Kazakhstan Parliament is currently considering amendments to legislation on new taxation for online businesses – so-called “Google Tax”. Thus, the draft law under consideration by the Mazhilis (lower house of the Parliament) proposes norms that would allow imposing VAT on foreign Internet companies selling online services and goods to citizens of Kazakhstan.
Let us briefly point the proposed amendments.
Who would be considered as VAT Payers?
VAT payers - are foreign companies providing their online platforms for electronic commerce (online sales of goods) and those providing online services to individuals in Kazakhstan.
Such online services may include the following:
•\tgranting rights to use software (including computer games);
•\tproviding advertising services;
•\tdata center services;
•\tdomain names’ registration and web hosting services;
•\tinformation systems and websites administration services;
•\tproviding access to search engines;
•\twebsites statistics’ maintenance;
•\tgranting rights to exploit electronic books, images, music, and audiovisual works via the Internet, including viewing or listening to them, etc.
When will online companies be qualified as VAT Payers?
Online companies will be charged VAT if one of the following conditions is met:
•\tthe buyer's place of residence is Kazakhstan;
•\tthe location of the bank where the bank account is opened and used by the buyer for payment of services, or the electronic money operator through which the buyer pays for services - is Kazakhstan;
•\tthe buyer's IP address used for the purchase of the services is registered in Kazakhstan;
•\tinternational country code of the telephone number (including mobile number) used for purchase or payment of services is assigned to Kazakhstan.
Is VAT Invoice to be issued?
The VAT payer is not required to issue VAT invoices for goods and services sold online.
How to pay VAT?
VAT is calculated at 12% from the tax base.
The VAT tax base is to be converted into tenge (Kazakhstan local currency) using the market exchange rate on the last working day preceding the date of receipt of the payment for goods and services.
VAT payment date to the budget is the day not later than the 25th day of the second month following the quarter in which the goods or services were sold.
We will keep you updated on the matter as information becomes available.
Information contained in this Client Update is general and cannot be used as legal advice or recommendation. Please note that Kazakhstan is an emerging economy, and its legislation and legal system are in constant development. Should you have any questions or want to discuss matters addressed in this Client Update, please contact us.