Legislative News. July-August 2017

This Client Update covers the key amendments to the laws of the Republic of Kazakhstan ('RK') and various legal developments introduced in July-August 2017.

NOVELTIES IN LEGISLATION

The laws covered by the present Client Update are related to both public and private sectors. Some of them may be of interest to you as they may affect your business in Kazakhstan.

We would like to draw your attention to the following legal acts.

LAWS

Healthcare

On 30 June 2017, the President of the RK signed the Law No.80-VI 'On Amendments to the Legislative Acts of the Republic of Kazakhstan on Healthcare' ('the Law').

The Law introduces the following key amendments:

1. Temporary restrictions on disposal of property, restrictions to conduct transactions with property as well as seizure of assets are not permitted in relations to assets of social health insurance fund held in bank accounts.

2. Foreclosure on the assets of social health insurance fund held in bank accounts is not permitted.

3. Foreigners and members of their families temporarily staying in the RK enjoy the rights and bear obligations in the mandatory social health insurance system on an equal footing with citizens of the RK under the international treaty ratified by the RK, unless otherwise provided for by laws and international treaties.

   Employer contributions payable to the fund are the following: From 1 July 2017 - 1% of the object of calculation of contributions; From 1 January 2018 - 1.5% of the object of calculation of contributions; From 1 January 2020 - 2% of the object of calculation of contributions; From 1 January 2022 - 3% of the object of calculation of contributions. 4. When determining an employee's income withheld at the source for each month during a calendar year regardless of periodicity of payments, tax deductions are applied for the amount of contributions to obligatory social health insurance.

5. The amount of administrative fine imposed for violation of social health insurance laws which cannot be paid due to the expired statute of limitations must be written off by the tax authority from a taxpayer's personal account (tax agent).

6. The payers of contributions are as follows:

   the government; employees, including government and civil officials, save for military personnel, law enforcement and special government officials; individual entrepreneurs; private notaries; private bailiffs; advocates; professional mediators; others. The Law came into force on 14 July 2017.

   Taxation

   On 30 November 2016, the President of the RK signed the Law No.26-VI 'On Amendments to the Legislative Acts of the Republic of Kazakhstan on Taxation and Customs Administration' ('the Law').

   According to the Law, the following key amendments were introduced from 1 July 2017:

   1) The concept of 'preliminary audit report'.

   Preliminary audit report is a document outlining preliminary results of the tax audit conducted by an inspector. Prior to the tax audit report, the tax official hands to the taxpayer a preliminary tax audit report, whereas previously a tax audit act was executed upon completion of a tax audit. Preliminary tax audit report rules are applicable to large taxpayers subject to monitoring, as well as to taxpayers who entered into investment contracts. Preliminary tax audit report procedure is outlined in Order No. 334 of the Minister of Finance of the RK On rules and Timelines for Furnishing Preliminary Tax Audit Reports, Providing Written Objections and Review of Written Objections (more details are set out further).

   2) Changing the order for appeal of notification of the audit results

   The taxpayer now appeals to the competent body as opposed to the superior body as it was before to the competent body. The competent body is the Ministry of Finance of the RK.

   The appeal must be accompanied by copies of the report and the appealed notification. For appeal review the competent body sets up an appeals commission. The appeals commission operates pursuant to the Regulation on the appeals commission for consideration of appeals of...