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Mazhilis approves draft law on double taxation avoidance in Baikonur

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by October 19, 2016 Business

Mazhilis at the plenary session has approved the draft law “On Ratification of Protocol on amendments to the Agreement between the Republic of Kazakhstan and the Russian Federation on the Status of Baikonur, the Procedure for Forming and the Status of Executive Bodies of December 23, 1995.”
“The Protocol aims at regulating the issues of double taxation with indirect VAT and excise taxes. Today, the trade turnover in Baikonur imposes VAT to our entrepreneurs. Baikonur and Russian taxpayers do not have the right to refer the VAT as per Russian legislation, and the cost of goods is increased by this amount. 18% VAT is being imposed in accordance with the Russian Tax Code. The situation is same for sales of goods from Baikonur territory on the territory of the Republic of Kazakhstan. Thus, there is an artificial overpricing.
To solve this problem, we have carried out joint work with Russian colleagues and drafted present Protocol,” Minister of Finance Bakhyt Sultanov said presenting the draft law.
According to the Minister, the draft Protocol provides for the principle, which operates in the Eurasian Economic Union – when the goods are sold from the territory of Kazakhstan to Baikonur, the turnover is taxed at a “zero” rate and 18% VAT is collected once in Baikonur, and vice versa. The same approach is for provision of services and performance of work.

Source: Government of the Republic of Kazakhstan

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