RK MF Tax Committee’s Letter No НК-13-ЮЛ-Е-883-НК-17 dated 8th January 2014, clarifies the procedure for applying the documents confirming residency of legal entities and individuals who are residents of CIS member states, that signed the Chisinau Treaty. Source: ZAKON.KZ IA.
The Letter states the following position of the authorized body on issues mentioned.
Taxpayer (tax agent) has no right to apply the reduced or zero rate when charging CIT at source from non-residents’ income earned from sources in RoK based on a residency certificate, without performing an appropriate legalization (affixing an apostile) following the procedure established by the legislation of the Republic of Kazakhstan.
In accordance with Article 3 of the Hague Treaty, the only formality that may be required for certifying the authenticity of signature, capacity in which the person signing the document acted, and, where appropriate, the identity of the seal or stamp which the document bears, is affixing the apostile provided for by Article 4 of the Hague Treaty by a competent body of the state where this document was executed.
According to Article 5 of the Hague Treaty, an apostile shall certify the authenticity of the signature, the capacity in which the person signing the document acted, and, where appropriate, the identity of the seal or stamp which the document bears.
In turn, provisions of the Treaty on legal assistance and legal relations in civil, family and criminal cases concluded by Member States in Chisinau on 07.10.2002 and ratified by the Law dated 10 March 2004 No 531 and the Treaty on Legal Assistance and Legal Relations in civil, family and criminal cases (Minsk, 22 January 1993) and ratified by the Resolution of RoK Supreme Soviet No 2055-XII dated 31 March 1993, proclaim that it was concluded between the Contracting parties based on the desire to provide citizens of each of the Contracting Parties and other persons residing on its territory, with a reliable legal protection of their personal, property and non-property rights in the territories of all the Contracting parties, attaching the great importance to the development of cooperation in the field of judicial institutions’ providing legal assistance in civil, family and criminal cases.
RoK MF Tax Committee believes that norms of the Chisinau (Minsk) Treaty are applicable if non-residents present documents issued by competent bodies, without carrying out diplomatic or consular legalization (affixing an apostile) within the framework of legal assistance on civil, family and criminal cases and are not applicable to tax relations.
In order to simplify the procedure for applying the residency certificate, they sent draft Memorandums of mutual understanding regarding the application of the Treaty for the Avoidance of Double Taxation to CIS member states, which are subject to the Hague Treaty (Russian Federation, Republic of Belarus, Republic of Azerbaijan, Armenia, Georgia, Kyrgyz Republic, Republic of Uzbekistan, Ukraine).
These draft Memorandums suggest that residency should be recognized on the basis of an original or a notarized copy of a document confirming residency certified by a foreign notary, without carrying out a legalization procedure for such document.
The Federal Tax Service of the Russian Federation holds a position that the provisions of Chisinau (Minsk) Treaty is not applicable to tax legal relations and that it is not acceptable for the Russian Federation to resolve the issue by signing the Memorandum.
In this connection, the Federal Tax Service has made a proposal to resolve the issue related to the procedure for applying the residency certificate by signing the Protocol on Introducing Amendments and Additions to the Treaty between the Government of the Republic of Kazakhstan and the Government of the Russian Federation on the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital.
Similar position is held by the Ministry of Taxes and Duties of the Republic of Belarus.
With the Republic of Armenia the draft Memorandum passed the domestic coordination in Armenia and is undergoing the intradepartmental coordination in the Republic of Kazakhstan.
With the other Member States of the Kishinev Treaty (except Georgia) the draft Memorandum is at the stage of coordination.
Since this RK TC Letter does not specify how the residency certificates should be accepted prior to introducing amendments and additions to the Treaty (the Agreement) on avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital with the Russian Federation and the Republic of Belarus, as well as signing corresponding Memorandums with other countries – members of the Chisinau Treaty, to avoid any confusion with the tax authorities, documents confirming residency of non-resident legal entities and individuals must be legalized (apostilled).