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

of December 22, 2009 No. HK-08-17/13080

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

According to Item 2 of article 272 of the Tax Code the exceeding of the VAT which developed on the goods, works, services acquired till January 1, 2009 is not subject to return from the budget except for of the exceeding formed in connection with purchase of goods of works, services which are used or will be used for the purpose of the turnovers assessed on zero rate.

According to Item 2 of article 25 of the Law of the Republic of Kazakhstan "About enforcement of the Code of the Republic of Kazakhstan "About taxes and other obligatory payments" (Tax code)" (further - the Law), on the turnovers on realization assessed on zero rate, the exceeding specified in Item 1 of this Article returns to the budget to the payer of the VAT according to the procedure, established by this Article, in case of simultaneous compliance to the following conditions:

the payer of the VAT enables permanent sales of goods, the works, services assessed on zero rate;

the turnover on realization assessed on zero rate for tax period in which the revolutions assessed on zero rate and on which the tax application for return of exceeding of the VAT is submitted are made constituted at least 70 percent in total leviable turnover on realization.

At the same time, as appears from your letter the export share in total turnover on realization constituted less than 70 percent.

Item 3 of article 25 of the Law provides that in case of failure to carry out of conditions, stipulated in Item 2 these Articles, exceeding of the VAT returns to the payer of the VAT regarding tax amount carried in offsetting on the realized goods to the performed works rendered to the services used for the purposes of the turnover on realization assessed on zero rate taking into account its tax liability on payment of the VAT for the previous tax periods.

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