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

of September 25, 2009 No. HK-09-27/9272

The Tax Committee of the Ministry of Finance of the Republic of Kazakhstan, having analyzed claims to actions (failure to act) of officials of bodies of Tax Service for drawing of notifications on elimination of the violations revealed by bodies of Tax Service by results of cameral control, to taxpayers who carried on deductions expenses on KPN and on account of VAT amount on transactions with the taxpayers recognized by court the pseudo-companies (further - Notifications No. 7), are reported by the following.

The analysis of claims to actions (failure to act) of officials of bodies of Tax Service in the direction of Notifications No. 7 shows that the mistake which is the most often made by territorial tax authorities is reflection in such notifications of incorrect regulations of the Tax code.

For example, in the notification of 24.08.2009 No. XXX for the 2nd quarter 2006 handed by Tax Administration across Kurchatov of the East Kazakhstan region to Zh LLP the reference to the subitem 5) of Item 1 of Article 258, article 115 of the Tax Code enacted since 01.01.2009 is given.

In this connection, we pay your attention that when forming Notifications No. 7 it is necessary to specify regulations of the Tax code correctly.

The regulations of the tax legislation regulating exception of deductions of expenses on KPN and from offsetting of VAT amount on transactions with the taxpayers recognized by court the pseudo-companies are enacted since 01.01.2007.

At the same time when forming Notifications No. 7 on data of violation on tax periods till 01.01.2007, it is necessary to be guided by Item 2 of Article 92 and Item 1 of article 235 of the Tax Code in the edition operating till 01.01.2007.

According to Item 2 of article 92 of the Tax Code deductions are made by the taxpayer in the presence of the documents confirming the expenses connected with receipt of gross annual income. These expenses are deductible in that tax period in which they are actually made, except for of deferred expenses. Deferred expenses are deductible in that tax period to which they belong.

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