LESSON 1

TAXES AND TAXATION OF RK BASICS

One of the most important components of either state is system of taxation.

Taxes are related to mobilize state incomes. Amounts of taxes and mandatory payments that
collecting from individual and legal entities to budget, are completing incomes of due budgets
and forms financial base of state generally.

TAX - is established with state in represented authorized organ unilaterally order and in
appropriate legal form mandatory monetary or naturally payment to income of state, produced
in certain sizes, bearing a non-refundable, non-equivalent and stable character.

Tax legislation of RK is based on the Constitution of Kazakhstan and consists of the normative
legal acts and the Codex "about taxes and other mandatory payments to budget" (Tax Code)
which regulates power relations of establishment, integration and procedure of calculation
taxes and other obligatory payments to the budget and the relationship between the state and
the taxpayers related to the execution of the tax obligation.

The main function of taxes - to supply state with the funds. The main purpose of taxes -
formation of financial resources of state, accumulated in the budget and off-budget funds.
Collected by the means of state taxes are spent on the maintenance of administrative
management, security, implementation of domestic and foreign policy, payments of the state by
debts, to social sphere, etc.

Tax liabilities are recognized obligation of the taxpayer to the state arising in accordance with
the tax laws of the Republic of Kazakhstan, by virtue of which the taxpayer is obliged to stand
registered in tax authority, to determine taxation objects and (or) objects related to taxation,
calculate taxes and other compulsory payments to the budget, prepare tax forms, submit tax
forms, except for tax registers, the tax authority in a timely manner and to pay taxes and other
obligatory payments to the budget.

The state represented by tax authority has the right to demand from the taxpayer's fulfillment of
its tax obligations in full, and in the case of non-performance or improper performance of tax
obligation, to apply methods for securing and enforcement measures in the manner prescribed
by this Code.

The tax legislation of the Republic of Kazakhstan is based on the principles of taxation such as
commitment, determination, unity and transparency of the tax system.

For all the taxes established mandatory elements of taxation:

• The object of taxation, the tax base;

• Taxable period;

• The tax rate;

• The procedure for calculating the tax;

• The procedure and terms of tax payment

The object of taxation and (or) object related to taxation are property and acts with and (or) on
the basis of which arises tax liability.

The tax base is the value, physical, or other characteristics of the object of taxation, on the basis
of which are determined the amount of taxes and other mandatory payments payable to the
budget.

The tax rate is the amount of tax liability on the calculation of tax and other obligatory
payments to the budget for the unit of measurement of the object of taxation or tax base.

The tax rate is set as a percentage or as an absolute amount per unit of measurement of the
object of taxation or tax base.

The tax period is the period of time specified for individual types of taxes and other obligatory
payments to the budget, after which the object of taxation are determined, the tax base,
calculated the amount of taxes and other mandatory payments payable to the budget.

• Corporate Income Tax (CIT)

• Individual income tax. (IIT)
• Value Added Tax. (VAT)
• Excise.
• Rent tax on export
• Special payments and taxes of subsurface users
• Social tax.
• Land tax.
• Tax on vehicles.
• Property tax.
• The tax on gambling
• Fixed tax
• Land tax

Fiscal policy - a set of measures for the establishment of new and the abolition of existing taxes
and other obligatory payments to the budget, changing interest rates, the objects of taxation and
objects related to taxation, the tax base for taxes and other obligatory payments to the budget in
order to ensure the financial needs of the state, based on respect the balance of economic
interests of the state and taxpayers.

Tax accounting - the process of conducting the taxpayer (tax agent) records in accordance with
the requirements of the tax Code for the purpose of generalization and systematization of
information on the objects of taxation and (or) objects related to taxation, also for calculation of
taxes and other obligatory payments to the budget and for tax reporting.

The word ‘tax’ first appeared in the English language only in the 14th century. It derives from
the Latin taxare which means ‘to assess’. Before that, English used the related word ‘task’,
derived from Old French. For a while, ‘task’ and ‘tax’ were both in common use, the first
requiring labor, the second money.

One of the most important components of either state is system of taxation.

Taxes are related to mobilize state incomes. Amounts of taxes and mandatory payments that
collecting from individual and legal entities to budget, are completing incomes of due budgets
and forms financial base of state generally.

TAX - is established with state in represented authorized organ unilaterally order and in
appropriate legal form mandatory monetary or naturally payment to income of state, produced
in certain sizes, bearing a non-refundable, non-equivalent and stable character.

Tax legislation of RK is based on the Constitution of Kazakhstan and consists of the normative
legal acts and the Codex "about taxes and other mandatory payments to budget" (Tax Code)
which regulates power relations of establishment, integration and procedure of calculation
taxes and other obligatory payments to the budget and the relationship between the state and
the taxpayers related to the execution of the tax obligation.

The main function of taxes - to supply state with the funds. The main purpose of taxes -
formation of financial resources of state, accumulated in the budget and off-budget funds.
Collected by the means of state taxes are spent on the maintenance of administrative
management, security, implementation of domestic and foreign policy, payments of the state by
debts, to social sphere, etc.

Tax liabilities are recognized obligation of the taxpayer to the state arising in accordance with
the tax laws of the Republic of Kazakhstan, by virtue of which the taxpayer is obliged to stand
registered in tax authority, to determine taxation objects and (or) objects related to taxation,
calculate taxes and other compulsory payments to the budget, prepare tax forms, submit tax
forms, except for tax registers, the tax authority in a timely manner and to pay taxes and other
obligatory payments to the budget.

The state represented by tax authority has the right to demand from the taxpayer's fulfillment of
its tax obligations in full, and in the case of non-performance or improper performance of tax
obligation, to apply methods for securing and enforcement measures in the manner prescribed
by this Code.

The tax legislation of the Republic of Kazakhstan is based on the principles of taxation such as
commitment, determination, unity and transparency of the tax system.

Three stages:

• Ancient world – Middle Ages

The State does not have a financial institution to define and collect taxes. The State just
announces the total amount it wants to receive and delegates the tax collection to the city or
community. Usually taxes are collected by publicans (tax collectors).

• XVI – beginning of XIX century

 The period of establishing of some governmental institutions (including the financial
institutions). The State performs some functions: defines the tax rates, oversees the tax
collection process. Publicans still play an important role.

• XIX century - present

The State is responsible for all functions related to taxation. Local governments and
communities helps the State in some of these functions having a different degree of
independence.

Basic terminology

Tax – payment to support the cost of government

A tax is not an assessment of benefits. It is a means of distributing the burden of the cost of
government. The only benefit to which the taxpayer is constitutionally entitled is that derived
from his enjoyment of the privileges of living in an organized society, established and
safeguarded by the devotion of taxes to public purposes.

US Supreme Court

Taxpayer – any person or organization required by law to pay tax to the governmental
authority

*Person could be both a natural person (individual) and a corporation.

Jurisdiction – the right of a government to levy tax on a specific person or organization

Elements of taxation

The object of taxation and (or) object related to taxation are property and acts with and (or) on
the basis of which arises tax liability.

The tax base is the value, physical, or other characteristics of the object of taxation, on the basis
of which are determined the amount of taxes and other mandatory payments payable to the
budget.

The tax rate is the amount of tax liability on the calculation of tax and other obligatory
payments to the budget for the unit of measurement of the object of taxation or tax base. The tax
rate is set as a percentage or as an absolute amount per unit of measurement of the object of
taxation or tax base.

The tax period is the period of time specified for individual types of taxes and other obligatory
payments to the budget, after which the object of taxation are determined, the tax base,
calculated the amount of taxes and other mandatory payments payable to the budget.