As we (www.mintax.kz) were previously informed, letter of TC MF RK^[2] dated 7 June 2013 # НК-13-55-4256, states that the norms of the Convention “On aid and advice in legal matters and legal relationship on civil, domestic and criminal proceedings” concluded between member states in Kishinev city on 7 October 2002 and ratified by RK Law dated 10 March 2004 # 531 (hereinafter – Kishinev Convention^[1]), shall not be applied to tax legal relationship,since they are only applicable to under aid and advice in legal matters on civil, domestic and criminal proceedings.

For which reason, tax authorities have recognized application of certificates of residence presented by residents of Kishenev Convention member states as illegal, should they be not subject to mandatory diplomatic or consular legalization following the order prescribed by the RK Laws.

Currently, letter of the TC MF RK dated 8 January 2014 # НК-13-ЮЛ-Е-883-НК-17, reports that in order to simplify the procedure of the certificate of residence the member states of the Commonwealth of Independent States (Russian Federation, the Republic of Belarus, Republic of Azerbaijan, Armenia, Georgia, Kyrgyz Republic, Uzbekistan, and Ukraine), were sent a draft memorandum of understanding on application of the Convention on the avoidance of double taxation.

The draft memorandums suggest that the residence should be recognized on the basis of an original or a copy of document certified by a foreign notary, which would confirm the residencewithout the document legalization procedure.

In turn, the Federal Tax Service of the Russian Federation and the Ministry of Taxes and Duties of the Republic of Belarus suggested that the issue on the procedure of application of certificates of residence by concluding Protocols on amendments to the relevant Convention on the avoidance of double taxation.

Currently, the Ministry of Finance of the Republic of Kazakhstan is taking current negotiations on the issue with the Ministry of Finance of the Russian Federation.

The first round of negotiations, during which an agreement was reached on inclusion in the above-mentioned Protocol of rules on mutual recognition of a document confirming residency, in the original without legalization of a signature and a seal of an authority that issued and certified the document, was held with the Ministry of Taxes and Duties of the Republic of Belarus. Please note that the Republic of Belarus uses only original documents proving residency.

With regard to the other Member States of the Commonwealth of Independent States:

ü in the Republic of Armenia, the text of a draft Memorandum has passed internal coordination,

ü in Ukraine, a draft Memorandum is being coordinated by the Ministry of Justice,

ü Kyrgyz Republic expressed its readiness to sign the Memorandum.

Tax Service of the Republic of Uzbekistan and the Republic of Azerbaijan are going to apply provisions of the Kishinev Convention to tax relations.

Considering that the NC MF RK considers that provisions of the Kishinev Convention are not applicable to tax relations, document that proof residency of these states shall be legalized in accordance with the laws of the Republic of Kazakhstan.

Considering that letter of the TC MF RK dated 8 January 8 2014 # НК -13- UL- E – 883- NC – 17 does not specify whether the effect of Protocol on amendments to Conventions on avoidance of double taxation with Russian Federation, Republic of Belarus, Memorandum of Understanding on application of the Convention for avoidance of double taxation with the Republic of Armenia, Ukraine and Kyrgyz Republic have retrospective effect, and it is not clear whether territorial tax authorities receive an order on not making demands on performance of obligations of a tax agent on corporate income tax deducted at source before signing these documents with respect to application of the Convention for avoidance of double taxation. The Association of Taxpayers of Kazakhstan is preparing a request to the TC MF RK, including a request to withdraw letter # HK 13-55-4256 dated 7 June 2013 year.”

Download Letter of the TC MF RK dated 8 January 2014 No. НК-13-ЮЛ–Е-883-НК-17