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

Article 264. Non-deductible expenses

Not subject to deduction:

1) are expenses not related to profit-oriented activities;

2) are expenses for transactions without actual performance of works, rendering of services, shipment of goods that were carried out with a taxpayer, whose head and (or) founder (participant) is not involved in registration (reregistration) and (or) financial and economic activities of such a legal entity, established by a final and binding court judgment, except for transactions for goods, works, services actually received from such a taxpayer as established by court;

3) are expenses for transactions with a taxpayer recognized inactive in the manner specified in Article 91 of this Code, from the date of issuing an order to recognize it as inactive;

4) expenses for the amount indicated in the invoice and (or) other document, the extract of which is recognized by an enforced court ruling or resolution of criminal investigation body on terminating the pre-trial investigation on non-rehabilitating grounds, as committed by a private business entity without actually performing work, rendering of services, shipment of goods;

5) are expenses for a transaction declared invalid by a final and binding court judgment;

6) are forfeits (fines, penalties) (to be) paid to the budget, except for forfeits (fines, penalties) (to be) paid to the budget under public procurement contracts;

7) is the amount of expenses, for which this Code establishes rates to be allocated to deductibles, in excess over the maximum amount of deduction calculated using the specified rates;

8) is the amount of taxes and payments to the budget calculated (assessed) and paid in excess of the amounts established by the legislation of the Republic of Kazakhstan or another state (on taxes and payments paid to the budget of another state);

9) are costs of acquisition, production, construction, assembly, installation and other costs included in the value of social facilities provided for in Article 239 of this Code, as well as expenses for their operation;

10) is the value of property transferred by the taxpayer free of charge, unless otherwise provided for by this Code. The cost of works performed and services rendered free of charge is determined up to the amount of expenses incurred in connection with such performance of works, rendering of services;

11) is VAT amount in excess over VAT amount for a taxable period received by a taxpayer applying Article 411 of this Code;

12) are contributions to reserve funds, except for deductions provided for in Articles 250, 252 and 253 of this Code;

13) is the book value of inventories transferred under a contract of purchase and sale of an enterprise as a property complex;

14) is the amount of an additional payment paid by a subsoil user operating under a production sharing contract;

15) are expenses of a taxpayer included in accordance with Article 228 of this Code in the initial value of non-depreciable assets;

16) are expenses related to the sale of minerals transferred by a subsoil user to fulfill the tax obligation in kind;

17) is the value of volumes of minerals transferred by a subsoil user to fulfill the tax obligation in kind - from a recipient on behalf of the state;

18) is the book value of assets transferred into temporary possession and use under a contract of property lease (rent), except for a lease agreement;

19) is the value of volumes of minerals transferred by a subsoil user to fulfill the tax obligation in kind;

Subparagraph 20) is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

20) are expenses of a bank’s subsidiary acquiring doubtful and bad assets of its parent bank:

in the form of money received by this subsidiary, in accordance with the legislation of the Republic of Kazakhstan on banks and banking activity, and transferred to the parent bank;

not related to the implementation of activity provided for by the legislation of the Republic of Kazakhstan on banks and banking activity;

21) are expenses of a non-commercial organization for the income specified in paragraph 2 of Article 289 of this Code;

22) expenses of an individual entrepreneur registered as a value added tax payer, or a legal entity on the account of another individual entrepreneur registered as a value added tax payer, or a legal entity under a civil law transaction, which are paid in cash, inclusive of value added tax, regardless of the frequency of payment, in an amount exceeding 1000 times the monthly calculation index established by the law on the republican budget and effective as of the payment date.

23) the costs of acquiring from a non-resident - by a related entity of management, advisory, consulting, auditing, designing, legal, accounting, lawyer’s, advertising, marketing, franchising, financial (excluding remuneration costs), engineering, agency services, royalties, rights to use intellectual property objects.

For the purposes of part one of this subparagraph, the following shall be recognized as related entities:

individuals indicated in paragraph 2 of Article 1 of this Code;

a legal entity that, together with another legal entity, is part of the same group of companies;

individuals and (or) legal entities, when the relationship between such persons has signs of interconnectedness, regardless of the conditions specified in this part. In this case, if the taxpayer does not recognize the interconnectedness, such recognition shall be established by the court on the basis of the tax authority’s claim.

For the purposes of part two of this subparagraph, a group of companies shall mean a structure of commercial and non-commercial organizations, including a parent company and companies whose shares, stakes and other equity instruments such a parent company directly or indirectly owns.

Footnote. Article 264 as amended by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (effective from 01.01.2021); dated 11.07.2022 No. 135-VII (shall be enforced from 01.01.2023).

Subchapter 3. Deductions of fixed assets