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

Article 272. Deduction of subsequent expenses

1. Expenses shall be recognized as subsequent if these are expenses for operation, repair, reconstruction, modernization, maintenance, liquidation and other costs incurred on the following assets, after their recognition in accounting,:

1) fixed assets, including in the period of temporary cessation of their use;

2) not related to intangible assets of fixed assets, investments in real estate, intangible and biological assets recorded in the accounting of the taxpayer in accordance with international financial statements and (or) requirements of the legislation of the Republic of Kazakhstan on accounting and financial statements and intended for use in activities aimed at receiving income, with the exception of assets indicated:

in subparagraph 1) of paragraph 2 of Article 266 of this Code - in the period before the commencement of extraction after commercial discovery;

in subparagraphs 7) and 15) of paragraph 2 of Article 266 of this Code;

3) the assets specified in Article 260 of this Code.

Subsequent expenses include, in particular, expenses paid by the taxpayer’s reserve funds, except for subsoil users’ expenses paid by the liquidation fund, contributions to which are allocated to deductibles in accordance with Article 252 of this Code.

Subsequent expenses also include the costs of operation, repair, reconstruction, modernization, maintenance and others incurred on property received under a property lease (rent) agreement.

2. Unless otherwise provided for in paragraphs 3 and 4 of this article, the amount of subsequent expenses to be accounted for as an increase in the book value of assets attributable to fixed assets, assets specified in subparagraph 14) of paragraph 2 of Article 266 of this Code, as well as subsequent expenses specified in paragraph 5 of Article 276 of this Code:

1) increases the value balance of a group (subgroup) corresponding to the type of an asset;

2) with no value balance of a group (subgroup) corresponding to the type of an asset, it forms the value balance of a group (subgroup) corresponding to the asset type at the end of a current taxable period.

Subsequent expenses provided for in this paragraph are recognized, for tax purposes, in the taxable period in which they are allocated to increase the book value of assets in accounting records, except for the case provided for in paragraph13 of Article 268 of this Code.

The amount of subsequent expenses incurred on property received under a property lease (rent) agreement, except for a lease agreement, and recognized in accounting as a long-term asset shall be accounted for in accordance with Subparagraph 4) of Paragraph 1 of Article 266 of this Code as a fixed asset.

3. A taxpayer entitled to apply investment tax preferences, at his/her/its choice, may deduct subsequent expenses for the reconstruction, modernization of buildings and production facilities, as well as machinery and equipment in accordance with paragraph 2 of this article or Articles 274 - 276 of this Code.

4. As to the assets specified in subparagraph 1) of paragraph 2 of Article 266 of this Code, the amount of subsequent expenses, incurred from the commencement of extraction after commercial discovery of minerals to be accounted for as an increase in the book value of such assets, increases the amount of accrued expenses for the group of depreciable assets provided for by paragraph 1 of Article 258 of this Code at the end of a taxable period, also in case when such an amount at the end of the taxable period is zero.

For tax purposes, subsequent expenses provided for in this paragraph are recognized in the taxable period in which they are accounted for as an increase in the book value of assets.

5. Subsequent expenses, including those incurred by a lessee in respect of leased property, except for those specified in paragraphs 2 and 4 of this article, as well as subsequent expenses increasing, in accordance with paragraph 6 of Article 228 of this Code, the initial value of non-depreciable assets shall be allocated to deductibles in the taxable period in which they are incurred.

Footnote. Article 272 as amended by the Law of the Republic of Kazakhstan dated 02.04.2019 No. 241-VI (shall be enforced from 01.01.2018); dated 10.12.2020 No. 382-VI (shall be enforced from 01.01.2018).