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

Article 712. Taxation of organizations implementing priority investment projects

1. An organization implementing a priority investment project on building new production facilities and (or) expanding, upgrading the existing ones:

1) reduces the corporate income tax calculated in accordance with Article 302 of this Code, by 100 percent of income received from implementation of priority activities through the operation of fixed assets, which were introduced as new production, expanded or updated as part of an investment priority project.

The income of an organization implementing a priority investment project from carrying out other activities, not related to the priority ones, is subject to corporate income tax in the generally established manner.

The organization implementing an investment priority project keeps separate tax accounting of taxation objects and (or) objects related to taxation in order to calculate tax liabilities.

If the terms of an investment contract for implementation of a priority investment project on the expansion and (or) upgrade of existing production facilities provide for the phased putting into operation of fixed assets manufacturing products, separate tax accounting is maintained for each fixed asset manufacturing products in accordance with the tax accounting policy.

An organization implementing a priority investment project is not entitled to apply other provisions of this Code allowing for a 100-percent reduction of corporate income tax within this project;

2) determines depreciation allowances for the value balances of groups (subgroups) of fixed assets put into operation within the priority investment project, by applying depreciation rates, established by paragraph 2 of Article 271 of this Code, to such value balances of groups (subgroups) as of the end of a taxable period.

2. The deadline for applying paragraph 1 of this article with regard to investment contracts for implementation of a priority investment project on:

1) building new production facilities:

begins on January 1 of the year, in which the investment contract for implementation of the priority investment project was concluded;

ends within ten consecutive years, which are calculated from January 1 of the year following the year, in which the investment contract for implementation of the priority investment project was concluded;

2) expanding and (or) upgrading existing production facilities, except for the cases specified in subparagraph 3) of this paragraph:

begins on January 1 of the year following the year, in which the last fixed asset manufacturing products was put into operation within the investment contract for implementation of the priority investment project;

ends within three consecutive years, which are calculated from January 1 of the year following the year, in which the last fixed asset manufacturing products was put into operation within the investment contract for implementation of the priority investment project;

3) expanding and (or) upgrading existing production facilities with the phased putting into operation of fixed assets manufacturing products, which is provided for by the investment contract for implementation of the priority investment project:

begins on January 1 of the year following the year, in which the fixed asset manufacturing products is put into operation within the investment contract;

ends within three consecutive years, which are calculated from January 1 of the year following the year, in which a fixed asset manufacturing products was put into operation within the investment contract.

The deadline applies to each fixed asset manufacturing products and specified in the investment contract for implementation of a priority investment project on expanding and (or) upgrading existing production facilities.

3. When calculating the land tax on land plots used for implementation of a priority investment project, an organization implementing a priority investment project on building new production facilities shall apply the coefficient of zero to relevant land tax rates.

The deadline for applying part one of this paragraph:

1) begins on the 1^st day of the month, in which an investment contract for implementation of a priority investment project on building new production facilities is concluded;

2) ends within ten consecutive years, which are calculated from January 1 of the year following the year, in which an investment contract for implementation of a priority investment project on building new production facilities was concluded.

The provisions of part one of this paragraph shall not be applied in cases of property lease (rent), provision for use on other grounds of a land plot used in implementation of a priority investment project, or a part thereof (with or without buildings, structures, constructions located on it).

4. Organization implementing an investment priority project for the creation of new industries, for facilities first put into operation on the territory of the Republic of Kazakhstan, shall calculate property tax at a rate of 0 percent to the tax base.

The provisions of part one of this paragraph shall apply to assets accounted for as fixed assets 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 provided for in the work program, which is an application to the investment contract concluded in accordance with the legislation of the Republic of Kazakhstan in the field of entrepreneurship.

Deadline for the application of the first part of this clause shall:

1) begin on the 1st day of the month in which the first asset is accounted for as fixed assets in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

2) end no later than eight consecutive years, which are calculated starting from January 1 of the year following the year in which the first asset is accounted for as fixed assets in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

The provisions of part one of this paragraph shall not apply in cases of transfer of objects of taxation for use, trust management or lease.

5. The provisions of this article shall apply if an investment contract for implementation of a priority investment project on building new production facilities allows for the application of:

100-percent reduction of corporate income tax, calculated in accordance with Article 302 of this Code;

a zero coefficient to land tax rates;

a zero rate to the tax base when calculating the property tax.

Footnote. Article 712 as amended by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (shall come into effect from 01.01.2018); dated 20.12.2021 No. 85-VII (shall be enforced from 01.01.2022).

Chapter 80-1 TAXATION OF PERSONS CONCLUDED INVESTMENT AGREEMENT

Footnote. The law is supplemented by chapter 80-1 in accordance with the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (shall come into effect from 01.01.2021).