Special tax regime based on patent

One of the simplest ways of doing business is the activity of an entrepreneur based on a patent, that is, this is a business in which the entrepreneur chooses the period during which he is going to carry out entrepreneurial activities, pays the necessary taxes and fees and conducts entrepreneurial activities.

At the same time, there are the following restrictions, in the case of applying a special tax regime based on a patent:

• The entrepreneur is not entitled to use the labor of employees;
• Must be self-employed.

In order to obtain a patent, an individual must register as an individual entrepreneur (hereinafter – IP) through the e-government portal using an electronic digital signature, registering as an individual entrepreneur does not mean that you have started entrepreneurial activity based on a patent. In order to obtain a patent, you need to apply to the tax authority at the location and submit a calculation of the cost of the patent, which can be provided either on paper or in electronic form, while:

1) newly formed individual entrepreneurs must provide a calculation no later than three working days from the date of submission of the notification for registration as an individual entrepreneur;

2) in case of transition from the generally established procedure or other special tax regime – before the 1st day of the month of application of the special tax regime based on a patent;

3) applying a special tax regime based on a patent to obtain the next patent – until the expiration of the previous patent or the period of suspension of tax reporting.

The calculation is tax reporting for calculating the cost of a patent. The cost of a patent is calculated as follows: the cost of a patent includes the payable amounts of individual income tax (except for individual income tax withheld at the source of payment) and social payments. The calculation of the amount of individual income tax included in the cost of a patent is made by applying a rate of 1 percent to the object of taxation, with the exception of the object of taxation of persons carrying out activities in the field of trade. Individual entrepreneurs carrying out activities in the field of trade calculate the amount of individual income tax included in the cost of a patent by applying a rate of 2 percent to the object of taxation, with the exception of income received through non-cash payments, which are taxed at a rate of 1 percent.

Individual entrepreneurs operating in the field of trade keep separate records of income taxed at different rates of individual income tax. At the same time, income received through non-cash payments is recorded in the tax register in the form established by the authorized body on the basis of primary documents, including bank statements.

In view of the fact that the activity of an individual entrepreneur on the basis of a patent implies the personal participation of the entrepreneur, then, accordingly, obligations arise to pay social payments on the basis of the laws of the Republic of Kazakhstan “On pensions in the Republic of Kazakhstan”, “On compulsory social insurance” and “On compulsory social medical insurance”.

If the amount of income actually received during the term of the patent exceeds the amount of income indicated in the calculation, individual entrepreneurs are obliged to submit the calculation in the form of additional tax reporting for the excess amount within five working days and pay taxes on this amount. Accordingly, if the amount of income actually received during the term of the patent (including cases of early termination) is less than the amount of income indicated in the calculation, individual entrepreneurs are entitled to submit the calculation in the form of additional tax reporting in the amount of a reduction in the cost of the patent. In this case, the refund of overpaid taxes is made in the manner prescribed by Chapter 11 of the Tax Code.

In the event that the amount of income actually received exceeds the amount of the marginal income in the amount of 300 times the minimum wage, received from the date of the start of the application of the generally established procedure or other special tax regime established by Article 679 of the Tax Code, is taxed accordingly in the generally established procedure or in the manner determined special tax regime.

In the event of termination of entrepreneurial activity before the expiration of the patent, the amount of tax paid is not subject to return and recalculation, except for the case when an individual entrepreneur is recognized as incapacitated.

Summing up, we can note the pros and cons of doing business on the basis of a patent.