When registering as an individual entrepreneur, an individual must choose one of the tax regimes under which the individual entrepreneur will work. What tax regime can you choose for individual entrepreneurs, and what preferential regimes are in effect now?
The Tax Code provides for special tax regimes for small businesses (SNR for SMEs), which establish a simplified procedure for calculating and paying certain types of taxes, preferential rates and other mechanisms aimed at reducing the tax burden.
SNR for SMB is not entitled to use individual entrepreneurs engaged in a number of activities (production, storage and wholesale of excisable goods, sale of gasoline, diesel fuel and fuel oil, lotteries, subsoil use, collection and acceptance of glassware, collection (procurement), storage, processing and sale scrap and waste of non-ferrous and ferrous metals, consulting services, activities in the field of accounting or auditing, financial, insurance activities, etc.).
The following types of SNR for SMEs operate in Kazakhstan:
- СНР on the basis of a patent;
- SNR based on a simplified declaration;
- СНР using a fixed deduction
Moreover, for entrepreneurs working in the sectors most affected by the pandemic, a new special retail tax regime has been introduced, which is provided for small and medium-sized businesses.
Let's dwell on each of them.
CHP based on patent
Mandatory conditions:
- the labor of hired workers is not used;
- income for the year does not exceed 3,528 times the MCI.
The patent has the right to apply to individual entrepreneurs who, in addition to meeting the above conditions, carry out activities in the form of personal entrepreneurship, as well as carry out one or more of the 32 types of activities (taxi activities, renting, etc.).
The personal income tax rate is 1% to the income received during the tax period. The possibility of submitting tax reports from one month to a year is provided. Mostly this regime is applied by taxpayers operating in the service sector for the lease of property.
SNR based on simplified declaration
Mandatory conditions:
- the average number of employees for half a year does not exceed 30 people;
- income for the six months does not exceed 24,038 times the MCI.
Personal income tax rate is 3% of income (excluding expenses). Tax reporting is provided once every six months. The simplified declaration reflects the amounts of individual income tax on income payable to the budget, and also reflects the IIT from income taxed at the source of payment, and social payments, both for the individual entrepreneur and for employees.
The regime is used mainly by taxpayers operating in the field of trade, public catering, and providing other types of services.
At the same time, income does not include income within 70,048 times the MCI, received by an individual entrepreneur through non-cash settlements with the obligatory use of a three-component integrated system.
CHR using a fixed deduction
Mandatory conditions:
- the average number of employees per year does not exceed 50 people;
- income for the year does not exceed 144,184 times the MCI.
An additional fixed deduction is provided in the amount of 30% of the total annual income, without supporting documents (subject to certain conditions), and, in addition to the deduction for labor costs, a decrease in taxable income by 100% of the payroll is provided.
For this regime, higher (in comparison with the simplified declaration) criteria for the size of the maximum income and the maximum number of employees are established.
Mostly the regime is applied by taxpayers who carry out wholesale and retail activities, provide other types of services, and also work in the construction sector.
SNR of retail tax
The SNR of the retail tax may be applied by taxpayers who are recognized as small and medium-sized businesses in accordance with the Entrepreneurial Code of the Republic of Kazakhstan and carry out only one or more types of activities determined by the Government of the Republic of Kazakhstan for this regime (PPRK dated 02.02.2021 No. 30).
Personal income tax rate is 3%. The object of taxation is income excluding expenses. The tax period is a calendar quarter.
This regime is valid from January 1, 2021 and is designed for 2 years.
The introduction of a retail tax regime with a single preferential rate and exemption from VAT and social tax is a temporary and necessary measure of support for business entities working in the sectors of the economy most affected by the pandemic, and will allow them to significantly simplify taxation.
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