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November 20, 2019
Kazakhstan postpones introduction of VAT for nonresident providers of electronic services to individuals to 1 January 2021
Kazakhstan has postponed to 1 January 2021, the introduction of new Article 426-1 of the Tax Code “Features of the Fulfillment of VAT Liabilities by Non-residents Providing Services in Electronic Form to Individuals” proposed by the State Revenue Committee of the Republic of Kazakhstan. The provision was originally to go into effect on 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 value-added tax (VAT) payer and calculate VAT based on turnover of services rendered if the place of supply of such services is Kazakhstan (regardless of whether they have established a registered presence).
Electronic services (e-services) subject to VAT would include:
The place of supply of e-services would be deemed to be Kazakhstan if:
Foreign entities would be required to calculate VAT at the rate of 12% of the value of e-services, submit VAT returns and pay VAT to the state budget each calendar quarter.
Foreign entities would not be required to issue Kazakhstan’s statutory VAT-invoices for e-services rendered to individuals.
VAT on goods (works or services) purchased by a foreign entity for the provision of electronic services would not be off-settable.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Kazakhstan LLP, Almaty