VAT at zero rate

In accordance with paragraph 1 of Article 393 of the Code of the Republic of Kazakhstan "On Taxes and Other Mandatory Payments to the Budget" (hereinafter referred to as the Tax Code), value added tax (hereinafter referred to as VAT) is levied at a zero rate on the turnover of sales of goods of own production to taxpayers operating in the territory of the Republic of Kazakhstan under a subsoil use contract, a production sharing agreement (contract), in accordance with the terms of which imported goods are exempt from VAT.

If the PSA subsoil use contract defines a list of imported goods exempt from VAT, turnover on the sale of goods specified in this list is taxed at a zero rate.

For the purposes of this article, a product (commodity) produced by a taxpayer for which there is a certificate of origin is recognized as a product of its own production.

The list of taxpayers specified in the first part of paragraph 1 of Article 393 of the Tax Code is approved by the authorized body in the field of oil and gas in coordination with the authorized body and the authorized body in the field of tax policy.

Thus, a branch of Maersk Oil Kazakhstan Gmbh, a branch of North Caspian Operating Company NV, Tengizchevroil LLP are included in the List of taxpayers operating in the territory of the Republic of Kazakhstan under a subsoil use contract, a production sharing agreement (contract), in accordance with the terms of which imported goods are exempt from VAT, approved by Order No. 71 of the Acting Minister of Energy of the Republic of Kazakhstan dated February 28, 2018.

According to paragraph 4 of Article 393 of the Tax Code, the documents confirming the sale of goods to taxpayers specified in paragraph 1 of Article 393 of the Tax Code are:

1) a contract for the supply of goods to taxpayers operating in the territory of the Republic of Kazakhstan under a subsurface use contract, a production sharing agreement (contract), under the terms of which imported goods are exempt from VAT, indicating in it that the supplied goods are intended to fulfill the work program of a subsurface use contract, a production sharing agreement (contract);

2) copies of shipping documents confirming the shipment of goods to taxpayers;

3) copies of documents confirming receipt of goods by taxpayers.

Considering the above, if the above conditions are met, the taxpayer has the right to apply VAT at a zero rate to the turnover for the sale of goods of its own production to the Branch of the Company "Maersk Oil Kazakhstan Gmbh", the Branch of "North Caspian Operating Company NV", LLP "Tengizchevroil".