Article 2. The basic concepts used in this Law of the Law on Transfer Pricing

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The following basic concepts are used in this Law:

1) price from information sources - the price obtained from officially recognized sources of information, data on stock quotes, from authorized bodies, as well as from other sources of information;

2) price range – a set of market price values determined in accordance with the "arm's length" principle in comparable economic conditions, which is established in accordance with the procedure provided for in Article 17-1 of this Law.;

2-1) control – control determined in accordance with international financial reporting standards or other internationally recognized financial reporting standards adopted by stock exchanges for the admission of securities to trading.

The concept of "control" is used for transfer pricing reporting purposes.;

3) quotation period – the pricing period, but not more than thirty-one consecutive calendar days, for which price quotations on the stock exchange are published, established in the contract for the sale of goods (work, services), during which, in accordance with the terms of the transaction, the parties to the transaction determine the arithmetic mean of the average daily price quotations for the corresponding exchange-traded goods (work, services), as well as non-exchange-traded goods, the prices of which are linked to quotations for exchange-traded goods;

3-1) quotation day – the day on which there is a published quotation for a product (work, service) in officially recognized sources of information.;

4) identical goods (works, services) - goods (works, services) having the same basic characteristics characteristic of them: physical characteristics, quality and reputation in the market, country of origin and manufacturer;

5) the corresponding market of identical (or, in their absence, homogeneous) goods (works, services) is the market for the destination (supply) of goods (work, services) on which the market price is formed, or the market on the basis of which the destination (supply) of goods (work, services) is objectively formed and (or) the market price is determined;

6) homogeneous goods (works, services) - goods (works, services) that, while not identical, have similar characteristics and consist of similar components, which allows them to perform the same functions and be interchangeable.;

7) differential - the amount of adjustment applied to bring the transaction price or the price from the information source into comparable economic conditions;

8) a state with preferential taxation is a foreign state determined in accordance with the tax legislation of the Republic of Kazakhstan.;

9) commission (agency) remuneration is a fee for the services of a trading broker, trader, or agent for the purchase and sale of goods, performance of work, or provision of services, paid in the form of an amount or percentage of the amount of the transaction, provided for in a separate agreement between the participant in the transaction and the trading broker, trader, or agent;

10) a transaction made on the territory of the Republic of Kazakhstan that is directly related to an international business transaction is a transaction the subject of which is the subject of an international business transaction;

10-1) financial year – the period for which the annual consolidated financial statements of the international group are prepared;

10-2) adverse socio-economic consequences – a set of social and economic consequences that hinder or endanger the realization of national interests, as well as jeopardize the sustainable development of the national economy;

11) economic justification of the applied price - documents and information confirming the validity of the application of the transaction price and provided to the authorized bodies;

12) the "arm's length" principle is a principle used to determine the market price, taking into account the price range (margin, profitability), based on comparing the terms of transactions between related parties with the terms of transactions between independent parties conducting transactions at the market price determined in accordance with the procedure established by this Law.;

13) margin - the amount received by a trading broker, trader or agent as a result of transactions for the purchase and sale of goods, performance of works, provision of services;

14) margin range – a set of market margin values determined in accordance with the "arm's length" principle in comparable economic conditions, which is established in accordance with the procedure provided for in Article 17-1 of this Law.;

15) transaction price - the price of a product (work, service) used by the participants in transactions when making a transaction regulated by this Law;

16) a participant in a transaction is a natural or legal person who has concluded a transaction regulated by this Law.;

17) transaction monitoring reports – data on transactions, including transactions involving transfer prices, made during the reporting period, submitted by the participant of the transaction to the state revenue authorities annually in accordance with the procedure and form approved by the authorized body.;

17-1) the median value is the value that is in the middle of an odd set of numbers, or the arithmetic mean of the two midpoints of an even set of numbers.;

18) market price is the price of a product (work, service) formed by the interaction of supply and demand in the market of identical (or, in their absence, homogeneous) goods (works, services) in comparable economic conditions, determined in accordance with the "arm's length" principle;

18-1) market profitability – profitability that has developed in comparable economic conditions, determined in accordance with the "arm's length" principle;

18-2) profitability is a financial indicator used to apply the methods specified in paragraph 1 of Article 12 of this Law and determined on the basis of accounting and (or) financial reporting data;

19) profitability range – a set of values of market profitability determined in accordance with the "arm's length" principle in comparable economic conditions, which is determined in accordance with Articles 17-1 and 17-2 of this Law;

20) Excluded by the Law of the Republic of Kazakhstan dated 03/25/2024 No. 68-VIII (effective sixty calendar days after the date of its first official publication).

21) tax benefits - exemption (reduction) from tax obligations for certain categories of taxpayers, the availability of investment tax preferences in accordance with the investment contract or the implementation of activities in the territory of special economic zones;

22) comparable economic conditions - the terms of transactions in the market of identical (or, in their absence, homogeneous) goods (works, services), if the difference between such conditions does not affect the price or can be adjusted in order to bring the terms of transactions to comparable economic conditions in accordance with this Law.;

23) trading broker, agent - a person performing intermediary services in accordance with the terms of the agency agreement concluded with the participant of the transaction;

24) compensation for the performance of trade and intermediary functions - compensation by one of the parties to the transaction in the form of monetary remuneration or the provision of a discount (price reduction) to the selling price of goods (work, services) for the provision of trade and intermediary services;

25) transfer price (transfer pricing) - the price that is formed between interrelated parties and (or) differs from the objectively emerging market price (margin, profitability), taking into account the range of prices (margin, profitability) when making transactions between independent parties, subject to control in accordance with this Law;

26) agreement on the application of transfer pricing is a written agreement between the authorized bodies and the participant of the transaction, which establishes the method of determining the market price and the source of information used to determine the market price for a certain period.;

27) trader - a person who performs intermediary functions in the purchase and sale of goods, performance of works, provision of services independently and (or) on behalf of the participant in the transaction;

28) the end consumer is an independent party that does not have a special relationship with the parties to the transaction that affects the economic results of the transaction carried out by such parties to the transaction.;

28-1) revenue – income from the sale of goods, works and services, determined in accordance with international financial reporting standards or other internationally recognized financial reporting standards adopted by stock exchanges for the admission of securities to trading;

29) authorized body – the state revenue body of the Republic of Kazakhstan;

30) long-term price - the transaction price set for a certain period in officially recognized sources of information and (or) a contract (agreement) between the parties to the transaction;

30-1) international group – a set of persons who are members of an international group, including the parent company of such an international group, who simultaneously meet the following conditions:

the aggregate of persons specified in the first paragraph of this subparagraph includes at least one person who is recognized as a resident of the Republic of Kazakhstan or is not recognized as a resident of the Republic of Kazakhstan, but carries out business activities in the Republic of Kazakhstan through a structural subdivision, permanent establishment;

they are interconnected through control and (or) participation;

consolidated financial statements are prepared in respect of them, or the financial statements of which are not taken into account when preparing consolidated financial statements solely due to the size or materiality of such persons' data in accordance with international financial reporting standards or other internationally recognized financial reporting standards adopted by stock exchanges for the admission of securities to trading.;

30-2) a member of an international group is a person who meets one of the following conditions:

the parent company of the international group;

a person engaged in business activities in respect of whom consolidated financial statements of an international group are being prepared or consolidated financial statements would be prepared (if none were available) if such person's securities were admitted to trading on the stock exchange;

a person engaged in business activities whose financial statements are not taken into account when preparing the consolidated financial statements of an international group solely because of the size or materiality of such person's data in accordance with international financial reporting standards or other internationally recognized financial reporting standards adopted by stock exchanges for the admission of securities to trading;

a structural subdivision or permanent establishment of a person defined in paragraphs two and (or) three and (or) four of this subparagraph, in respect of which separate financial statements are prepared for internal control purposes or financial, tax or other regulatory reporting of the person who created such a structural subdivision or permanent establishment;

30-3) authorized member of an international group – a member of an international group that is not the parent company of an international group, but which is authorized:

The parent company of the international group to prepare and (or) submit cross-country reports on behalf of the international group, and which exercises the same rights and obligations as the parent company of the international group in legal relations for the submission of cross-country reports.,

or another member of the international group to prepare and (or) submit on behalf of the international group or such member basic reporting and (or) local reporting in the State (territory) of which the other member of the international group, who provided the appropriate authority, is a resident, or in which (in which) such member of the international group carries out business activities through a structural unit, permanent establishment. An authorized participant in the legal relations for the submission of basic reporting and (or) local reporting exercises the same rights and obligations as another participant in an international group who has delegated the relevant authority.

The actions (inaction) of an authorized participant in an international group in legal relations regulated by this Law are recognized as the actions (inaction) of a participant in an international group who has granted appropriate powers to an authorized participant in an international group.;

30-4) the parent company of an international group is a member of an international group that simultaneously satisfies the following conditions:

such a participant directly and (or) indirectly participates in the authorized capital of other participants of the international group and the share of such participation is sufficient to ensure that consolidated financial statements are prepared for the participants of the international group.;

such a participant does not have another parent company over him;

No other member of the international group simultaneously satisfies all the conditions specified in this subparagraph.;

31) international business transactions – transactions in which one participant in the transaction is a non-resident not registered in the Republic of Kazakhstan, and the other participant in the transaction is a resident of the Republic of Kazakhstan or a non-resident operating in the Republic of Kazakhstan through a permanent establishment, as well as transactions of residents of the Republic of Kazakhstan made outside the territory of the Republic of Kazakhstan;

32) consolidated financial statements – financial statements of an international group prepared in accordance with international financial reporting standards or other internationally recognized financial reporting standards adopted by stock exchanges for the admission of securities to trading, in which the assets, liabilities, capital, income, expenses and cash flows of the parent company of the international group and other participants in the international Groups are represented as assets, liabilities, equity, income, expenses, and cash flows of a single entity.

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

President

Republic of Kazakhstan

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