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

Article 300. Loss carryforward

1. Losses from entrepreneurial activity, as well as losses from the disposal of fixed assets of group I and losses from the sale of construction in progress, uninstalled equipment, except for assets purchased for state needs in accordance with the laws of the Republic of Kazakhstan, are carried forward to the coming ten years inclusively, to cover them from taxable income in these taxable periods.

The taxable income of controlled foreign companies and permanent establishments of controlled foreign companies, with the exception of those registered in states with preferential taxation shall be reduced by the amount of losses from entrepreneurial activities in the Republic of Kazakhstan incurred during the reporting and two previous tax periods consecutively preceding the reporting tax period. Losses accounted for in the current and (or) previous periods at the expense of taxation objects determined by Article 223 of this Code shall not be taken into account

2. Losses from the sale of land plots, except for land plots purchased for state needs in accordance with the laws of the Republic of Kazakhstan, are offset by income from the increase in value obtained from the sale of such assets.

If these losses cannot be compensated in the period in which they occurred, then they can be carried forward to the coming ten years inclusively and offset by income from the increase in value obtained from the sale of land.

3. Unless otherwise established by this article, losses arising from the sale of securities are offset by income from the increase in value obtained in the sale of other securities, except for income from the increase in value obtained in the sale of securities specified in paragraphs 4, 5, 6 and 7 of this article.

If these losses cannot be offset in the period in which they occurred, then they can be carried forward to the coming ten years inclusively and offset by income from the increase in value obtained from the sale of other securities, unless otherwise established by this article.

4. Losses arising from the sale of shares, participatory interests in a resident legal entity or a consortium established in the Republic of Kazakhstan are offset by income from the increase in value in the sale of shares, participatory interests in a resident legal entity or consortium established in the Republic of Kazakhstan. This paragraph applies provided all of the following requirements are met:

the taxpayer has been holding shares or participatory interests for more than three years as of the day of sale of these shares or participatory interests;

such an issuing legal entity or such a legal entity, a participatory interest in which is being sold, or a participant in such a consortium, which sells a participatory interest in such a consortium, is not a subsoil user;

the property of persons (a person), who are (is) subsoil users (subsoil user), in the value of the assets of such an issuing legal entity or such a legal entity, a participatory interest in which is being sold, or in the total value of assets of consortium participants, a participatory interest in which is being sold, is not more than 50 percent as of the day of such a sale.

The period of the taxpayer’s ownership of shares or participatory interests specified in this paragraph is determined cumulatively with account of the terms of ownership of shares or participatory interests by former owners if such shares or participatory interests are received by the taxpayer as a result of reorganization of former owners.

For the purposes of this sub-paragraph, a subsoil user shall not be recognized as a subsoil user who is such solely because of the possession of the right to extract groundwater and (or) widespread minerals for their own needs, as well as a subsoil user exercising during the twelve month period preceding the first day of the month in which shares or participatory interest, subsequent processing (after primary processing) of at least 50 percent of the mineral raw materials mined for the specified period, including coal, at its own and (or) owned by a resident legal entity that is a related party, production facilities located in the Republic of Kazakhstan.

When determining the volume of mineral raw materials, including coal, sent for further processing, it is necessary to take into account raw materials:

directly going to produce goods obtained as a result of any processing following primary processing;

used in the production of primary processing products for the purpose of its further after-treatment.

In this case, the share of property of persons (a person) that are (is) subsoil users (a subsoil user) in the value of assets of a legal entity or consortium whose shares or participatory interests are being sold, is determined in accordance with Article 650 of this Code.

Paragraph 4-1 shall remain in force before 01.01.2029 in accordance with the Law of the Republic of Kazakhstan dated 26.12.2018 No. 203-VI.

4-1.Losses arising from the sale of shares issued by legal entities specified in Subparagraph 6) of Paragraph 1 of Article 293 of this Code, participatory interests in legal entities specified in Subparagraph 6) of Paragraph 1 of Article 293 of this Code shall be compensated for account of increment of value in sale shares issued by legal entities specified in Subparagraph 6) of Paragraph 1 of Article 293 of this Code; participatory interests in legal entities specified in Subparagraph 6) of Paragraph 1 of Article 293 of this Code.

5. Losses arising from the sale through open bids at a stock exchange in the territory of the Republic of Kazakhstan of securities that are in official lists of this stock exchange as of the day of sale are offset by income from the increase in value of securities that are in official lists of a stock exchange in the territory of the Republic of Kazakhstan when sold through open bids at this stock exchange as of the day of sale.

6. Losses arising from the sale of government-issued securities are offset by income from the increase in value in the sale of government-issued securities.

7. Losses arising from the sale of agency bonds are offset by income from the increase in value in the sale of agency bonds.

8. If the losses specified in paragraphs 4, 5, 6 and 7 of this article cannot be offset in the period in which they occurred, they are not carried forward to subsequent taxable periods.

9. Losses of a special financing company from an activity carried out in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization may be carried forward in securitization transactions within the circulation period of bonds secured with allocated assets.

10. Losses arising from the application of a special tax regime for producers of agricultural products, aquaculture products (fish farming) and agricultural cooperatives are not carried forward to subsequent taxable periods.

Paragraph 11 is in effect until 01.01.2027 according to Law of the Republic of Kazakhstan № 121-VI as of 25.12.2017.

11. Losses of a bank’s subsidiary acquiring doubtful and bad assets of its parent bank are not carried forward to subsequent taxable periods.

12. Losses from derivative financial instruments used for purposes other than those for hedging or delivery of an underlying asset are offset by income from derivative financial instruments used for purposes other than those for hedging or delivery of an underlying asset.

If such losses cannot be offset in the period in which they occurred, they may be carried forward to the coming ten years inclusively and offset by income from derivative financial instruments used for purposes other than those for hedging or delivery of an underlying asset.

13. Losses from entrepreneurial activity of a legal entity, except for that specified in paragraph 14 of this article, on an activity for which this Code provides for the reduction of corporate income tax calculated in accordance with Article 302 of this Code by 100 percent, are not carried forward to subsequent taxable periods.

14. Losses of an organization implementing a priority investment project within the framework of an investment contract concluded in accordance with the legislation of the Republic of Kazakhstan in the field of entrepreneurship shall not be carried forward to taxable periods following the taxable period in which such an investment contract is terminated.

15. Losses on the intellectual property object referred to in paragraph 4-3 of Article 293 and paragraph 4 of Article 709 of this Code shall be compensated in subsequent tax periods at the expense of taxable income on each intellectual property object within the statute of limitations.

Footnote. Article 300 as amended by the Law of the Republic of Kazakhstan dated 26.12.2018 No. 203-VI (shall be enforced from 01.01.2019); dated 10.12.2020 No. 382-VI (shall be enforced from 01.01.2020); dated 20.12.2021 No. 85-VII (shall be enforced from 01.01.2023).