The experts of OLYMPEX ADVISERS successfully rendered services on representation and defense of the Client before the tax authorities of the Republic of Kazakhstan in appealing against in-house audit decisions on international taxation issues.
The essence of the disputed issues was to defend the legitimacy of the Client’s actions when applying the national tax legislation. The Client exempted from taxation in the Republic of Kazakhstan income of a non-resident in the form of dividends, since all the conditions stipulated by the Tax Code were met. However, the tax authority, not agreeing with the position of the Client, charged additional corporate income tax at source from dividends paid to a non-resident. As justification, the tax authority cited the absence of the concept of “net income” in the Tax Code for the purposes of taxing dividends, ignoring that in practice the source for paying dividends is net income (net profit) determined according to accounting and financial reporting data. Thus, according to the position of the tax authority, the Client was entitled to apply exemption from taxation only towards dividends accrued and paid to a non-resident not on the basis of accounting data, but on the basis of tax accounting data.
In addition, the new dividend taxation concept adopted from January 1, 2021, which effectively changes the object of taxation and abolishes the benefits previously provided for by the Tax Code, was incorrectly applied by the tax authority retrospectively to dividends accrued and paid to a non-resident for the period 2018-2019.
Total amount of corporate income tax being appealed at source was 536,652,582 tenge, of which 100 per cent were successfully eliminated following the appeal assisted by the experts of OLYMPEX ADVISERS,
Notes: The name of the Client company for the services described above is not disclosed in accordance with the confidentiality agreement between the parties.
Project team: Serik Zhamanbalin, Galymzhan Zhakupov, Dana Omarova, Yekaterina Nurperzentova, Ainagul Akisheva