Mining tax
For the purposes of calculating the mineral extraction tax, technological losses of oil cannot be attributed to oil used for its own production needs. K LLP attributed technological oil losses to this type of oil and calculated the mineral extraction tax based on the production cost increased by 20%, with a reduction coefficient of 0.5 applied to the tax rate. The mineral Extraction Tax Authority calculated the volume of technological oil losses as commercial oil based on world prices, without using a reduction coefficient. In this regard, the tax base has been increased and additional taxes and penalties have been charged. The norms of paragraph 1 of Article 334, Article 336, paragraph 2 of Article 332 of the Tax Code provide for exhaustive lists of the procedure for determining the cost of crude oil from the actual cost price and cases when a reduction factor of 0.5 is applied to the established rates when calculating the mineral extraction tax. However, there are no technological losses of oil in these lists. In the sub-items 1), 2), 2-1), 3), 4), 5), 5-1) and 5-2) of paragraph 2, as well as in general, Article 332 of the Tax Code does not establish that technological losses of crude oil belong to the groups of the MET subject provided for in them.
Therefore, in order to calculate the mineral extraction tax, the technological losses of oil are reasonably attributed to the group of the object of taxation in the form of commercial crude oil and the value of its physical volume is legitimately determined in accordance with paragraph 2 of Article 334 of the Tax Code, based on the world price. In accordance with paragraph 1 of Article 332 of the Tax Code, the subject of MET is the physical volume of crude oil, gas condensate and natural gas produced by a subsurface user during the tax period. According to Article 336 of the Tax Code, in the case of the sale and (or) transfer of crude oil and gas condensate on the domestic market of the Republic of Kazakhstan, including in kind due to the payment of mineral extraction tax, rental tax on exports, royalties and shares of the Republic of Kazakhstan for the division of products to the recipient on behalf of the state, or use for their own production needs In accordance with the procedure provided for in subparagraphs 1), 2), 3) and 4) of paragraph 2 of Article 332 of the Tax Code, a reduction factor of 0.5 is applied to the established rates.
Paragraph 2 of Article 332 of the Tax Code defines an exhaustive list of areas for the use of crude oil and gas condensate for their own production needs, for which, when calculating the mineral extraction tax, a reduction factor of 0.5 is applied to the established rates, however, technological losses of oil are not included in the list. The physical volume of produced crude oil, gas condensate and natural gas, which is not included in the list provided for in subparagraphs 1) - 5) of paragraph 2 of Article 332 of the Tax Code, respectively, is the physical volume of marketable crude oil, gas condensate and natural gas. As follows from the case file, according to the MET declaration for 2009-2012, the Partnership accounted for the volume of technological oil losses and oil costs as the volume of crude oil produced and used for its own production needs, respectively, when calculating the MET, a reduction factor of 0.5 was applied to the established rates. Taking into account the above, the court concluded that the Partnership unreasonably attributed the volume of technological losses of oil to the produced crude oil used for its own production needs, respectively, when calculating the mineral extraction tax on these facilities, a lowering coefficient of 0.5 was unlawfully applied to the established tax rates.
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