Who Can Apply Patent-Based Special Tax Regime

The main condition for the application of the special regime "SNR by patent" is the conduct of personal entrepreneurship, i.e. they do not use the labor of employees.

Other conditions for the patent application and existing restrictions are fixed in Article 683 of the Tax Code of the Republic of Kazakhstan, according to which there are the following restrictions:

• on the amount of income (up to 3,528 MCI per year);
• by type of activity (taking into account the requirements of paragraph 3, paragraph 2, Article 683 of the Tax Code of the Republic of Kazakhstan and other restrictions).

If the annual income exceeds the established threshold, the sole proprietor loses the right to apply the patent and is obliged to switch either to another special tax regime, to a "simplified" or to a generally established regime.

Sole proprietors who carry out one or more of the following types of activities can work under the patent:

1. plastering;
2. carpentry and carpentry;
3. floor covering and wall cladding works;
4. painting and glass works;
5. taxi activity;
6. freight transportation by road;
7. property management for remuneration or on a contractual basis;
8. activities in the field of photography;
9. translation (oral and written) business;
10. renting out property (lease);
11. leasing of vehicles;
12. rental and property hiring (rental) of entertainment and sports equipment;
13.  
14. video and disc rental;
15. rental and property hiring (rental) of other personal consumption items and household goods;
16. leasing of agricultural machinery and equipment;
17. leasing of office machinery and equipment,    
18. including computer technology;
19. services in the field of sports education and education
20. of leisure professionals;
21. cultural education services;
22. other education services;
23.  auxiliary educational services;
24. activities in the field of art;
25. repair of computers and peripheral equipment;
26. repair of communication equipment;
27. repair of personal items and household goods;
28. hairdressing services;
29. manicure and pedicure;
30. veterinary services;
31. land processing services;
32. residential cleaning and housekeeping services;
33. porter services at markets, train stations;
34. manufacture and repair of musical instruments;
35. grazing of pets.

It is forbidden to engage in trade under the patent. If it is revealed that activities are not included in this list, then the transfer from the patent mode will be automatically carried out to the generally established mode.

Entrepreneurs applying a special tax regime based on a patent make monetary settlements with the mandatory use of cash registers, with the exception of taxpayers whose activities are located in places where there is no public telecommunications network.

Sole proprietors who provide services on the basis of agency agreements (agreements) are not entitled to apply a special tax regime based on a patent.

To obtain a patent, an entrepreneur must first register as an individual entrepreneur. Upon initial receipt of a patent, if an entrepreneur indicated in the notification of registration as an individual entrepreneur a type of activity that does not correspond to the list of permitted types of activities (Article 685 of the Tax Code), then the entrepreneur will not be able to obtain a patent.

In order to apply a special tax regime based on a patent, a calculation of the patent value (calculation) is submitted to the tax authority at the location.

The calculation is submitted on paper or in electronic form, including through the web portal "electronic government", sole proprietors:

1) newly formed, - no later than 3 working days from the date of submission of the notification for registration as an individual entrepreneur;

2) making the transition from a generally established procedure or other special tax regime, – until the 1st day of the month of application of a special tax regime based on a patent;

3) to obtain another patent, – before the expiration of the previous patent or the period of suspension of tax reporting.

The calculation is a tax report for calculating the value of a patent.

The amount of income that is planned to be received during the period of validity of the patent is determined by the taxpayer himself.

The payment of the patent value is made by the taxpayer before the submission of the calculation.

In case of payment of the patent value through second-tier banks or organizations engaged in certain types of banking operations, a notification of the electronic government payment gateway is attached to the calculation submitted in electronic form, which is generated on the electronic government web portal when the payment document details are specified in the request.

Simultaneously with the calculation on paper, documents confirming the payment of the cost of the patent are submitted.

In the calculation submitted in electronic form, including through the e-government web portal, individual entrepreneurs indicate the details of payment documents for the payment of taxes and social payments included in the cost of the patent.

The patent price includes the amounts of individual income tax payable (except for individual income tax withheld at the source of payment) and social payments.

The calculation of the amount of individual income tax included in the cost of a patent is carried out by applying a rate of 1 percent to the object of taxation.

IMPORTANT: in accordance with Article 57-4 of the Law of the Republic of Kazakhstan dated December 25, 2017 "On the Entry into force of the Code of the Republic of Kazakhstan "On Taxes and Other Mandatory Payments to the Budget" (Tax Code)" from January 1, 2020 to January 1, 2023, the amount of personal income tax, including for sole proprietors applying a special tax the regime based on a patent, in accordance with the conditions established by Article 57-4 of the said Law, is reduced by 100%.

Ie, there is no need to pay IPN for this period (the cost of the patent is 0).

Accordingly, when providing f.911.00 for 2021, the amount of the planned income is indicated in the calculation, and the amount of the IPN to be accrued is 0 tenge.

The calculation of social payments included in the cost of the patent is made in accordance with the laws of the Republic of Kazakhstan:

• On pension provision in the Republic of Kazakhstan,
• On compulsory social insurance,
• On compulsory social health insurance.

After submitting the calculation, the tax authority generates a patent in the information system of the tax authority within 1 working day following the date of submission of the calculation.

The tax period for the patent application is a calendar year.

But an entrepreneur can "buy out" a patent for any period, in the range from 1 full calendar month to 1 year.

This should be done before starting a business.

• If an entrepreneur plans to continue his activity after the expiration of the patent, then it is necessary to purchase the next patent before the expiration of the previous one.
• If the sole proprietor plans to change the tax regime, then the notification of the change should be submitted before the month in which the transition is planned. Otherwise, it will automatically be transferred to the generally established taxation procedure.
• If the activity is planned to be suspended, the application for suspension should also be submitted before the end date of the current patent.

If an entrepreneur simply "drops" a patent at the end of its validity, but does not file an application for suspension of activity, it will also be automatically transferred to the generally established taxation procedure.