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

of March 2, 2007 No. NK-UNA-3-18/6617

The Tax Committee of the Ministry of Finance of the Republic of Kazakhstan, having considered the letter of the joint-stock company, reports the following.

According to Item 2 of article 251 of the Tax Code exceeding of VAT amounts on the turnovers assessed on zero rate returns to the payer of the VAT according to the procedure, stipulated in Clause 252 Tax codes if the following conditions are satisfied:

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

2) the turnover on realization assessed on zero rate for each of three months preceding month of filing of application on return constituted at least 70 percent in total leviable turnover on realization.

At the same time, Item 3 of article 251 of the Tax Code provides that in case of failure to carry out of conditions, stipulated in Item 2 these Articles, exceeding returns to the payer of the VAT regarding tax amount carried in offsetting on goods (works, services) used for the purposes of the turnover assessed on zero rate taking into account its obligations on the VAT for the previous tax periods.

The joint-stock company from 2004 to November, 2005 does not make sales of goods for export, in connection with the conclusion of the contract with National Bank of Kazakhstan and realization to it goods (precious metals).

The letter of MF RK Oil Company of December 12, 2006 No. NK-UM-2-14/11677 to the taxpayer makes explanation that "permanent realization" of goods for export, is understood as implementation by the payer of the VAT of sales of goods for export on permanent (continuous) basis - at least once a month or in quarter.

Return to the taxpayer of VAT amounts on the turnovers assessed on zero rate is performed by the Tax Committee on the district of Almaty according to Item 3 of article 251 of the Tax Code, that is regarding tax amount, carried in offsetting on goods (works, services) used for the purposes of the turnover assessed on zero rate because of non-compliance with conditions of Item 2 of article 251 of the Tax Code.

At the same time since December, 2005 sales of goods for export is enabled by the taxpayer on continuous (permanent) basis once a month.

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