Article 13. Method of comparable uncontrolled price of the Transfer Pricing Law

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1. The method of comparable uncontrolled price is applied by comparing the transaction price for goods (works, services) with the market price, taking into account the range of prices for identical (and in their absence - homogeneous) goods (works, services) in comparable economic conditions, unless otherwise provided by this article.

When determining the market price of a product (work, service), information on the prices of goods (work, services) at the time of sale of this product (work, service) is taken into account.

If the terms of the contract for the sale of goods (works, services) provide for the use of a quotation period, then the price of exchange-traded goods, as well as for non-exchange-traded goods whose prices are linked to quotations for exchange-traded goods, is defined as the arithmetic mean of any of the daily quotations for goods (works, services) published in one information source. services) for the quotation period, taking into account the differential.

The arithmetic mean value of price quotations for the quotation period is determined by the following formula:

P1 + P2 + Pn

S = --------------

where:

S is the arithmetic mean of the average daily price quotations for the corresponding product (work, service) for the quotation period.;

P1, P2,..., Rp - the arithmetic mean of the daily price quotations for the corresponding product (work, service) on the days for which price quotations were published during the quotation period;

n is the number of days in the quotation period for which price quotations have been published.

The arithmetic mean of the daily price quotations for the corresponding product (work, service) for the quotation period is determined by the formula:

Cn1 + Cn2

Pn = ------------

where:

Rp is the arithmetic mean of the daily price quotations for the corresponding product (work, service);

Sp1 - the lowest value (min) of the daily price quotation for the corresponding product (work, service);

Sp2 is the highest value (max) of the daily price quotation for the corresponding product (work, service).

In the absence of minimum and maximum values of price quotations for the day, the actual value of the quotation for the corresponding day is taken as the arithmetic mean.

2. For the purposes of this Law, every documented delivery of goods (work performed, service rendered) within the framework of the contract is recognized as a transaction, and the sale price is compared with the market price only with the corresponding market of goods (works, services), regardless of the country of registration of the buyer.

The moment of sale of the goods is the date of transfer of ownership to the buyer, unless otherwise provided by this article.

The quotation period specified in the contract for the sale of goods (works, services) is not subject to change within a twelve-month period from the date of its establishment.

For the purposes of this Law, the quotation period must be determined in accordance with the terms of the contract in a time interval.:

for oil:

1) when selling goods by sea, no more than five quotation days before the date of transfer of ownership to the buyer of the goods and no more than five quotation days after the date of transfer of ownership to the buyer of the goods;

2) when goods are sold by mainline pipeline transport and other modes of transport, with the exception of sale by sea, from the first to the last day of the month when ownership of the goods is transferred to the buyer.;

for exchange–traded goods (works, services), with the exception of oil, no more than sixty-two calendar days before the date of transfer of ownership to the buyer of the goods (work, service) and no more than sixty-two calendar days after the date of transfer of ownership to the buyer of the goods (work, service);

for non–over-the-counter goods, the prices of which are linked to quotations for exchange-traded goods, no more than sixty-two calendar days before the date of transfer of ownership to the buyer of the goods and no more than one hundred and twenty-three calendar days after the date of transfer of ownership to the buyer of the goods.

If the quotation period specified in the contract for the sale of goods (works, services) does not comply with the conditions for determining the quotation period established by this article, market prices for goods (works, services) are accepted at the time of sale of this product (work, services).

For long-term contracts with non-over-the-counter goods (works, services), in which the long-term price is indicated, the moment of sale of the goods (works, services) to determine the market price is the moment of conclusion of the contract, subject to the following conditions::

1) the execution of transactions under the agreement begins within one month from the date of conclusion of the agreement;

2) the market price is determined from officially recognized sources of information established in accordance with this Law for long-term contracts on the last date preceding the date of conclusion of the contract.;

3) the long–term price is applied for no more than one year and is confirmed by the final contract between the participants in the transactions, whose relationship includes, among other things, the conditions provided for in subparagraphs 16) – 20) of the second part of Article 11 of this Law, or a subsequent contract between a trader affiliated with a participant in the transaction - a resident of the Republic of Kazakhstan, and the final consumer, who is an independent party. The proof of contract performance is the documents submitted at the request of the authorized bodies.

3. The comparable uncontrolled price method is used to determine the market price by external or internal comparison. If it is impossible to apply the method of comparable uncontrolled price by external comparison, the method of comparable uncontrolled price is applied by internal comparison. In this case, an external comparison compares comparable transactions between a participant in the transaction and an interconnected party and between two or more independent parties. The internal comparison compares comparable transactions between a participant in the transaction and an interconnected party and between the same participant in the transaction and an independent party.

4. When using the comparable uncontrolled price method, the market price is determined as follows:

1) for transactions with goods (works, services) for which there is documented information about the route of transportation to the relevant market, where there is a price in the information source, the market price is defined as the price from the information source, taking into account the price range. The transaction price is adjusted by means of a differential to comparable economic conditions with the market price;

2) for transactions in goods (works, services) that do not comply with subparagraph 1) of this paragraph, the market price is determined by bringing the price from the source of information in the relevant market by means of a differential to comparable economic conditions with the transaction price, taking into account the price range.

5. The differential includes:

1) the costs necessary for the delivery of goods (works, services) to the relevant market, justified and documented and (or) documented by sources of information;

2) conditions affecting the amount of deviation of the transaction price from the market price specified in paragraph 7 of this article;

3) the quality of goods (works, services).

6. The components of the differential must be documented or confirmed by information sources.

7. The conditions affecting the amount of deviation of the transaction price from the market price include:

1) the quantity (volume) of goods supplied, works performed, and services provided;

2) payment terms used in transactions of this type, as well as other conditions that may affect prices;

3) price discounts or price surcharges applied during transactions, including those caused by:

seasonal fluctuations in consumer demand for goods (works, services);

loss of goods (works, services) of quality or other consumer properties;

partial improvement or restoration of lost qualities and (or) other consumer properties of goods (works, services);

expiration (approaching the expiration date) of the shelf life or sale of goods (works, services);

marketing policy when promoting new goods (works, services) that have no analogues on the market, as well as when promoting goods (works, services) to new markets;

realization of experimental models and samples of goods (works, services) in order to familiarize consumers with them;

4) market reputation, country of origin and trademark availability;

5) margin, commission (agency) remuneration of a trading broker, trader or agent, or compensation for the performance of their trading and intermediary functions.

8. According to the differential specified in paragraph 5 of this article, it is not allowed for a participant in a transaction to make changes and additions to the relevant transaction monitoring reports.:

1) the tax period under review - during the period of comprehensive and thematic checks on transfer pricing issues.;

2) the appealed tax period – during the time period for filing and considering a complaint against a notification of the results of a tax audit and (or) a decision of a higher state revenue body issued based on the results of consideration of the complaint against the notification, taking into account the restored deadline for filing a complaint.

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

President

Republic of Kazakhstan

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