liquidation of a legal entity or reduction of the authorized capital, as well as redemption by a legal entity from the founder, participant of a participation interest or a part thereof in this legal entity, redemption by a legal entity-issuer for a shareholder of shares issued by this issuer - the book value of the property received (received) by the shareholder, participant, founder during the distribution of property, including received (received) instead of previously contributed, as of the date of transfer, subject to reflection (reflected) in the accounting records of the transferor persons, excluding revaluation and impairment, reflected in the document confirming the transfer of such property and certified by the signatures of the parties,

or

in the event that the assets were received free of charge, - the value included in the total annual income in the form of the value of the property received free of charge in accordance with this Code,

plus

other costs that increase the value of assets, including after their acquisition, in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, except for:

costs (expenses) not subject to deductions in accordance with subparagraphs 2) , 3) , 4) and 5) of Article 264 of this Code;

depreciation charges.

The initial value of the assets specified in subparagraph 4) of paragraph 2 of this article excluded from fixed assets is the book value of such assets determined in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting as of the date of retirement from fixed assets, excluding revaluation and impairment.

7. The initial value of the participation share is:

a set of actual costs for its acquisition, costs associated with the acquisition and increasing the value of participatory interest in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting,

and/or

the value of contribution to the authorized capital, including if the participatory interest was received as a contribution to the authorized capital,

and/or

in the event that the participatory interest was received due to reorganization - the value indicated in the deed of transfer or separation balance sheet,

and/or

the book value of property to be received (received) by the shareholder, participant, founder in the course of the distribution of property, including the received ( to be received) one in return of previously contributed one, as of the date of transfer, subject to reflection (reflected) in the accounting records of the transferor, excluding revaluation and impairment, stated in a document confirming the transfer of such property and certified by the signatures of the parties – if the assets were received by a shareholder (participant, founder) due to the property distribution during the liquidation of a legal entity or a decrease in the authorized capital, also in case of repurchase by a legal entity from the founder, participant of a participatory interest or part thereof in this legal entity, repurchase of shares from a shareholder by a legal entity that issued these shares, 

and/or

in the event that the participatory interest was received gratuitously,- the value included in the total annual income in the form of the value of property received gratuitously in accordance with this Code.

7-1. The initial cost of the assets specified in subparagraphs 6) and 7) of paragraph 2 of this article, received by a resident legal entity as a result of acquisition from a non-resident legal entity, shall be determined in the following order:

the actual costs incurred by a non-resident legal entity for the acquisition of assets specified in the sale and purchase agreement or other type of agreement under which the assets were acquired,

or

if the assets were received as a contribution to the authorized capital of a non-resident legal entity, the value of the contribution to the authorized capital,

or

in the event that the assets were received due to reorganization of a non-resident legal entity,- the value indicated in the deed of transfer or separation balance sheet,

or

in the event that the assets were received by a non-resident legal entity due to property distribution in the course of liquidation of a legal entity, the shareholder (participant, founder) of which is this non-resident legal entity, or a decrease in the authorized capital of such a legal entity, also repurchase by a legal entity from a non-resident legal entity of shares, participatory interest or part thereof in this legal entity - the book value of the property to be received (received) by the non-resident legal entity in the distribution of property from the legal entity, including the property to be received (received) in return for the previously contributed one, as of the date of transfer, subject to reflection (reflected) in the accounting of a legal entity, excluding revaluation and impairment, reflected in a document confirming the transfer of such property and certified by the signatures of the parties,

plus

in the event that a non-resident legal entity made contributions to the authorized capital of the transferred legal entity - the value of such contributions to the authorized capital,

plus

the value of contributions to the authorized capital of a legal entity after its acquisition by a resident legal entity.

If the value of assets is determined in foreign currency, such value shall be recalculated in tenge at the market exchange rate determined as of the last business day preceding the date of the above transactions and (or) actions.

In this case, the initial cost is subject to reflection in a document confirming the sale of such assets, certified by the signatures of the parties.

This paragraph shall apply for the purposes of the subsequent sale of an asset by a resident legal entity that has accepted such an asset, provided that there are notarized copies of documents confirming the initial cost.

The provisions of this paragraph shall apply if at least ninety-nine percent of the participation shares, securities or other forms of equity participation with the persons transferring and acquiring assets directly or indirectly belong to one natural person.

8. The initial value of property attributed to social facilities in accordance with Article 239 of this Code is the book value of such assets as of the date of their disposal, exclusive of revaluations and impairments.

9. Was valid until 01.01.2020 in accordance with Law of the Republic of Kazakhstan No. 121-VI dated 25.12.2017.

10. For the purposes of this article, the value of the contribution to the authorized capital is:

the value of the asset transferred (received) as a contribution to the authorized capital, including as an additional contribution to the authorized capital, indicated in the deed of acceptance and transfer or other document confirming the acceptance and transfer of the asset, its value, but not more than the amount of the contribution to the authorized capital, in payment for which the asset was transferred (received);

the amount of money contributed (received) as a contribution to the authorized capital, including as an additional contribution to the authorized capital, but not more than the amount of the contribution to the authorized capital, in payment of which the money was transferred (received).

11. Income from increase in value is recognized when:

1) a non-depreciable asset is sold - in a taxable period in which such an asset was sold;

2) a non-depreciable asset is transferred as a contribution to the authorized capital - in a taxable period in which such an asset was transferred as a contribution to the authorized capital;

3) a non-depreciable asset is disposed of as a result of reorganization through merger, incorporation, division - in a taxable period for which liquidation tax returns are filed;

4) a non-depreciable asset is disposed of as a result of reorganization through separation - in a taxable period in which a separation balance sheet is approved.

12. Income from increase in value received from the sale of securities is included in total annual income, with account of the provisions of paragraphs 3, 4, 5, 6 and 7 of Article 300 of this Code.

Footnote. Article 228 as amended by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (enforcement, Article 2).