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

Article 723-1. Features of tax accounting when reissuing the right to subsoil use for a licensed mode of subsoil use

1. In case of re-issuance of the subsoil use right from a subsoil use contract to a licensed subsoil use regime in accordance with the legislation of the Republic of Kazakhstan on subsoil and subsoil use, reissued subsoil use contract and the subsoil use license received in return for it in aggregate to maintain separate tax accounting in the tax period in which the re-issuance of a subsoil use contract shall be considered as a single subsoil use contract, and the activities of the subsoil user under the reissued subsoil use contract and the specified subsoil user within the framework of the obtained subsoil use license are considered as a single contractual activity for which a single separate tax accounting shall be maintained.

If, when reissuing a subsoil use right, instead of a subsoil use contract, a subsoil user is granted two or more subsoil use licenses, the subsoil use contract for the tax period in which the subsoil use contract was reissued shall refer to the aggregate part of the reissued subsoil use contract corresponding to the redistributed in accordance with clauses 2 - 7 of this Article for a license to objects of taxation and (or) objects related to taxation, and the specified license for subsoil use. Accordingly, the activity of a subsoil user within the framework of each obtained license for subsoil use and the corresponding part of the activity of the specified subsoil user under the reissued subsoil use contract in the tax period in which the subsoil use contract was reissued shall be collectively considered as a separate unified contractual activity for which separate tax accounting is maintained.

2. When reissuing the subsoil use right from a subsoil use contract to a subsoil use license regime in accordance with the legislation of the Republic of Kazakhstan on subsoil and subsoil use, objects of taxation and (or) objects related to taxation, according to the reissued contract, are recognized as objects of taxation and (or) objects related to taxation, under a license obtained in exchange for a reissued contract, from the beginning of the tax period in which the said subsoil use right was reissued.

If, when reissuing the right to subsoil use, instead of a subsoil use contract, a subsoil user is granted two or more subsoil use licenses, taxable objects and (or) objects related to taxation, taken into account in tax accounting under the reissued subsoil use contract, are subject to distribution among the obtained licenses in accordance with paragraph 3 of this Article from the beginning of the tax period in which the specified re-issuance of the subsoil use right was made, and are further taken into account when maintaining separate tax accounting, respectively, for activities within the framework of each subsoil use license.

3. The distribution of general and indirect income and expenses incurred by the subsoil user from the beginning of the relevant tax period until the date of re-issuance of the subsoil use contract for a licensed regime shall be carried out in accordance with paragraphs 8, 9, 10 and 11 of Article 723 of this Code.

Therewith, the taxpayer shall notify the tax authority no later than March 31 of the year following the year in which the subsoil use right was re-registered of the selected distribution methods, in accordance with paragraph 11 of Article 723 of this Code, which is not subject to revision and change.

In the absence of such notification within the time limits specified in part one of paragraph 7 of this Article, the method specified in subparagraph 1) of part one of paragraph 11 of Article 723 of this Code shall be applied for distribution purposes.

4. Distribution of the cost balance of a subgroup (group I), a group of depreciable assets formed under a subsoil use contract being reissued, as well as a separate group of depreciable assets specified in Article 258 of this Code, shall be carried out as of January 1 of the year in which the subsoil use right was reissued. Therewith, depreciable assets included in the specified cost balance of a subgroup (group I), a group of depreciable assets, must be classified into direct, indirect and general in accordance with paragraphs 8 and 11 of Article 723 of this Code.

5. Accumulated as of January 1 of the year in which the subsoil use right was re-registered, the funds of the liquidation fund are subject to distribution for licenses in accordance with paragraph 11 of Article 723 of this Code and are included in the total annual income of such licenses in the year in which such a right was re-registered subsoil use.

6. If at the beginning of the tax period in which the subsoil use contract was reissued to the subsoil use license regime, there are losses accumulated from previous tax periods under the subsoil use contract being reissued, these losses shall be taken into account in the following order:

if a subsoil user receives one subsoil use license, they shall be taken into account in the tax period in which the subsoil use contract was reissued, and in case of incomplete use, they shall be transferred for repayment at the expense of taxable income received from activities under the specified license within the period determined in accordance with Article 300 of this Code;

in case of obtaining two or more licenses for subsoil use - they are distributed as of January 1 of the year in which the subsoil use contract was reissued, taking into account the provisions of paragraph 11 of Article 723 of this Code, and the tax accounting policy of the subsoil user for the licenses received, are taken into account in the specified tax period in the relevant part for each license and are transferred for their further repayment at the expense of taxable income received from activities under the relevant license within the period determined in accordance with Article 300 of this Code.

7. Distribution of the general and indirect value balances of subgroups (group I), groups referred to in paragraph 4 of this article, accumulated funds in the liquidation fund referred to in paragraph 5 of this article, as well as losses referred to in paragraph 6 of this article, shall be carried out one by the same distribution method independently chosen by the subsoil user from the methods provided for in subparagraphs 1) - 5) of paragraph 11 of Article 723 of this Code, on which the taxpayer shall notify the tax authority no later than March 31 of the year following the year in which the subsoil use right was re-issued, and which not subject to review or change.

In the absence of such notification within the period specified in part one of this paragraph, the method specified in subparagraph 1) of part one of paragraph 11 of Article 723 of this Code shall be applied for distribution purposes.

Footnote. Chapter 82 is supplemented by Article 723-1 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).

Chapter 83. SIGNATURE BONUS