Choosing a special tax regime when registering a business

This article will talk about the main points that entrepreneurs need to pay attention to when starting a small business and who have chosen a special tax regime provided for by the Tax Code of the Republic of Kazakhstan.

In accordance with the Entrepreneurial Code, business entities are divided into micro-business entities, small, medium and large businesses.

The Tax Code provides for the following special tax regimes for small businesses:

• Based on a patent;
• Based on a simplified declaration;
• Special tax treatment based on a fixed deduction;
• Special tax regimes for agricultural producers.

The special tax regime provides for a small business entity a simplified procedure for calculating and paying: individual income tax, social tax and corporate tax, for each of the regimes there are certain features.

In order for a small business entity to apply the special tax regime, it must meet the following requirements:

• The average number of employees does not exceed for the special tax regime;
• Based on the simplified declaration – 30 people;
• With a fixed deduction of 50 people.

Income for the tax period does not exceed for the special tax regime:

• On the basis of a patent – 300 times the minimum wage (hereinafter referred to as the minimum wage), established by the law on the republican budget and effective as of January 1 of the corresponding financial year. In 2018, the minimum wage amounted to 28,284 tenge, respectively, income should not exceed 8,485,200 tenge;
• Based on the simplified declaration – 2,044 times the minimum wage, respectively 57,812,496 tenge;
• With the use of a fixed deduction – 12,260 times the minimum wage, respectively 346,761,840 tenge.

LIMITATIONS ON THE APPLICATION OF THE SPECIAL TAX REGIME

By type of activity. A business entity operating under a special tax regime is not entitled to engage in the following activities:

• production of excisable goods;
• storage and wholesale of excisable goods;
• sale of certain types of petroleum products – gasoline, diesel fuel and fuel oil;
• running lotteries;
• subsoil use;
• collection and acceptance of glassware;
• collection (harvesting), storage, processing and sale of scrap and waste of non-ferrous and ferrous metals;
• consulting services;
• accounting or auditing activities;
• financial, insurance and intermediary activities of an insurance broker and insurance agent;
• activities in the field of law, justice and justice;
• financial leasing activities.

By subject matter. The following subjects are not entitled to apply the special tax regime:

1) legal entities with structural subdivisions;

2) structural subdivisions of legal entities;

3) taxpayers with other separate structural subdivisions and (or) objects of taxation in different settlements.

For the purpose of taxation of persons applying special tax regimes, another separate structural subdivision of the taxpayer is recognized as a territorially separate subdivision, at the location of which stationary workplaces are equipped that perform part of its functions. The workplace is considered stationary if it is created for a period of more than one month.

The provision of this subparagraph does not apply to taxpayers engaged exclusively in the activity of leasing (renting) property;

4) legal entities in which the share of participation of other legal entities is more than 25 percent;

5) legal entities in which the founder or participant is at the same time the founder or participant of another legal entity that applies a special tax regime or features of taxation;

6) non-profit organizations;

7) payers of tax on gambling business.

Separately, the legislator singled out services that individual entrepreneurs and legal entities operating on the basis of a special tax regime based on a patent or a simplified declaration, providing services on the basis of agency contracts (agreements) are not entitled to engage in. Agency contracts (agreements) are civil law contracts (agreements) concluded in accordance with the legislation of the Republic of Kazakhstan, according to which one party (agent) undertakes, for a fee, to perform certain actions on behalf of the other party on its own behalf, but at the expense of the other party or on behalf of and at the expense of the other party.

The tax period for applying the special tax regime based on a patent or using a fixed deduction is a calendar year.

The tax period for applying the special tax regime based on the simplified declaration is half a year.

It is VERY IMPORTANT to pay attention to the deadlines for applying for a special tax regime:

• On the basis of a patent – for a newly formed entity, no later than three working days from the date of submission of a notice of the commencement of entrepreneurial activity, it is necessary to submit a calculation of the cost of a patent in paper or electronic form to the appropriate state revenue authority at the location;
• On the basis of a simplified declaration – newly formed legal entities send a notification to the state revenue authorities no later than five working days after the state registration of the legal entity in the justice authorities. Late filing of the notification does not deprive the legal entity of the right to file a notification on the transition to a special tax regime on the basis of a simplified declaration, but this exception applies only to newly formed small businesses.

Starting date of application of the tax regime:

• For newly formed individual entrepreneurs, this is the date of registration as an individual entrepreneur in the state revenue authorities;
• For newly formed legal entities that submitted a notification of the applicable taxation regime within the prescribed period, the date of state registration with the justice authorities.

These are the main points that beginner entrepreneurs need to pay attention to when choosing a special tax regime. In case of difficulty in choosing a tax regime, the lawyers of the law firm KORGAN can provide detailed advice at the office of our company.