Article 296. The procedure for determining income under a long-term contract when applying the completion method of the Tax Code of the Republic of Kazakhstan

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 1. Income under a long-term contract for tax purposes when applying the completion method for the reporting tax period is determined in the following order:

 the product of the total amount of income under a long-term contract to be received under this contract for the entire period of its validity, and the share of execution of such a contract at the end of the current tax period

 minus

 income from such a contract for tax purposes for previous tax periods.

 2. Unless otherwise specified in this article, the share of execution of a long-term contract is calculated according to the following formula:

 A/(A+B), where:

 A is the amount of expenses under a long–term contract recognized as such in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting for the previous and reporting tax periods of the long-term contract;

 B is the amount of expenses under a long–term contract that must be incurred in subsequent tax periods of the long-term contract in order to complete work on such a contract.

 The amount of expenses included in indicator B is determined based on the types and amounts of work to be performed in subsequent tax periods of the long-term contract in accordance with the design and estimate documentation (or other documents containing information about such types and amounts of work and agreed with the customer).

 3. In the tax period in which a long-term contract expires, the share of execution of such a contract is equal to one.

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 296. Exemption from taxation of the Code on Taxes and Other Mandatory Payments to the Budget (Tax Code) of the Republic of Kazakhstan

1. The financial profit of a controlled foreign company or the financial profit of a permanent establishment of a controlled foreign company is exempt from taxation in the Republic of Kazakhstan if one of the following conditions is met:

1) with the indirect participation or indirect control of a resident in a controlled foreign company carried out through another resident;

2) with the indirect participation or indirect control of a resident in a controlled foreign company, carried out through a person who is not a controlled person;

3) if the financial profits of a permanent establishment of a controlled foreign company have been taxed on profits in the State in which the controlled foreign company that established the permanent establishment is registered at an effective rate of 20 percent or more;

4) if the financial profit of a controlled foreign company or the financial profit of a permanent establishment of a controlled foreign company has been taxed in the State in which the controlled person is registered, through which the resident indirectly owns shares or has indirect control in the controlled foreign company, at an effective rate of 20 percent or more;

5) if the share of passive income of a controlled foreign company or a permanent establishment of a controlled foreign company, with the exception of those registered in countries with preferential taxation, is less than 20 percent;

6) with direct and (or) indirect ownership and (or) control by an investment resident of the Astana International Financial Center in a controlled foreign company.

2. For the purposes of applying paragraph 1 of this Article, a resident must have the following documents (with mandatory translation into Kazakh or Russian)::

1) in the case of application of subparagraph 1) or 2) of paragraph 1 of this Article:

copies of documents confirming the indirect participation or indirect control of a resident in a controlled foreign company specified or specified in subitems 1) or 2) of paragraph 1 of this Article,

a copy of a document signed by the first head (or a person authorized to sign financial statements) of a resident, disclosing the unified organizational structure of a consolidated group of which the resident is a participant (shareholder), reflecting the names of all participants in such a consolidated group and their geographical location (names of states (territories) where the participants of the consolidated group were established, the size of the shares and the numbers of the state and tax registration of all participants in the consolidated group (if there is a tax registration);

2) in case of application of subparagraph 3) of paragraph 1 of this Article:

a copy of the approved separate financial statements of a controlled foreign company that established a permanent establishment;

a copy of the approved financial statements of a permanent establishment of a controlled foreign company;

a document signed by the first head (or a person authorized to sign the financial statements) of a controlled foreign company, disclosing information on the inclusion in the financial profit of a controlled foreign company that established a permanent establishment, the financial profit of such a permanent establishment, or an explanatory note to the audited financial statements, certified by the person who audited the financial statements of a controlled foreign company, disclosing information about inclusion in the financial profit of a controlled foreign company, which has established a permanent establishment, the financial profits of such a permanent establishment;

a copy of a document (documents) drawn up in a foreign language confirming the payment of income tax on the financial profits of a permanent establishment of a controlled foreign company in a foreign country in which a controlled foreign company that has established a permanent establishment is registered.

If the withholding tax is included in determining the effective rate, the resident must have:

a copy of a document (documents) drawn up in a foreign language confirming the withholding and transfer to the budget of a foreign state (foreign states) of withholding tax from income (income) included in financial profit before taxation;

a document signed by the first head (or a person authorized to sign the financial statements) of a controlled foreign company and (or) a permanent establishment of a controlled foreign company, disclosing information on the inclusion in the financial profit before taxation of income (income) taxed at the source of payment, or an explanatory note to the audited financial statements, certified a person who conducted an audit of the financial statements of a controlled foreign company and (or) a permanent establishment of a controlled foreign company, disclosing information on the inclusion of income (income) taxed at the source of payment in financial profit before taxation;