September 6, 2019
Kazakhstan proposes imposing VAT liability on nonresidents providing electronic services to individuals
The State Revenue Committee of the Republic of Kazakhstan (Kazakhstan) has proposed the introduction of a new Article 426-1 of the Tax Code, “Features of the fulfillment of Value Added Tax (VAT) liabilities by a nonresident providing services in electronic form to individuals.” The new provision would be effective as of 1 January 2020.
According to the proposed changes, a nonresident legal entity, when providing services to individuals in electronic form, will be required to register as a VAT payer and calculate VAT based on the turnover of services rendered if the place of supply of such services is the Kazakhstan (regardless of whether they have established a registered presence).
Electronic services would include:
The place of supply of services in electronic form would be deemed to be in Kazakhstan if:
Foreign organizations would have to calculate VAT at the rate of 12% of the value of services provided in electronic form and would have to submit VAT returns and pay VAT to the state budget each calendar quarter.
Issuing Kazakhstan statutory VAT-invoices by a nonresident for services in electronic form rendered to individuals is not currently required. VAT on goods (works or services) purchased by a nonresident for the provision of electronic services would not be allowed for offset.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Kazakhstan LLP, Almaty