Article 10. Adjustment of taxable objects and (or) objects related to taxation of the Transfer Pricing Law

Home / RLA / Article 10. Adjustment of taxable objects and (or) objects related to taxation of the Transfer Pricing Law

1. Upon establishing the fact of deviation of the transaction price from the market price, taking into account the range of prices and (or) profitability of the participant of the transaction from the range of profitability during inspections, the authorized body shall adjust the objects of taxation and (or) objects related to taxation in accordance with the procedure provided for by this Law and other laws of the Republic of Kazakhstan.

2. For exchange-traded commodities, the adjustment of taxable items and (or) tax-related items is carried out taking into account the price range and differential specified in the information sources, unless otherwise provided for in this article. The list of exchange-traded goods is approved by the Government of the Republic of Kazakhstan.

3. For transactions involving agricultural products, taxable items and (or) tax-related items are adjusted when the transaction price deviates from the market price by more than ten percent, unless otherwise provided for in paragraph 4 of this Article.

4. According to export agreements concluded in the period from March 15 to July 1 of the current calendar year in respect of agricultural products produced (received) in one of the future months of the current calendar year, no adjustment of taxable items and (or) tax-related items is made in the following cases:, if the transaction price is not lower than the commercial purchase price of a specialized organization for the current calendar year, subject to separate accounting of these agricultural products and receipt of funds to the bank accounts of the transaction participant (seller) from a non-resident in the amount of at least fifty percent of the total amount of the export contract within fifteen working days after the conclusion of the export contract.

5. Taxable items and (or) tax-related items are adjusted when the transaction price deviates from the market price, defined as the median value from the price range indicated in the information source for the following transactions with participants:

1) registered in a state with preferential taxation;

2) carrying out commodity exchange (barter) operations;

3) having a loss according to the tax returns for the last two tax periods preceding the year of the transaction;

4) having tax benefits;

5) fulfilling obligations under transactions carried out by offsetting a counterclaim (including offsetting in case of assignment of a claim).

5-1. For transactions with related parties, the adjustment of taxable items and (or) tax-related items, if the transaction price deviates from the market price, defined as the median value from the price range indicated in the information source, is carried out by the authorized body based on the results of the tax audit.

6. Based on the adjustment of taxable items and (or) tax-related items, taxes and other mandatory payments to the budget are calculated as if the income or expenses from these transactions and other taxable items for the reporting period were determined based on the market price, taking into account the price range, using fines and penalties in accordance with the legislation of the Republic of Kazakhstan.

7. If it is established that the transaction price deviates from the market price, taking into account the price range of the transaction participant who has tax and (or) customs benefits, taxes and payments for the period in which the transaction price deviates from the market price are paid in accordance with the generally established procedure without applying special provisions of the legislation of the Republic of Kazakhstan that reduce tax and customs obligations.

8. The adjustment of taxable objects and (or) objects related to taxation is carried out upon establishing the fact of profit distribution carried out in accordance with Article 16 of this Law, which does not comply with the "arm's length" principle, in comparable economic conditions between interrelated parties based on the results of the reporting tax period.

The adjustment in accordance with this paragraph is carried out by changing the objects of taxation and (or) objects related to taxation, without a corresponding change in payment documents and primary documents confirming the shipment of goods (works, services) with the registration of forms of documents required in accordance with the customs legislation of the Republic of Kazakhstan.

In the case of an adjustment made by the participant in the transaction in accordance with subparagraph 5) of paragraph 1 of Article 5 of this Law, with the simultaneous transfer of part of the total profit between the related parties, the profit received is considered as income from sales for the reporting tax period, and the transferred profit is considered as a decrease in income from sales for the reporting tax period.

Adjustments to taxable items and (or) tax-related items made in accordance with this paragraph shall be reflected in the relevant tax reports submitted to the state revenue authorities with the application of appropriate calculations for each transaction separately, subject to the conditions provided for in paragraph 9 of this article.

9. Adjustments are carried out for taxable objects and (or) objects related to taxation, if such an adjustment leads or may further lead to an increase in the amounts of taxes and other mandatory payments to the budget.

10. Taxable items and/or tax-related items are not adjusted if the transaction price deviates from the market price, taking into account the price range in the following cases::

1) establishing or determining the transaction price and (or) the pricing procedure (methodology) in an international agreement ratified by the Republic of Kazakhstan;

2) setting the transaction price in agreements between the Government of the Republic of Kazakhstan and the governments of other states;

2-1) implementation of the state's priority right to purchase refined gold to replenish assets in precious metals;

3) establishing, by decision of the Government of the Republic of Kazakhstan, the transaction price and (or) the pricing procedure (methodology).

If the transaction price deviates from the price established and (or) formed in accordance with subitems 1) – 3) of part one of this paragraph, the adjustment of taxable objects and (or) objects related to taxation is carried out in accordance with the procedure established by this Law.

An application for establishing, by decision of the Government of the Republic of Kazakhstan, the transaction price and (or) the pricing procedure (methodology) is submitted by the participant of the transaction to the authorized body responsible for managing the relevant area of public administration, accompanied by an economic justification for the proposed price and (or) the pricing procedure (methodology), documents (calculations, justifications) confirming the threat of adverse socio-economic consequences, and substantiation of the need to establish, by decision of the Government of the Republic of Kazakhstan, the transaction price and (or) the pricing procedure (methodology).

No later than thirty working days from the date of receipt of the application, the authorized body responsible for managing the relevant area of public administration shall make one of the following decisions:

1) on the expediency of setting the transaction price and (or) the pricing procedure (methodology) and sends proposals to the Government of the Republic of Kazakhstan on setting the transaction price and (or) the pricing procedure (methodology).;

2) on the inexpediency of setting the transaction price and (or) the pricing procedure (methodology) and sends a reasoned refusal to the transaction participant.

11. In case of independent adjustment by a taxpayer of taxable objects and (or) objects related to taxation, before the start of a comprehensive tax audit (if transfer pricing issues are included) and a thematic audit on transfer pricing issues, the amounts of taxes and other mandatory payments to the budget are calculated using a range of prices and (or) a range of profitability (margin) and They are subject to payment without fines and are reflected in the relevant tax reports submitted to the authorized body.

12. The adjustment of taxable items and (or) tax-related items of a transaction participant registered in a state with preferential taxation is carried out as follows:

1) when applying the method specified in subparagraph 1) of paragraph 1 of Article 12 of this Law, without taking into account the provisions of paragraph 5 of Article 13 of this Law.;

2) when applying the methods specified in subitems 2), 3) and 5) of paragraph 1 of Article 12 of this Law, without taking into account the profitability of the participant in the transaction registered in a state with preferential taxation.

The Law of the Republic of Kazakhstan dated July 5, 2008 No. 67-IV.

President

Republic of Kazakhstan

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