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Tax preferences under investment priority project

Home Tax preferences under investment priority project

Tax preferences under investment priority project

In accordance  with Article 290 of the Entrepreneurial Code of the Republic of Kazakhstan  , tax preferences are granted to legal entities registered under the laws of  Republic of Kazakhstan pursuant the  tax legislation  of the Republic of Kazakhstan.

Types of tax preferences:

  • reduction of the amount of calculated corporate income tax (CIT) by 100 percent;
  • application of coefficient 0 to land tax rates;
  • calculation of property tax at a rate of 0 percent to the tax base;

An organization implementing an investment priority project for the creation of new industries and (or) for the expansion, renewal of existing industries reduces corporate income tax by 100 percent on income received from the implementation of priority activities through the operation of fixed assets that were introduced as new industries, expanded or updated as part of an investment priority project. Income of an organization implementing an investment priority project from carrying out other types of activities not related to priority ones is subject to corporate income tax in accordance with the generally established procedure.

CIT

An organization implementing an investment priority project is not entitled to apply other provisions of tax legislation for such a project that provide for a reduction in corporate income tax by 100 percent;

Deadline for applying such CIT reduction:

  • when creating new production facilities from January 1 of the year in which an investment contract for the implementation of an investment priority project is concluded until the expiration of ten consecutive years, which are calculated starting from January 1 of the year following the year in which an investment contract for the implementation of an investment priority project is concluded;
  • when expanding and (or) updating existing production facilities from January 1 of the year following the year in which the last fixed asset producing products was put into operation under an investment contract for the implementation of an investment priority project until the expiration of no later than three consecutive years, which are calculated starting from January 1 of the year following the year in which the last fixed asset producing products was commissioned under an investment contract for the implementation of an investment priority project.

However, when expanding and (or) updating existing production facilities with a phased commissioning of fixed assets producing products, provided for by the investment contract for the implementation of an investment priority project, the application period begins on January 1 of the year following the year in which the fixed asset is put into operation, producing products under the investment contract until the expiration of three consecutive years, which are calculated starting from January 1 of the year following the year in which the commissioning of a fixed asset producing products put into operation under the investment contract was made.

The deadline applies to each fixed asset that produces products and is provided for in the investment contract for the implementation of an investment priority project to expand and (or) upgrade existing production facilities.

LAND TAX

An organization implementing an investment priority project for the creation of new industries exempted from land tax.

Deadline for the application of the first part of this paragraph:

1) begins on the 1st day of the month in which an investment contract for the implementation of an investment priority project for the creation of new industries was concluded;

2) ends no later than ten consecutive years, which are calculated starting from January 1 of the year following the year in which the investment contract for the implementation of the investment priority project for the creation of new industries was concluded.

The provisions of part one of this paragraph shall not apply in cases of property lease (lease), for use on other grounds of a land plot used for the implementation of an investment priority project, or part of it (together with buildings, structures, structures located on it or without them) .

PROPERTY TAX

An organization implementing an investment priority project for the creation of new industries, for facilities first put into operation in the territory of the Republic of Kazakhstan, calculates property tax at a rate of 0 percent to the tax base.

Deadline for the application of the first part of this paragraph:

1) starts on the 1st day of the month in which the first asset is accounted for as fixed assets in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

2) ends no later than eight consecutive years, which are calculated starting from January 1 of the year following the year in which the first asset is accounted for as fixed assets in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

The provisions of part one of this paragraph shall not apply in cases of transfer of objects of taxation for use, trust management or lease.