VAT exemption for import became available from 1 January, 2017 for investors, carrying out investment projects and from 1 January, 2018 for investors, carrying out special investment projects. The provisions on VAT exemption for import are set out in the Tax Code the Republic of Kazakhstan (the Tax Code).
Pursuant to the sub-point 15 point 1 article 399 Tax Code, import value of raw and other materials within investment contract is exempt from the VAT if the following conditions are simultaneously met:
- Raw and other materials are on the List of raw and other materials free from VAT on import in frames of investment contract, established by the authorized state body on investments and approved by the authorized state planning and authorized public budgeting state body;
- Imports of raw and other materials are documented pursuant to the customs laws of the Customs Union and Republic of Kazakhstan;
- VAT payer should submit with the customs body a commitment document on usage of imported raw and other materials within the time allowed for claims and solely within the investment contract.
List of raw and other materials to be exempt from VAT on import within the investment contract is set forth in the Order of the Ministry of Investment and Development of the Republic of Kazakhstan of 27 February 2018 No.140.
VAT free import of raw and other materials within the investment contract is granted to the legal entities of the Republic of Kazakhstan for the period of 5 consecutive years from the 1st day of the month of commissioning of the fixed assets, which are indicated in the working programme, annexed to the investment contract and signed pursuant to the investments laws of the Republic of Kazakhstan.
When the working programme provides commissioning of two and more fixed assets, the VAT exemption period for imports of raw and other materials within the investment contract shall be calculated from 1st of month of commissioning of the first fixed asset indicated in the working programme.
Failure to comply with these rules, under this provision, within five years from the time of goods release for free circulation or internal consumption in the territory of the Republic of Kazakhstan triggers mandatory payment of VAT for imported raw and other materials inclusive of fine, accrued from the established VAT payment date for import in manner and in the amount specified in the customs laws of the Customs Union and the customs laws of the Republic of Kazakhstan.
Special Investment Project
Pursuant to sub-point 15, point 1, article 399, the Tax Code, VAT exemption shall be applicable for import of raw materials and/or materials imported as a part of transport vehicles; and/or materials imported as a part of farm machinery provided that they are placed under customs procedures of free customs zone stock under special investment contract between an authorized investment body and a legal entity,:
- a producer of transport vehicles that signed an agreement on industrial assembly of motor vehicles with the authorized body for state support of industrial and innovative activity;
- a producer of farm machinery.
In accordance with point 3 article 399, the Tax Code, VAT exemption for import of goods components of the finished products manufactured in the territory of special economic zone or free customs zone stock is applicable by a legal entity which signed a special investment contract with the authorized investment body, subject to as follows:
- all goods are placed under the customs procedure of free customs zone stock or free warehouse;
- customs procedure of free customs zone or free warehouse will terminate in customs procedure of release for free circulation;
- the goods, components of the finished produces are identified as per the customs laws of the Republic of Kazakhstan.