Concerning the monitoring of foreign financing

Posted: Valeriy Posted: 10 May 2017 11:24 Category: MinTax Group News Views: 468

By Saule Sultanova, Senior Manager of MinTax Group, Auditor, DipFR (ACCA), CIPA

Since 11 October 2016, the Law "On Issues Related to  Payments and Payment Systems" enacted amendments  to the RoK Tax Code, concerning the obligation of individuals and legal entities financed from foreign sources to submit reporting forms 017.00, 018.00 in accordance with the procedure established by Orders of RoK Minister of Finance dated 19 October 2016 No 553 and 554.

According to paragraph 1-1 of Article 14 of the RoK Tax Code, reporting forms 017.00, 018.00 must be submitted by persons and (or) structural subdivisions of a legal entity - recipients of money (or other assets) from foreign states, international and foreign organizations, foreigners, stateless persons in respect of transactions concluded with them for an amount exceeding 1 KZT in the case when their activities are aimed at the following:

- providing legal assistance, including legal information, protection and representation of the interests of citizens and organizations, as well as their consulting;

- studying and conducting public opinion polls, sociological surveys (with the exception of public opinion polls and sociological surveys conducted for commercial purposes), as well as dissemination and placement of their results;

- collection, analysis and dissemination of information, except for cases when the specified activity is carried out for commercial purposes.

At the same time, the persons and (or) structural subdivisions of legal entities are required to notify the tax authorities in accordance with the form approved by the authorized body within 10 working days from the day following the day of concluding the transaction, with obligatory entry of data concerning the money and (or) other assets to be received from foreign states, international and foreign organizations, foreigners, stateless persons.

According to paragraph 1-1 of Article 14 of RoK Tax Code, requirements to submit reporting forms 017.00, 018.00 do not extend to:

1) state-owned institutions;

2) persons occupying important government positions, persons authorized to perform state functions, deputies of the Parliament of the RoK and Maslikhats (except for deputies of Maslikhats who carry out their activities on a non-liberated basis), servicemen, employees of law enforcement and special government agencies in the performance of their official duties;

3) second-tier banks, organizations that carry out certain types of banking operations, insurance organizations;

4) major taxpayers subject to monitoring, the list of which is approved by RoK Government;

5) organizations of preschool and secondary education, educational institutions implementing educational programs of technical and professional, post-secondary, higher and postgraduate education, as well as autonomous educational organizations and international schools;

6) money and (or) other assets received in connection with the implementation of advocacy, notarial activities, the activities of private bailiffs, mediators, arbitrators, appraisers, auditors;

7) subjects of the quasi-public sector;

8) diplomatic and equivalent representations of a foreign state, consular offices of a foreign state accredited in the RoK, as well as their employees;

9) money and (or) other assets assigned for the development of national, technical and applied sports, support and encouragement of physical culture and sports, as well as those designed for sporting events, including international sports competitions, sports events;

10) money and (or) other assets, received on the basis of international agreements signed by the RoK;

11) money and (or) other assets received for the purpose of paying for medical treatment or undergoing health and preventive procedures;

12) money and (or) other assets received as revenues under foreign trade contracts;

13) money and (or) other assets received for the organization and implementation of international carriage, the provision of international postal services;

14) money and (or) other assets received within the framework of investment contracts concluded under the laws of the RoK;

15) amounts of dividends, interest, winnings which were previously taxed with personal income tax at source of payment where documents confirming the withholding of such tax at source of payment are available;

16) other cases established by the RoK Government.

Failure to notify about the receipt of money and (or) other assets from foreign states, international and foreign organizations, foreign persons, stateless persons, as well as failure to submit or untimely submission of information about their receipt and expenditure, entail administrative liability in accordance with Article 460- 1 of the Code of Administrative Offences of the Republic of Kazakhstan in the form of:

- a fine on individuals at the rate of fifty, on small businesses or non-profit organizations - at the rate of one hundred, on large business entities - at the rate of three hundred and fifty times the monthly reference index.

Thus, upon receiving income from foreign sources, one must submit to the state revenue authorities, not later than the 15th day of the second month following the reporting quarter, information on receipt and expenditure of money (or) other assets received from foreign states, international and foreign organizations, foreigners and stateless persons.

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