Tax law. (Lecture 2)

1. Tax Law

Madi Kenzhaliyev, LL.M

2. Terms & Translations

Terms & Translations
PIT
(Personal Income Tax) – ИПН
(Индивидуальный Подоходный Налог);
MS (Minimum Salary) – МЗП (Минимальная
Заработная Плата);
Pension (Compulsory Pension Contributions)
- ОПН (Обязательные Пенсионные
Взносы);

3. Goal

Tax Burden under Employment Contract;
Tax Burden under Civil Contract;
Tax Burden of Individual Entrepreneurs;

4. Types of Taxes

1. Corporate Income Tax
2. Personal Income Tax
3. VAT
4. Excise Duty
5. Export Rent Tax
6. Special Payments and Taxes
of Subsurface Users
7. Social Tax
8. Tax on Transport Vehicles
9. Land Tax
10. Property Tax
11. Tax
on
Gambling 12. Fixed Tax
Business
13. Uniform Land Tax

5. Personal Income Tax

1.
2.
Object of the PIT:
Revenues taxed at source (i.e. income from:
salary, dividends, interest, gains, pensions,
scholarships, lump-sum payment);
Revenues not taxed at source (property income,
income of IE, lawyers, private notaries, income
derived from sources outside of RK).

6. Personal Income Tax

1.
2.
3.
Rates of the PIT:
Revenues taxed at source - at the rate of 10%;
Income from dividends – at a rate of 5%;
Other rates stipulated by the Tax Code.

7. Social Tax

1.
2.
3.
Paid by the IP’s and LE’s.
For IP:
GEP – 2 MCI;
Patent – 1%;
Simplified Declaration – 1,5%.
Social Tax for Employees 11%.

8. Case

LABOR CONTRACT KZT 300,000.
Taxable Income – Deductions – Pensions –
Minimum Salary – PIT = Net Income;

9. Case

LABOR CONTRACT KZT 300,000.
- Pension: 300K * 10% = 270,000;
- Minimum Salary = 270,000 - 21,364 = 248,636;
- PIT = 248,636 * 10% = 24,864.
Social Tax =(Taxable Income – Pensions) * 11% =
(300,000 – 30,000)*11% = 29,700;
Total Taxes = PIT + Social Tax =
= 24 863 + 29 700 = KZT 54 563

10. Case

Let’s assume that Arman also get’s free
lunch at the expense of the Firm.
Each lunch costs – KZT 1,500;
Does Arman bears tax liability for
free lunches?
Calculate tax liability of Arman.

11. Case

November - 20 working days
Calculation:
1,500 * 20 = KZT 30,000;

12. Case

Tax Liability Calculation:
300,000 + 30,000 = 330,000;
Taxable Income – Deductions – Pensions – Minimum Salary
– PIT = Net Income;
Pension: 330K – (330K * 10%) = 297,000;
Minimum Salary = 297,000 - 21,364 = 275,636;
PIT = 275,636 * 10% = KZT 27,536.
Social Tax = (Total Revenue – Deductions - Pension)*0.11;
(330,000 – 33,000)* 11% = KZT 32,670;
Total Tax Liability = PIT + Social Tax = KZT 60,206

13. Case

Amount of Contract is KZT 300,000.
SERVICE CONTRACT
Arman is an IE (Individual Entrepreneur)
Company doesn’t have to pay any taxes for
Arman.

14. Tax Law

For Legal Entities:
Taxable Income = (Aggregate Annual Income)
- (Deductions);
Aggregate Annual Income of local LE’s shall
consist of income subject to be received
(received) both in the Republic of Kazakhstan
and beyond its boundaries during a tax period.

15. Case

Alex’s salary is KZT 1 mln.
Business Trip for 12 days to Moscow.
Carlton Hotel for 12 nights.
Cost per night was KZT 200,000.
Bonus - KZT 1 mln.
Vacation in France - 5 mln.
Company renovated his apartment for
KZT 600,000.
How much will be tax burden of the
company on Alex’s income?

16. Tax Code

Art.163. Tax Code
Income of employees taxable at source of payments
shall be determined as the difference between
income of employees assessed by the employers,
which is subject to tax, subject to adjustments
specified in Article 156 of this Code and amounts of
tax deductions specified in Article 166 of this Code.

17. Tax Code

Art.163. Tax Code
1) the money in cash and (or) non-cash forms to be
transferred by the employer to the employee;
2) the employee's income in kind;
3) the employee's income in the form of material
benefits.

18. Case

1. Total revenue = all income (in money or
in kind, art. 163) =
= Salary + Bonus + France + Renovation +
Hotel stay =
= 1 mln.(salary) + 1 mln.(bonus) +
5mln.(France) + 0.6 mln.(Renovation) + 0.2
mln.*12 (hotel stay) =
10,000 000

19. Deductions & Exemptions

Deductions & Exemptions
Deductions & Exemptions (art. 155 &
156) =
= business trip (art. 155 (3/4)
Max 8 MCI for abroad;
Max 6 MCI within RK;
(no more than 40 days)
8*MCI (1982 tenge)*12 days (business trip)
=
KZT 190,272

20. Maximum Pension

Maximum Pension =
= (75 * 21,364)*0.1 =
= KZT 160,230

21. PIT (Labor Law)

PIT = Taxable income *0.1
= (Total Revenue – Deductions &
Exemptions – Pension – Minimum
Salary)*0.1 =
=(10,000,000 (total revenue) –190,272
(deductions & exemptions) –
160,230 (pension) – 21,364 (minimum
salary))*0.1=
= 962,813.4

22. Social Tax (Labor Law)

ST = Taxable income *0.11 =
(Total Revenue – Deductions Pension)*0.11 =
(10,000,000 (total revenue) – 190,272
(deductions) – 160,230 (pension)) * 0.11=
= 1,061,445

23. Tax Burden (Labor Law)

Tax Burden of the Company =
PIT + Social Tax
=
962 813 + 1 061 445 =
= 2 024 258

24. Individual Entrepreneur

Tax Regimes of the IP
Generally
Established
Procedures
PIT – 10%;
Social Tax – 2 MCI;
Deductions;
Can Hire Employee
Simplified
Declaration
PIT – 1,5%;
Social Tax 1,5%;
No Deductions
Can Hire Employee
Patent
PIT – 1%:
Social Tax 1%;
No Deductions;
Cannot Hire

25. Individual Entrepreneur

1.
2.
3.
Generally Established Procedures:
PIT – 10%;
Social Tax – 2 MS for oneself and 1 MS for each
employee of the IP;
Pension: personally identify the income from
which pension contributions will be paid. Shall
not be less than 10 MS (10* 21,364) and not
more than 75 MS (75* 21,364).

26. Case

SERVICE CONTRACT
Arman is an IE: Generally Established Proc.
Amount of Contract is KZT 300,000.
Expenses – KZT 50,000;
Taxable Income – 250,000;
PIT: 250,000 * 10% = 25,000;
Social Taxes – 2 MS = 2 * 21,364 = 42,728;

27. Individual Entrepreneur

1.
2.
Special Tax Regime - Patent:
PIT – 1%;
Social Tax – 1%
*Note: IP can not hire employees and doesn’t
have the rights to make deductions from the
Taxable Income.

28. Case

SERVICE CONTRACT
Arman is an IE: Patent
Amount of Contract is KZT 300,000.
Expenses: KZT 50,000;
Taxable Income: 300,000;
PIT: 300,000 * 1% = 3,000;
Social Taxes: 300,000 * 1% = 3,000;

29. Individual Entrepreneur

1.
2.
Special Tax Regime – Simplified Declaration:
PIT – 1,5%;
Social Tax – 1,5%;
*Note: IP doesn’t have the rights to make
deductions from the Taxable Income.

30. Case

SERVICE CONTRACT
Arman is an IE: Simplified Declaration
Amount of Contract is KZT 300,000.
Expenses – KZT 50,000;
Taxable Income – 300,000;
PIT: 300,000 * 1,5% = 4,500;
Social Taxes: 300,000 * 1,5% = 4,500;