Transfer Pricing in Kazakhstan

We help mitigate risks:

Providing consultation on transfer pricing based on the OECD guidelines
Assisting in the preparation of transfer pricing documentation
Helping with the update of transfer pricing documentation

Transfer Pricing Requirements in Kazakhstan

Companies involved in controlled transactions must submit documents to the tax authority for price verification in such transactions. Non-compliance with market pricing may indicate tax understatement.

Tax Control

Authorized bodies of the Republic of Kazakhstan conduct transaction monitoring, inspections, and other procedures established by the legislation of the Republic of Kazakhstan.
Participants in transactions are required to maintain records and documentation supporting the justification of prices and provide them to the authorized bodies within 90 days of the request.

In case of non-compliance of transfer pricing with the market, tax authorities will reassess taxes based on the median value of the market price range, and impose fines and penalties. Taxpayers have the right to make a self-adjustment of taxes based on the extreme values of the price range. This allows reducing the amount of additional taxes paid and avoiding penalties.

Controlled Transactions

Transactions Related to International Operations

Transactions conducted in Kazakhstan that are directly related to international business operations. The subject of such transactions is the subject of international business operations. These transactions are subject to control if:

the parties to the transactions have different CIT rates
one of the parties has tax benefits
one of the parties has losses according to tax declarations for the 2 years preceding the year of the transaction
the transaction involves buying/selling natural resources by the producers

International Business Operations

International business operations include transactions with non-residents of Kazakhstan and transactions between residents of Kazakhstan conducted outside Kazakhstan.

2 Types of Transfer Pricing Reporting

Transaction Monitoring Reporting

Reporting is required for international business operations included in the list approved by the Order of the Minister of Finance of the Republic of Kazakhstan. In addition to raw materials and agricultural products, the list includes construction services, equipment installation, forwarding, and marketing services.
The reporting includes transactions where the total amount of income/expenses and/or liabilities in the reporting financial year is at least 250,000*MCI.[1]

The reporting deadline is May 15 of the year following the reporting year.

[1] MCI – Monthly Calculation Indicator, effective on January 1 of the reporting year

Three-Tier Transfer Pricing Documentation

Declaration of participation in an international group of companies
Local file
Master file
Country-by-country report

More about the three-tier transfer pricing documentation

Fines

Violation	Entity	Fine
Understatement of tax amounts in the declaration	SBE[1]	20% of the assessed tax amount[2]
	MBE[3]	50% of the assessed tax amount
	LBE[4]	80% of the assessed tax amount
Understatement of current payments[5]	SBE	30% of the understated payment amount[6]
	MBE	30% of the understated payment amount
	LBE	50% of the understated payment amount
Excess of the amount of actual CIT over the amount of calculated advance payments by more than 20%	SBE	20% of the excess of the actual tax amount
	MBE
	LBE
Failure to provide transaction monitoring reports and documents required for price control	SBE	100 MCI 125 MCI for repeated violations[7]
	MBE	200 MCI 250 MCI for repeated violations
	LBE	350 MCI 750 MCI for repeated violations
Detection of discrepancies between transaction monitoring report data and data revealed by inspection exceeding 2000*MCI	SBE	100 MCI
	MBE	200 MCI
	LBE	300 MCI
Failure to provide or providing inaccurate transfer pricing documentation	MBE	250 MCI 500 MCI for repeated violations
	LBE	500 MCI 1000 MCI for repeated violations

[1] SBE – Small Business Entities
[2] Assessed tax amount – the amount of tax assessed following a tax audit

[3] MBE – Medium Business Entities

[4] LBE – Large Business Entities

[5] Current payments – excise taxes, property tax, vehicle tax, land tax.

[6] Understated payment amount – the amount of understatement of current payments in the calculation

[7] Repeated violation – violation within a year after the imposition of the fine

Preparation of 3-Tier Documentation

Assistance in Preparing Three-Tier Transfer Pricing Documentation According to OECD Concepts:

Primary report (Master file);
Local report (Local file);
International report (Country-by-country reporting).

Mitigating Transfer Pricing Risks

We offer support for all necessary actions related to transfer pricing reporting and preparation for tax audits.

Our Transfer Pricing Services:

Identification of related parties and controlled transactions;
Comparative analysis of transfer prices, including market analysis and calculation of company metrics;
Preparation of transfer pricing documentation;
Updating of transfer pricing documentation.

Our Transfer Pricing Experts

Konsu specialists have extensive experience in tax consulting for companies with foreign participation, analyzing transfer pricing, and preparing documentation in accordance with international concepts developed by the OECD and the tax legislation of the Republic of Kazakhstan. Please don’t hesitate to contact us for a consultation.