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

Article 745. Tax base

1. The tax base for calculating the mineral extraction tax is the value of taxable volume of recovered mineral reserves, contained in mineral raw materials, for a taxable period.

2. For the purposes of calculating the mineral extraction tax, mineral raw materials are divided into:

1) mineral raw materials containing only those minerals that are specified in paragraph 4 of this article;

2) mineral raw materials containing minerals specified in paragraph 4 of this article and other types of minerals at the same time;

3) mineral raw materials containing minerals, except for minerals specified in paragraph 4 of this article;

4) mineral raw materials extracted from written-off reserves (loss recovery) at a site;

5) mineral raw materials extracted from off-balance reserves at a site.

3. For the purposes of calculating the mineral extraction tax, the value of taxable volume of recovered mineral reserves contained in mineral raw materials for a taxable period is determined:

1) with regard to minerals contained in the taxable volume of recovered mineral reserves specified in subparagraph 1) of paragraph 2 of this article – on the basis of the average exchange price of such minerals for a taxable period.

The average exchange price, unless otherwise specified in this article, is defined as the product of the arithmetic mean of daily average price quotations for a taxable period and the arithmetic average market exchange rate for a relevant taxable period using the formula below.

For the purposes of this article, a price quotation means a mineral price quotation in foreign currency fixed by the London Metal Exchange or the London Bullion Market Association and published in the Metal Bulletin Magazine of Metal Bulletin Journals Limited, the Metal Pages Magazine of Metal-Pages Limited.

The average exchange price, unless otherwise specified in this article, is determined using the following formula:










where:

S - average exchange price of a mineral for a taxable period;

P1, P2, ..., Pn - daily average price quotation on the days, for which price quotations on the London Metal Exchange were published within a taxable period;

E - arithmetic average market exchange rate for a relevant taxable period;

n - the number of days in a taxable period, for which price quotations were published.

The daily average mineral price quotation is determined using the formula:










where:

Pn - daily average price quotation;

Сn1 - daily Cash price quotation for a mineral;

Сn2 - daily Cash Settlement price quotation for a mineral.

The average exchange price for gold, platinum, palladium is defined as the product of the arithmetic mean of the daily average price quotations for a taxable period and the arithmetic average market exchange rate for a relevant taxable period using the following formula:










where:

S - average exchange price for gold, platinum, palladium for a taxable period;

P1, P2, ..., Pn - daily average price quotation for gold, platinum, palladium on the days, for which the price quotations of the London Bullion Market Association were announced and published within a taxable period;

E - arithmetic average market exchange rate for a relevant taxable period;

n - the number of days in a taxable period, for which price quotations were published.

The daily average price quotation for gold, platinum, palladium is determined using the formula:










where:

Pn - daily average price quotation;

Сn1 - daily quotation of a.m. prices (morning fix) for gold, platinum, palladium;

Сn2 - daily quotation of p.m. prices (afternoon fix) for gold, platinum, palladium.

The average exchange price for silver is defined as the product of the arithmetic mean value of daily silver price quotations for a taxable period and the arithmetic average market exchange rate for a relevant taxable period using the following formula:










where:

S - average exchange silver price for a taxable period;

P1, P2, ..., Pn - daily silver price quotation on the days, for which price quotations of the London Bullion Market Association were announced and published within a taxable period;

E - arithmetic average market exchange rate for a relevant taxable period;

n - the number of days in a taxable period, for which quotations were published.

The average exchange price of a mineral is applied to the entire volume of each type of mineral contained in the taxable volume of recovered mineral reserves, specified in paragraph 4 of this article, and also to the amount transferred to other legal entities and (or) a structural unit within one legal entity for subsequent processing and (or) use for own production needs;

2) with regard to minerals specified in subparagraph 2) of paragraph 2 of this article:

minerals contained in taxable volumes of recovered mineral reserves specified in paragraph 4 of this article - in the manner specified in subparagraph 1) of this paragraph;

other types of minerals contained in taxable volumes of recovered mineral reserves – on the basis of the weighted average price of their sale, and in case of their transfer to other legal entities and (or) a structural unit within one legal entity for subsequent processing and (or) use for their own production needs – on the basis of the actual production cost of extraction and primary processing (enrichment), attributable to such types of minerals, determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, increased by 20 percent;

3) mineral raw materials specified in Subparagraph 3) of Paragraph 2 of this Article, based on the weighted average selling price of mineral raw materials, including those that that underwent only primary processing (enrichment).

4. The provisions of subparagraph 1) of paragraph 2 of this article shall apply to those types of minerals, for which official price quotations were fixed by the London Metal Exchange or the London Bullion Market Association in a reporting taxable period.

5. In case of no sale of mineral raw materials that underwent only primary processing (enrichment), except for mineral raw materials specified in Subparagraph 1) of Paragraph 2 of this Article, and minerals specified in Subparagraph 2) of Paragraph 2 of this Article, except for minerals specified in Paragraph 4 of this Article, their value shall be determined on the basis of the weighted average selling price of the last taxable period of such sale.

6. In case of no sale at all of mineral raw materials only processed (enriched) and (or) minerals from the commencement of a contract, the value shall be determined:

1) with regard to minerals contained in taxable volumes of recovered mineral reserves specified in paragraph 4 of this article - in the manner specified in subparagraph 1) of paragraph 3 of this article;

2) with regard to other types of minerals contained in taxable volumes of recovered mineral raw materials specified in subparagraph 2) of paragraph 2 of this article – on the basis of the actual production cost of extraction and primary processing (enrichment), attributable to such types of minerals, determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, increased by 20 percent;

3) mineral raw materials specified in subparagraph 3) of paragraph 2 of this article, with the exception of the one specified in subparagraph 4) of part one of this paragraph – on the basis of the actual production cost of extraction and primary processing (enrichment) attributable to such types of minerals, determined in accordance with the international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, increased by 20 percent;

4) uranium extracted from productive solutions – on the basis of the weighted average price per kilogram of uranium in the form of natural uranium concentrate (U3O8), determined as the product of arithmetic mean value of monthly price quotations per pound of uranium in the form of natural uranium concentrate (U3O8) in foreign currency for each month of the tax period, taking into account the conversion of pounds into kilograms in accordance with the approved coefficient and the arithmetic average of the market exchange rate for the relevant tax period according to the formula below.

For the purposes of part one of this subparagraph, the quotation of the price per pound of uranium in the form of natural uranium concentrate (U3O8) means the monthly indicator of the spot price per pound of natural uranium concentrate (U3O8) valid on the last day of the month in foreign currency based on the information published in the sources “Ux Weekly”, Ux Consulting LLC (USA) and “The Nuclear Market Review” by TradeTech LLC (USA).

In the absence of information on the quotation of the price of uranium in the form of natural uranium concentrate (U3O8) in one of the indicated sources, the price of another indicated source in which such a quotation is available shall be applied.

In the absence of information on the price quotation for uranium in the form of natural uranium concentrate (U3O8) in the sources specified in part two of this subparagraph, the price shall be applied according to other sources determined by the legislation of the Republic of Kazakhstan on transfer pricing.

The weighted average price per kilogram of uranium in the form of natural uranium concentrate is determined by the following formula:










where:

S- is the weighted average price quotation per kilogram of uranium in the form of natural uranium concentrate for the tax period;

P1, P2, P3 – arithmetic average monthly price quotation from sources for each month during the tax period;

the arithmetic average monthly price quotation is determined by the formula:










where:

Рn – is arithmetic average price quotation;

Cn - the value of the monthly quotation of the price per pound of uranium in the form of natural uranium concentrate (U3O8) on the last day of the corresponding month of the reporting period from the Ux Weekly source of Ux Consulting LLC (USA);

Dn - the value of the monthly quotation of the price per pound of uranium in the form of natural uranium concentrate (U3O8) (Exchange Value) on the last day of the corresponding month of the reporting period from the source "The Nuclear Market Review" of TradeTech LLC (USA);

K - the coefficient for converting pounds to kilograms, set at 2.59978;

E - arithmetic average market exchange rate of foreign currency for the corresponding tax period.

In case of subsequent sale of mineral raw materials that underwent primary processing (enrichment) and minerals contained in taxable volumes of recovered mineral reserves specified in Subparagraph 2) of Paragraph 2 of this Article, except for minerals specified in Paragraph 4 of this Article, a subsoil user shall be obliged to adjust the amounts of the calculated mineral extraction tax with account of the actual weighted average selling price in the taxable period of the first sale.

A subsoil user adjusts the calculated amounts of the mineral extraction tax for a twelve-month period preceding the taxable period of the first sale. In this case, the adjustment amount is a tax obligation for a current taxable period.

7. For the purposes of this article, the weighted average selling price for a taxable period is determined using the following formula:

P av. = (V1 s.b. х P1 s. + V2 s.b. х P2 s....+ Vns.b. х Pn s.)/V tot. sale,

where:

V1 s.b., V2 s.b.,. Vns.b. - volumes of each batch of minerals sold for a taxable period;

P1 s., P2 s. ... Pn s. - actual prices of sale of minerals for each batch in a taxable period;

n - the number of batches of minerals sold in a taxable period;

V tot.sale - total volume of sales of minerals for a taxable period.

A subsoil user applies the weighted average selling price to the entire volume of minerals extracted for a taxable period, also to the volumes transferred at the production cost of extraction to a structural unit within one legal entity for subsequent processing and (or) used for the subsoil user’s own production needs, including their use as raw materials for the production of commercial products.

8. If the selling price of a mineral is set in a foreign currency, then such price for sales transactions made after January 1, 2020, for the purposes of paragraph 7 of this Article, shall be recalculated in tenge using the market exchange rate determined on the date of transition of the right ownership of the mineral raw materials being sold, including those that have only undergone primary processing (enrichment), in accordance with the agreement (contract).

Footnote. Article 745 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 come into effect from 01.01.2020); dated 11.07.2022 No. 135-VII (shall be enforced from 01.01.2023).