Article 259. Deduction of value added tax by value added tax payers of the Tax Code of the Republic of Kazakhstan

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 1. This article defines the procedure for deducting the amounts of value-added tax by a taxpayer for which a value-added tax payer has been registered in the taxpayer database, including those included in the cost of purchased goods, works, and services.

 2. Unless otherwise provided for in this article, the following value-added tax costs are taken into account in the cost of purchased goods, works, and services:

 1) the amount of value-added tax that is not included in the offset in accordance with paragraph 1 of Article 482 of this Code;

 2) the amount of value-added tax that is not allowed to be offset in accordance with subparagraph 2) paragraph 2 of Article 489 of this Code;

 3) the amount of the value-added tax adjustment to be offset towards a decrease in the cases specified in subitems 1) and 4) of paragraph 2 of Article 484 of this Code.

 3. The value-added tax payer has the right to deduct the amount of value-added tax that is not allowed to be offset, in accordance with Article 488 and subparagraph 3) paragraph 2 of Article 489 of this Code, if such a tax is not included in the cost of purchased goods, performed works, or rendered services in accounting. The deduction is made in the tax period in which the value-added tax arises, which is not allowed to be offset.

 4. The value-added tax payer has the right to deduct the amount of the adjustment of the value-added tax, attributed to the offset, in the direction of reduction, made in accordance with:

 1) subparagraph 1) paragraph 2 of Article 484 of this Code for goods, works, and services used not for the purposes of taxable turnover, if such goods, works, and services are used (are being used) in carrying out activities aimed at generating income;

 2) subparagraph 4) paragraph 2 of Article 484 of this Code on property transferred as a contribution to the authorized capital, except for the transfer of assets not subject to depreciation as a contribution to the authorized capital.

 The deduction is made in the tax period in which the amount of the value added tax attributed to the offset is subject to adjustment.

 5. The amounts of the value-added tax offset downward in accordance with subitems 1) and 4) of paragraph 2 of Article 484 of this Code for assets that are not subject to depreciation, used not for taxable turnover purposes or transferred as a contribution to the authorized capital, are taken into account in the initial cost of these assets in accordance with articles 253 and 254 of this Code.

 6. The provisions of this article shall not apply to value-added tax on goods, works, and services, the cost of which is subject to deduction in accordance with Article 314 of this Code.

The Code of the Republic of Kazakhstan dated July 18, 2025 No. 214-VIII SAM.

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Republic of Kazakhstan

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From January 1, 2026, to invalidate the Code of the Republic of Kazakhstan dated December 25, 2017 "On Taxes and Other Mandatory payments to the Budget" (Tax Code) in connection with the entry into force of the Tax Code dated July 18, 2025 No. 214-VIII SAM.

Article 259. The specifics of deductions of expenses for geological exploration and preparatory work for the extraction of natural resources and other deductions of a subsurface user operating under a contract for exploration and (or) combined exploration and production of hydrocarbons of the Tax Code and Other Mandatory Payments to the Budget (Tax Code) of the Republic of Kazakhstan

1. For the expenses specified in paragraph 1 of Article 258 of this Code incurred by a subsurface user from January 1, 2018 under an exploration and (or) combined exploration and production contract (during the exploration period), the subsurface user has the right to form a separate group of depreciable assets in order to deduct them under other mining and (or) mining contracts. combined exploration and production (during the production period) of this subsurface user.

For these expenses, the subsurface user calculates depreciation charges by applying the depreciation rate, determined at the discretion of the subsurface user, but not higher than 25 percent, to the amount of accumulated expenses for the group of depreciable assets provided for in this paragraph at the end of each tax period.

At the same time, these depreciation charges are deductible for other mining and (or) combined exploration and production contracts (during the mining period) of this subsurface user by distributing them according to the specific weight of direct income attributable to each specific mining and (or) combined exploration and production contract (received during the mining period) in total the amount of direct income received by the subsurface user under such contracts during the tax period.

2. The right to form a separate group, established by this article, is granted in the tax period in which the first costs specified in paragraph 1 of this Article are incurred. At the same time, if the subsurface user does not have another production and/or combined exploration and production contract at the time of the formation of such a separate group (during the production period), then the right to form such a separate group is granted in the tax period in which the production contract is concluded and/or the production period under the combined exploration and production contract has begun. exploration and production.

However, such a right is not subject to review until the end of the exploration contract or the combined exploration and production contract (before the start of the production period).

3. Prior to the calculation of depreciation charges for the tax period, a separate group of depreciable assets formed in accordance with this article shall be reduced by the amount of income specified in paragraph 4 of Article 258 of this Code received under the relevant contract.

If the amount of such income exceeds the size of a separate group of depreciable assets formed in accordance with this article, the excess amount reduces the separate group of depreciable assets formed in accordance with Article 258 of this Code under the relevant exploration contract or a combined exploration and production contract (before the start of the production period). In the absence of a separate group of depreciable assets formed in accordance with Article 258 of this Code, the amount of such excess is included in the total annual income.

4. A subsurface user is obliged to keep separate tax records of a separate group of depreciable assets formed in accordance with this Article and a separate group of depreciable assets formed in accordance with Article 258 of this Code, within the framework of the relevant exploration and (or) combined exploration and production contract (during the exploration period).

5. From the tax period in which the production period under the combined exploration and production contract began or in which the production contract was concluded based on the discovery and evaluation of a deposit under the exploration contract, the value of a separate group of depreciable assets formed in accordance with this article, which was not previously deductible, is deductible in accordance with the procedure defined by Article 258 of this Code, within the framework of such a mining or combined exploration and production contract.

6. In the event of termination of the contract for exploration and (or) combined exploration and production (during the exploration period), the value of a separate group of depreciable assets not deducted in accordance with this article shall not be deductible at the time of such termination, except in the case specified in paragraph 5 of this article.

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