Today we would like to discuss some of the tax benefits, specialities in accounting, and other details of working within the Astana International Financial Center framework. The AIFC is a special economic zone located in Astana, Kazakhstan. Its members can enjoy benefits such as lower taxes and simplified business administrative procedures.
ACCOUNTING OF AIFC MEMBER-COMPANIES
– The first financial year of a legal entity begins from the moment of its registration and lasts for a period not exceeding 18 months by decision of the owners or partners of the company. The second or any subsequent financial year of legal entities begins at the end of the financial year of legal entities and lasts 12 months or during another period that is 7 days shorter or longer than 12 months, as decided by the owners or partners of the company.
– According to the AIFC legislation, the authorized capital can also be formed in dollars.
– The minimum authorized capital of a private company may be 1 tenge.
– The AIFC legislation allows the founders to form the authorized capital with property. In this case, the company’s management needs to evaluate the property and notify the Committee about the formation of the authorized capital by the property.
– The constitutional law “On the AIFC” does not provide for certain requirements for the maintenance of accounting records by AIFC participants.
– Accounting for operations in the AIFC is carried out in accordance with the requirements of IFRS. There are no special requirements for accounting for operations at the AIFC site. However, due to the need to maintain separate tax accounting, it is recommended to keep separate accounting of transactions in IFRS in case of conducting other activities outside the AIFC.
– Separate accounting is carried out either on special accounting accounts designed to record transactions in IFRS and approved in the working chart of accounts used by the Company, or using a separate accounting base.
– The accounting policy of the Company should describe the rules, principles, operations of maintaining separate accounting of operations in the AIFC. All operations are carried out using the Working Chart of Accounts approved by the company’s management.
TAXATION OF AIFC MEMBER-COMPANIES
– Taxation of AIFC in accordance with Article 6 of the Constitutional Law of the Republic of Kazakhstan dated December 7, 2015 No. 438 – V “On the Astana International Financial Center”: Participants of the Center until January 1, 2066 are exempt from corporate income tax on income received from the provision of the following financial services on the territory of the Center: banking services of an Islamic bank; reinsurance services and insurance brokerage services; services for the investment management of the assets of investment funds, their accounting and storage, as well as ensuring the issuance, placement, circulation, redemption and redemption of securities of investment funds; brokerage and (or) dealer, underwriting services; other financial services determined by a joint act of the Center, the central authorized body for state planning and the state body exercising management in the field of ensuring tax revenues and other obligatory payments to the budget.
– Until January 1, 2066, the Center’s participants are exempt from paying corporate income tax on income received from legal, auditing, accounting, consulting services and provided to the other AIFC’s members.
– Foreigners who are employees of a participant or body of the Center, until January 1, 2066, are exempt from paying individual income tax on income from activities in the Center under an employment contract concluded with a participant of the Center providing services provided.
– AIFC participants have tax benefits: CIT, PIT, property and land tax, VAT
– Salaries for employees – participants of the AIFC, only foreigners have tax benefits for PIT. For the rest of the employees, the current legislation does not provide tax benefits.
– The exemption for corporate income tax withheld at the source of payment on income received as a result of managing the assets of an investment fund located outside of the territory AIFC does not apply.
MONETARY OBLIGATIONS OF AIFC MEMBER-COMPANIES
– Currency transactions carried out in the territory of the AIFC are subject to separate currency regulation. In particular, such operations are not subject to the requirement for accounting registration, notification by banks of their foreign exchange transactions, and notification by residents of bank accounts opened with foreign banks.
– According to the Constitutional Law “On the AIFC”, monetary transactions of AIFC participants are executed in the currency of the agreement. Accordingly, restrictions on conducting foreign exchange transactions between residents only in tenge do not apply to AIFC participants.
– Currency regulation in the territory of the AIFC, as a general rule, is determined by the acts of the AIFC in agreement with the National Bank of the Republic of Kazakhstan.
– Monetary obligations of participants in trading on the stock exchange are expressed and executed in currencies determined by the rules of the stock exchange.
