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LETTER OF THE TAX COMMITTEE OF THE MINISTRY OF FINANCE OF THE REPUBLIC OF KAZAKHSTAN

of February 11, 2011 No. HK21-28/1511

The Tax Committee of the Ministry of Finance of the Republic of Kazakhstan, reports the following.

1. Whether legal entities have the right to accept temporary financial aid (returnable loan) from physical persons if it has no permanent character for the legal entity,

On the first question

According to Item 3 of Article 715 of the Civil code of the Republic of Kazakhstan (further - RK Group) to legal entities and citizens forbids fund raising in the form of loan from citizens as business activity, and such agreements are recognized invalid from the moment of their conclusion.

This prohibition does not extend to cases when borrowers are the banks having the license of authorized state body for acceptance of deposits, and also for cases of acceptance of money in exchange for securities which release is registered in the procedure established by the legislation.

Thus, the above-stated regulation about fund raising prohibition in the form of loan from citizens as business activity extends to cases when the physical person provides cash loan to physical person or legal entity which transfers afterwards the received money to the third parties as loan for the purpose of income acquisition.

2. Whether means subitem 7) of item 2 of Art. 84 of the Tax code RK that the income arising in financial accounting of the legal entity who received temporary interest-free financial aid in connection with discounting on effective rate of percent for the purpose of the taxation as the income, including in the form of gratuitously the received services, is not considered,

On the second question

According to Item 1 of article 84 of the Tax Code the gross annual income of legal litsarezident consists of the income which is subject to obtaining (received) by this person in the Republic of Kazakhstan and beyond its limits during tax period.

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