Payment of VAT on imported goods to be canceled by offsetting

From January 1, 2022 import of agricultural machinery, equipment, pesticides, pedigree animals and cattle, spare parts and other goods will be subject to general VAT payment method, reports World of NAN referring to "AgroInfo".

According to subparagraph 4 of Article 2 of the Law of the Republic of Kazakhstan of December 25, 2017 № 121-VI "On enactment of the Code of the Republic of Kazakhstan "On taxes and other obligatory payments to the budget," articles 427 and 428 of the Tax Code of the Republic of Kazakhstan (hereinafter - the RK Tax Code) are in effect until January 1, 2022.

Article 427 of the RoK TC regulates the method of payment of VAT on import of certain goods by offsetting, or without actual payment of this tax. Persons registered for value added tax and importing the following goods: 1) equipment; 2) agricultural machinery; 3) truck rolling stock; 4) helicopters and aircraft; 5) railroad locomotives and cars; 6) marine vessels; 7) spare parts; 8) pesticides; 9) breeding animals of all kinds and artificial insemination equipment; 10) live cattle, shall not pay the VAT amount, but only reflect these amounts in the VAT return simultaneously in accrual and offsetting the tax.

In accordance with Article 428 imports of the above goods from EEU member countries are also subject to the offsetting without actual payment in cash equivalent.

As of next year, the VAT offsetting for imports will be abolished. Agricultural producers-taxpayers importing the above goods will pay the full amount of import VAT according to the Tax Code of the Republic of Kazakhstan at the rate of 12% of the value of goods.

Previously, for offsetting tax distribution like this, domestic farmers planning to import machinery, livestock or equipment volunteered to be registered for VAT in order to avoid paying such large amounts of tax. Now there will be no such tax relief.

There are no alternatives in the Tax Code to replace the abolished VAT on import offsetting procedure. Despite the fact that the amount of VAT on import of expensive machinery, equipment and livestock is enormous and the tax burden on agricultural importers will increase significantly. In this regard, there is also a probability of increase in the cost of agricultural production assets from next year.

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