Transfer pricing reporting: amendments were introduced

On 18 May 2022, the order of the Deputy Prime Minister – the Minister of Finance of the Republic of Kazakhstan was published. The order introduces amendments to the forms and rules for transfer pricing reporting and notification on participation in a multinational group. These changes come into effect on 3 June 2022.

The most significant changes relate to the local file and include the following:

• Changing the “controlled transaction” definition – a transaction of a local entity concluded with a related party subject to the transfer pricing control.
• Introducing a materiality threshold for categories of controlled transactions included into a local file – 250,000 MCI for the total amount of income (expenses) and/or liabilities.
• Clarifying that a local file should contain information on material categories of controlled transactions. In case a local entity does not have such transactions in a reporting financial year, a local file should not be submitted.
• Expanding the “category of controlled transactions” definition – the comparable economic conditions requirement has been abolished.
• Clarifying the “local entity” definition – a participant of a multinational group obliged to submit a local file.
• Expanding the section “Local entity” in paragraph 1.1. – in addition to a description of the management and organizational structures of a local entity, a description of the parties to whom the local management reports, including the countries where such parties have their main offices, should be indicated.
• Expanding the “Local entity responsibility” in section 4 – adding a name, legal address, a telephone number and email of a local entity; a full name, a telephone number and a signature of a person who prepared the report.

Other changes:

• Adding the web address of the resource where the forms and rules for transfer pricing reporting are available (https://kgd.gov.kz/ru/content/transfertnoe-cenoobrazovanie-1-1).
• Clarifying the deadline for submission of a master file – no later than 12 months from the date of receipt by a participant of a multinational group of the request from the authorized body for the provision of a master file.
• The forms and rules for county-by-country reporting have been removed from the order containing the rules and forms for notification on participation in a multinational group (i.e., they remained only in the order containing forms and rules for transfer pricing reporting).

Authors:

• Anuar Mukanov
• Yuliya Barsukova