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Individual income tax – one of the most famous and widespread taxes. Refers to the direct and personal taxes, is included into a tax group on income and is the source of income of local budgets. It covers a large part of the population of a country. The economic essence of this tax is presented in its regulation, as the level of social production and consumption and income levels.

Payers

● Payers of individual income tax are individuals having the objects of taxation, determined in accordance with Art. 155 of the Tax Code.

● Payers of the fixed tax on gambling, do not pay personal income tax on income from the type of the activities pointed out in Art. 411 and 420 of the Tax Code.

● Individual entrepreneurs, who are using a special tax regime for peasant and individual farms do not pay individual income tax on income from activities covered by this special tax regime.

Taxable items

● Income taxed at source

● Income not taxed at source.

The tax rates

● The income of taxpayer is taxed at a rate of 10 percent.

● Incomes from dividends has obtained from sources in the Republic of Kazakhstan and abroad are taxed at the rate of 5 percent.

Taxable period

● The tax period for the calculation by the tax agents of the individual income tax on income taxed at source, is a calendar month.

● It is necessary to pay tax over paid income calculated by the tax agents from the source of taxation by the 25th of the month following the month of payment, the place of its location.

Terms of IIT payment by the tax agents who are using a special tax regime for small businesses based on the simplified declaration and the peasant or individual farms, are set within the framework of an applied special tax regime.

● By taxpayers – residents the tax for the tax period it should be payed no later than 10 calendar days after the deadline for delivery of the declaration at the location (residence).

● Individual entrepreneurs applied a special tax regime for small businesses based on the base of the patent or the simplified declaration should pay the individual income tax on income taxable within these special tax regime.

Declaration of individual income tax. Form № 200.

● declaration of individual income tax are is submitted by the following resident taxpayers:

1) individual entrepreneurs;

2) private notaries, private bailiffs, attorneys;

3) Individuals who receive property income;

4) individuals who receive other income, including income outside of the Republic of Kazakhstan;

5) individuals who have money in bank accounts in foreign banks located outside the Republic of Kazakhstan.

● Deputies of the Parliament of the Republic of Kazakhstan, the judges, as well as individuals who are responsible to submit a declaration in accordance with the Constitutional Law of the Republic of Kazakhstan «On Elections in the Republic of Kazakhstan», the Criminal-executable Code of the Republic of Kazakhstan and the Republic of Kazakhstan Law «On Fight against Corruption» submit a declaration of income and property being a subject of taxation, and located both on the territory of the Republic of Kazakhstan and beyond.

● Individual entrepreneurs applying a special tax regime for small businesses based on the patent or simplified declaration according to income included in the object of taxation in accordance with Art. 427 of the Tax Code, the declaration of individual income tax do not represent.

Deadlines for submission of declarations

● The declaration of individual income tax to the tax authority at the location (address) is submitted no later than March 31 of the year following the tax reporting period, except for the cases stipulated by the Constitutional Law of the Republic of Kazakhstan «On Elections in the Republic of Kazakhstan» and the Law of the Republic of Kazakhstan «On the fight against corruptions

Checklists

1. What are the subjects and objects of the individual income tax?

2. What are tax rates on the individual income tax?

3. Who has to submit a declaration of individual income tax?

4. Call deadlines for submission and terms of payment of individual income tax?

5. How the individual income tax is calculated?

6. Who calculates the IIT?

Task № 1

Required:

1. Determine the subject of taxation of individual income tax.

2. Sum of individual income tax.

An employee Karimov Arman – the manager of the company has the income in the form of wages for the year 2011 in the sum of 2 200 000 tenge. In May, he was in the hospital for 20 days, he was accrued to payment 15 000 tenge. The financial assistance for the operation in the sum of 140 000 tenge was provided. Were reimbursed travel expenses 255 600 tenge for 10 days in Kazakhstan (travel 80 000, meals – 75 600, accommodation – 100 000), the rate of daily consumption is derived as 5 MCI per day. In June Arman visited advanced training sales courses at the cost of 55 000 tenge. In July, Armand was on vacation 18 days – 120 000tenge. In August, Arman sent a kid to a children's cams. Son is 17 years old, the price for the camp ticket is 45 000 tenge. Arman also has a bank account and received a reward of 50 000 tenge for 2011.

Solution (2011):

Employee income: Art 156, 163

Salaries 2 200 000

Hospital 15 000

Financial assistance to 140 000 – (8 * 15 999) = 12 008

Selling 120 000

Kids camp ticket 45 000

Total income 392 008

Deductions: Art. 166

MPC 239 201

MW (12 * 15 999) 191 988

Total deductions 431 189Taxable income 1 960 819

The sum of IIT, Art. 158 196 082

Task № 2

Define:

Ivanov’s taxable income

– The sum of mandatory pension contributions

– The sum of the individual income tax.

Sergei Ivanov's salary in year of 2012 was accrued in the sum of 3 710 000 tenge.

During the year, Ivanov received the construction materials in sum of 75 000 tenge for the hous repair. He moved with the organization and within 30 days from the time of movement he confirmed his expencies at the sum of 280 000 tenge.

In July, Ivanov was sent on a business trip to Astana for 4 days, he was given under accountability 63000 tenge. Upon arrival from a trip he had made an advance report where according to the submitted documents the following expenses were listed:

–Round trip / tickets / 16000

–Bills from hotel 10000

– daily allowance/checks / 37000

At a rate of daily expenses 4 MCI per day

In August, a son of Sergei was born, and he was given a one-time financial assistance of 130000 tenge (all documents are prepared accordingly). In September, Sergei took advanced training courses costing 35 000 tenge.

Sergei paid the costs on remuneration of credit issued in Zhilsotsstroybank to buy an apartment in the sum of 250 000 tenge. There was accrued interest on unpaid pension deductions in the sum of 32 000 tenge. Sergey won the lottery 150 000 tenge. Sergey also received a gift from his father, a car «Mazda -626» worth $6500 U.S. dollars. On the day of donation the currency rate of $1 U.S. dollar was 147,5 tenge. He donates voluntary pension contributions on a monthly basis for his spouse in the sum of 5000 tenge (the wife does not work and is a husband’s dependant).

Solution (2011):

Employee income:

Salaries 3710000

Repair of housing 75000

Daily costs 37 000 – (4 * 1512 * 4) 12808

Mat. assistance 130 000 – (8 * 15 999) 2008 Lottery 150 000 – 8000 142000

Total income 3 941 816

Deductions:

MPC (3,941,816 – 142 000) * 10 % 379 982

MW (12 * 15 999) 191 988

Remuneration 250000

Total deductions 821970

Taxable income 3119846

Sum IIT 311985

Task № 3

Determine: the sum of individual income tax using the tax deduction for the period from January to March 2011.

Employee for the month of January was accrued salary in the sum of 16000 tenge. In February, he took a vacation without payment for family reasons and had no accrued income. In March he was accrued income 20 000 tenge.

Solution (2011):

In accordance with s. 2 of Art. 166 TC of RK (cumulative total of unused deduction) calculation will be the following:

January, 2011

MPC 16000x10 % = 1600

IIT 16000-1600-15 999 = -1599 IIT = 0 because there is no taxable income

February 2011

IIT is absent since there is no accrued income, and therefore a tax deduction is not applied.

March 2011

MPC 20000x10 % = 2000

IIT 20000-2000-15999 – 1599 (accumulated deduction from January) = 402x10 % = 40,2

Task № 4

Determine: the sum of personal income tax for the employee in November 2011, due to obtaining of material and social benefits.

The Company at its own expense provides their employee by meals via a contract with the public catering. In order to control the assimilation of funds on employee’s meal there are token coins for meal with the employee’s name. For November 2011 Ivanov received 20 token coins at 1000 tenge each. In addition to that the employee was accrued the wage in the sum of 50000 tenge.

Solution (2011):

The cost of providing their employees with free meals are personalized (ie, defined for each individual), i.e the employer can set the end user of the material and social benefits. They are considered as employees’incomes received in the form of material, social benefits and other material benefit, and are subject of taxation IIT and social tax.

20000 + 50000 = 70000

MPC 70000x10 % = 7000

IIT 70000-7000-15 999 = 47001 x10 %=4700,1

Task № 5

Determine: the sum of personal income tax of employee for December 2011 in connection with obtaining of material benefit.

Out of 200000 tenge, issued to him for the representative expenses, in advance report he proved documentarily only expenses in the sum of 180 000 tenge.

Solution (2011):

Representative expenses are included in the list of payments not considered as income; funds granted for this purpose to employee, documentarily proved, are not included in his calculated income. Only in the case when an employee has not confirmed the cost by original documents the unconfirmed sum will be taken into account to be its income for tax purposes.

The documentarily proved representative expenses of the economic entity, in according to the summary of the year in deductions will be considered after the fact, but not more than 1 % of the cost of the employer for payment to the employee at the same time the incomes of employees are determined in accordance with the provisions of s.2 of Art. TC 163, in the employee's income it is taken in to account all expenses of the employer in the form of wages, social and material benefits given to employees, either in the form of material benefit. Expenses not documentarily proved should be included in the employee's income for tax purposes.

MPC 20000x10 % = 2000

IIT 20000-2000-15 999 = 2001x10 % = 200,1

Task № 6

Determine: the sum of personal income tax to employees for December 2011 in accordance with compensation during business trips.

I. In November 2011 the employee was sent for 45 days to Astana. Daily costs were calculated and paid – 45 days x 4MCI x 1413tenge.

Solution (2011):

s.1 ss.4 s 3 Art.. 155 the employee’s compensation of travel expenses for 40 days will not be treated as taxable income. Exceeding of this norm will be taxed

IIT:

30240 x = 5days x 4MCI x1512

MPC 30x240x10 % = 3024

IIT 30 240-3024 -15 999 = 11217x10 %=1121,7

II. In December 2011 the employee was sent for 10 days to Astana. Daily costs were calculated and paid – 10 days x 8MCI x 1512tenge.

The solution:

s.1 ss.4 s 3 Art.. 155 the employee’s daily costs not exceeded 6-time MCI within Kazakhstan will not be treated as taxable income. Exceeding of this norm will be taxed

IIT:

30240 = 10days x2MCIx1512

MPC 240x10 30 % = 3024

IIT 30 240-3024 -15 999 = 11217 x10 %=1121,7

Task № 7

Determine: the sum of personal income tax to employees for December 2011 due to costs related to corporate entertainment.

For the collective action of the company due to the New Year (Christmas tree, toys, banquet, theater, fireworks, fire management) company took expenses in the sum of 500 000 tenge.

The solution:

s. i.8 s.3 Art. 155 of the TC, the employee’s costs not related with the profitable activity and not deductible if they are not distributed among specific individuals then are not considered as income of individuals

Task № 8

Determine: the sum of personal income tax to employees for December 2011, over the compensation costs related to transfer of the employee to another area.

Legal entity opens a branch in another city and direct his employee to work in a company branch.

Documented costs were:

For travel 58 000 tenge;

transport of private assets (container) 15000 tenge;

hotel accommodation 40 days 160 000 tenge.

Solution (2011):

s. i.8 s. 3 Art. 155 TC, the compensation of costs for employee associated with the transfer of him to work in another place will not be treated as income. All costs associated with the move, transportation of property, renting rooms for 30 days. Since the restrictions only on the calendar days of room rent, then the 10 days of exceeding each of 4000 tenge (160000:40 = 4000) – is 40 000 taxable IIT

MPC 40000x10 % = 4000

IIT 40000-4000-15 999 = 20001x10 %=2000,1

Task № 9

Determine: the sum of individual income tax to employees for December 2011 on insurance payments.

The employer has insured his office employee against accident during his job duties under the contract of mandatory insurance of 2 December 2011. The sum of insurance 5000tenge December 10, 2011 accident happend, and By December 28, 2011 insurance payment was made to the employee in the sum of 180 000tenge

The solution:

Insurance payments are made for contracts of mandatory insurance of employee against accidents during of job (service) duties, signed between employer and employee in accordance with the legislative act of Kazakhstan regulating the mandatory insurance.

The sum of insurance, as well as the paid sum of insurance compensation for tax purposes by the employee will not be treated as income, i.e. not be included in the calculation of the income. It will be taken into account only within the s.3 art. 155.

Task № 10

Determine: the sum of individual income tax of employee for December 2011 for compensation of expenses of the individual who is considered as the landlord.

The company filled a car rental agreement with the individual who is an employee of the company at the same time in the sum of 50 000 tenge. During the operation of the car the gasoline was used, car’s oil and filter were replaced in the sum 20000 tenge.

Solution (2011):

In this situation, the employee’s income will be rental fee. Other costs of renter in connection with the operation of the leased property from an individual s.s.24, s.3 Art. 155 TA should not be treated as the income of a individual considered as the landlord.

IIT:

MPC 50 000x 10 % = 5000

IIT 50 000 – 5000 – 15 999 = 29 001x10 %= 2900,1

Task № 11

Determine: the individual income tax sum of incomes for certain categories of individuals.

Employee, a member of military operations in Afghanistan, for the year was accrued income of 1 800 000 tenge.

Solution:

In 2011 the employee’s income has to be freed from taxation IIT in the sum of 822360 tenge (55MWx14952.) The sum of excees of the income over the defined benefit 977640 (1 800 0008223 60), will be taxed in the normal manner.

IIT:

MPC 977 640x10 %= 97 764

IIT 977 640 – 97 764 -15 999 = 863 877x10 %= 86 387,7