Kazakhstan Proposes New Tax Measures for Foreign Companies Engaged in E-Commerce and the Supply of Electronic Services to Individuals

The proposed amendments to the Tax Code of the Republic of Kazakhstan introduce a number of measures aimed at enhancing the transparency of foreign companies operating in Kazakhstan’s e-commerce market and strengthening oversight of their tax compliance obligations.

The proposed amendments affect information reporting obligations, enforcement mechanisms applicable to online platforms, and the VAT treatment of e-commerce transactions.

The proposed amendments to Article 54 of the Tax Code would require payment organizations to provide the tax authorities with information on the aggregate amounts of payments and transfers made during a calendar quarter in favor of:

registered foreign companies operating in Kazakhstan through online marketplaces; and

unregistered foreign companies operating through online marketplaces, provided that more than 100 payments or transfers have been made to such companies during a calendar quarter and the aggregate amount exceeds 1,000 Monthly Calculation Indices (MCI), which currently corresponds to approximately KZT 4.3 million (around USD 8,500).

The proposed amendments to Article 56 provide for a change in the reporting frequency applicable to internet platforms with respect to information on goods sold, services (works) performed, and/or payments made to individuals who are residents of the Republic of Kazakhstan.

Currently, such information must be submitted on a monthly basis, no later than the 5th day of the month following the reporting month. The draft law proposes to change the reporting frequency to a quarterly basis, with reports to be submitted no later than the 15th day of the second month following the reporting quarter.

The draft law proposes supplementing the Tax Code with a new Article 89-1, which introduces a mechanism for the suspension of the sale of goods and services through an online platform.

Under the proposed provision, the tax authorities may issue a decision to suspend sales activities where an online platform fails to comply with:

• a notice on elimination of violations of tax legislation; or
• a notice of discrepancies identified as a result of a desk tax audit.

The relevant decision will be issued and delivered to the owner of the online platform.

The proposed amendments to Article 826 clarify the VAT treatment of e-commerce transactions involving the sale of goods and the supply of electronic services to individuals.

Under the proposed changes, VAT would not be required to be calculated and paid by a foreign company if the value of the goods has already been included in the taxable import value and import VAT has been paid to the state budget of Kazakhstan and is not subject to refund under the Tax Code.

Should the amendments be adopted, foreign companies engaged in e-commerce and the supply of electronic services to individuals in Kazakhstan may wish to:

• register for VAT purposes in Kazakhstan;
• review the accuracy and timeliness of their VAT compliance and reporting obligations;
• ensure prompt responses to notifications issued by the tax authorities;
• assess the risk of suspension of activities on online platforms where tax violations are identified.

Should you have any questions, please do not hesitate to reach out to us. Our professionals at KPMG Kazakhstan are ready to assist you.