Update in the list of activities under STR for small business

In accordance with the Laws of the Republic of Kazakhstan ("RK") No. 85-VII dated December 20, 2021 and No. 165-VII dated December 21, 2022 "On Amendments and additions to the Code of the RK "On taxes and other mandatory payments to the budget" (Tax Code)", amendments were introduced to subparagraph 3 of paragraph 2 of Article 683 of the Tax Code of the RK. The adopted amendments establish limitations on the application of a special tax regime for small business entities[1] (including individual entrepreneurs).

From January 1, 2023, in addition to the previously established limitations, small business entities engaged in the following types of activities cannot apply the special tax regime:

• marketing services
• leasing and operation of the retail market
• subleasing of retail facilities related to retail markets, fixed retail facilities of category 1, 2 and 3 in accordance with the legislation of the RK on the regulation of trade activities, as well as retail outlets, retail facilities and catering facilities located on their territory
• the activities of two or more taxpayers providing hospitality services on the territory of one hotel or a separate non-residential building in which such services are provided

Small business entities that carry out the abovementioned activities from January 1, 2023 should switch to the general tax regime. As a consequence, the tax burden and tax reporting requirements for such taxpayers will change (for example, the tax rate for individual entrepreneurs will increase from 3% to 10% and such individual entrepreneurs should submit tax return form 220.00 instead of tax return form 910.00).

We will be happy to discuss the impact of these amendments on your company and provide the necessary support in adapting to changes or revising your business model in the Republic of Kazakhstan.

Authors:

• Dinara Tanasheva
• Roman Yurtayev
• Rafael Khaidarov
• Minel Ibragim