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

Article 242. General provisions

1. When determining taxable income, the taxpayer’s expenses in connection with aprofit-oriented activity shall be deductible, with account of the provisions established by this article and Articles 243 - 263 of this Code, except for expenses not subject to deduction in accordance with this Code.

The provisions of this paragraph apply to the taxpayer’s expenses incurred both in the Republic of Kazakhstan and outside it.

The taxpayer’s expenses for construction, acquisition of fixed assets and other capital expenses are deductible in accordance with Articles 265 - 276 of this Code.

2. The taxpayer’s expenses related to activities carried out in a foreign state through a permanent establishment are subject to deduction in accordance with this Code.

When determining taxable income of a permanent establishment of a resident legal entity in a foreign country, it is allowed to deduct managerial and general administrative expenses incurred both in the Republic of Kazakhstan and outside it for the purposes of obtaining such a taxable income in accordance with the provisions of tax legislation of such a foreign state or an international treaty.

The amount of managerial and general administrative expenses is deductible in a foreign state, from which sources a resident legal entity receives income, in the manner prescribed by tax legislation of such a foreign state.

If tax legislation of a foreign state, from which sources a resident legal entity receives income, or an international treaty allows the deduction of managerial and general administrative expenses, but the foreign state’s tax legislation does not provide for the procedure for allocating such expenses to deductibles, a resident taxpayer allocates managerial and general administrative expenses to deductibles in the indicated foreign state in the manner determined by Articles 662 - 665 of this Code.

3. A taxpayer deducts actually incurred expenses given documents confirming such expenses related to a profit-oriented activity.

Prepaid expenses determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting are subject to deduction in the taxable period to which they relate.

3-1. Deductions for expenses on goods, works, services when they are acquired from the persons referred to in subparagraph 8) of paragraph 1 of Article 412 of this Code, under a civil law transaction, the value of which exceeds 1000 times the monthly calculation index established by the law on the republican budget and effective as of the date of such a transaction, are made subject to the provisions of paragraph 3 of this article and availability of an electronic invoice or a check of a cash register with the function of fixing and (or) transmission of data, containing the identification number of the buyer (client), recipient of goods, works, services, except for:

cases provided for by subparagraphs 4), 5) and 6) of paragraph 13 of Article 412 of this Code;

expenses for the acquisition of works, services from a non-resident;

goods brought into the territory of the Republic of Kazakhstan from the territories of the Eurasian Economic Union member states;

goods brought into the territory of the Eurasian Economic Union member states, subject to declaration in accordance with the customs legislation of the Eurasian Economic Union and (or) the customs legislation of the Republic of Kazakhstan.

In the case provided for by subparagraph 1) of paragraph 2 of Article 412 of this Code, deductions are made in the existence of an invoice on paper.

For the purposes of this section, the date of the invoice issue does not affect the date of recognition of expenses.

4. Unless otherwise established by this article and articles 243 - 263 of this Code, for the purposes of this section, the recognition of expenses, including the date of their recognition, shall be 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 event that the procedure for recognizing expenses in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting differs from the procedure for determining deductions in accordance with this Code, for tax purposes these expenses shall be accounted for in the manner established by this Code.

5. Unless otherwise provided by paragraph 4 of Article 192 of this Code, expenses arising in accounting due to a change in the value of assets and (or) liabilities when applying international financial reporting standards and the legislation of the Republic of Kazakhstan on accounting and financial reporting, other than those payable (paid), shall not be considered as expenses for taxation purposes.

6. If several expense items provide for the same types of expenses, the latter are deducted only once when calculating taxable income.

7. A taxpayer shall adjustdeductions in accordance with Article 287 of this Code. In this case, the sum of these deductions, with account of these adjustments, can have a negative value.

Footnote. Article 242 as amended by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (enforcement, Article 2); dated 24.06. 2021 No. 53-VII (effective from 01.01.2022).