The Special Tax Regime (SNR) of retail tax is a new tax regime approved by the introduction of amendments and additions to the Tax Code by Law No. 231-VI dated March 20, 2023 retrospectively. The special retail tax regime is intended for small and medium-sized businesses engaged in certain types of activities, the list of which must be established by the Government of the Republic of Kazakhstan.
Since 2024, the list of activities allowed for the application of the SNR retail tax has been almost doubled - from 190 to 364. This change was approved by Government Resolution No. 1240 dated December 29, 2023 "On Amending Resolution No. 393 of the Government of the Republic of Kazakhstan dated May 22, 2023 "On Determining Types of Activities for the Purposes of Applying a Special Retail Tax Regime and Invalidating Resolution No. 912 of the Government of the Republic of Kazakhstan dated November 17, 2022 "On Introducing amendments to the Resolution of the Government of the Republic of Kazakhstan dated February 2, 2021 No. 30 "On the definition of types of activities for the purposes of applying a special tax regime retail tax". The decree comes into force on January 22, 2024. The purpose of the resolution is to expand the list of activities previously commissioned by the Head of State for the purpose of applying a special retail tax regime, which will ensure a reduction in the tax burden for small and medium-sized businesses.
According to paragraph 1 of Article 696-3 of the Tax Code, taxpayers who meet the following conditions are entitled to apply a special retail tax regime:
1) the average number of employees for the tax period does not exceed 200 people;
2) income for a calendar year does not exceed 600,000 monthly calculation index established by the law on the republican budget and effective on January 1 of the corresponding financial year;
3) carry out exclusively one or more of the types of activities defined by the Government of the Republic of Kazakhstan for the purposes of applying this regime.
In accordance with paragraph 2 of Article 696-3 of the Tax Code, legal entities whose founder or participant is simultaneously the founder or participant of another legal entity applying a special retail tax regime are not entitled to apply a special retail tax regime.
The special tax regime of retail tax provides for a special procedure for calculating corporate or individual income tax, with the exception of taxes withheld at the source of payment.
Thus, according to paragraph 4 of Article 696-3 of the Tax Code, the calculation of corporate or individual income tax, with the exception of taxes withheld at the source of payment, when applying a special retail tax regime, is carried out by the taxpayer independently by applying to the object of taxation for the reporting tax period a rate in the amount of:
- 4% on income received (to be received) for the tax period in the Republic of Kazakhstan and abroad, unless otherwise provided for in paragraph three of this paragraph;
- 8% on income received from the sale of goods, performance of works, provision of services to taxpayers who apply the norms of paragraph 3-2 of Article 242 of this Code on the allocation of expenses to deductions for the calculation of corporate or individual income tax.
At the same time, according to paragraph 5 of Article 696-3 of the Tax Code, local representative bodies have the right to lower the rate by no more than 50 percent.
Such a decision to lower the tax rate was made by the Ural City Maslikhat of the West Kazakhstan region No. 9-9 dated February 28, 2024. (Registered with the Department of Justice of the West Kazakhstan Region on February 29, 2024 No. 7331-07). This rule will come into force on January 1, 2024.
By this decision, the rate of corporate or individual income tax, with the exception of taxes withheld at the source of payment, when applying the special retail tax regime in the city of Uralsk was reduced from 4 (four) percent to 3 (three) percent on income received (to be received) during the tax period.