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

of July 26, 2011 No. 21-28/8743

In connection with the addresses of taxpayers to Association of taxpayers of Kazakhstan, we ask you to provide explanations concerning the following questions.

According to the subitem 7) Item 1 of article 99 of the Tax Code: "from gross annual income of taxpayers are subject to exception: the investment revenues gained by share and joint-stock investment funds according to the legislation of the Republic of Kazakhstan on investment funds into accounts in custodians and which are on them".

The above-stated regulation of the Tax code is ambiguous in the interpretation and, including, implies that investment revenues are subject to release, in case of simultaneous accomplishment of two compulsory provisions:

1. receipt of investment revenue into accounts in custodian;

2. finding of investment revenue on accounts in custodian.

As this regulation does not specify about what accounts there is a speech, we can assume that the speech can go or about bank accounts, or about business accounts at custodian.

The analysis of the considered regulation shows that if the legislator means bank accounts, that inclusion of this regulation in the tax legislation does not make sense for the following reasons:

1. Expression "the income which is on the bank account" from the point of view of financial terminology not correctly as on the bank account there is money which belongs to assets of the company. While the income is the financial term for designation of inflow of benefits to the company and is reflected in the capital of the company.

2. If to assume that the income was implied as money the received on the bank account, then such means could be received on the bank account, however could not be there as owing to specifics of the activities, the investment fund shall reinvest immediately them and consequently no investment revenue will be exempted from the taxation as one of conditions of release of the income - finding of the income on accounts in custodian is not carried out.

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