1. Tax Law Zhanat Alimanov, assistant professor

2. Home assignment (2-3 per day)  Calculate tax burden of the company on Volodya’s income: under (1) Labor Law, (2) Civil Law (not IE), & (3) Civil law (IE): 1. Salary is KZT 150,000 a month 2. Salary is KZT 230,000 a month 3. Salary is KZT 70,000 a month 4. Salary is KZT 20,000 a month 5. Salary is KZT 32,000 a month 6. Salary is KZT 370,000 a month 7. Salary is KZT 475,000 a month 8. Salary is KZT 367,000 a month

3. Example  Calculate tax burden of the company on Volodya’s income: under (1) Labor Law, (2) Civil Law (not IE), & (3) Civil law (IE). Salary is KZT 170,000 a month 1. Labor Law: PIT + Social Tax  PIT = Taxable income * 0.1= (Total Revenue – Deductions&Exemptions – Pension – Minimum Salary)*0.1= (170,000 - 0 – 17,000 (pension) – 19,966(minimum salary))*0.1 = 13, 303.4  Social Tax = Taxable income*0.11 = (Total revenue – deductions - Pension)*0.11=(170,000-0-17,000)*0.11= 16,830 2. Civil Law (not IE): PIT  PIT = Taxable income * 0.1= (Total Revenue – Deductions&Exemptions)*0.1= (170,000 - 0)*0.1 = 17,000 3. Civil Law (IE): no tax on company

4. Terms 1. Tax – налог 2. Revenue (Income) – Доход 3. Total Personal Revenue – Совокупный личный доход 4. Net Income – Чистый доход 5. Personal Income Tax – Индивидуальный подоходный налог

5. Plan I. Legislation II. Personal Income Tax & Social Tax 1. Who are taxed? 2. When company has to pay Personal Income Tax? How to calculate PIT & Social Tax Differences of taxation of Civil & Labour Contracts

6. I. Legislation

7. Constitution & Constitutional Statutes Civil Code Statutes Tax Code Other acts Administrative Code Other Codes Statutes

8. II. Personal Income Tax (PIT) & Social Tax

9. 1. Who are taxed (PIT)?

10. Example Let’s assume that foreigner can own real estate in KZ. Masha rents her apartment to Petya for USD 300. Does she need to pay taxes if she is: (1) a foreign citizen; (2) a KZ citizen; (3) person without citizenship?

11. Example Let’s assume that foreigner can own real estate in KZ. Masha rents her apartment to Petya for USD 300. Is she a taxpayer if she is: (1) a foreign citizen; (2) a KZ citizen; (3) person without citizenship? Art. 153, Tax code.

12. 2. When COMPANY has to pay Personal Income Tax ?

13. Step 1: Who pays PIT? Total Revenue Taxed at Source (art. 160) Company would pay PIT for Physical Person Not Taxed at Source (art. 177) Company would not pay PIT for Physical Person, he will pay PIT himself

14. Example Company Arico hired Volodya as accountant for KZT 300,000 a month. Who will pay Volodya’s PIT (Company or Volodya)? 1. Labor Law Contract? 2. Civil Law Contract & Volodya is not IE? 3. Civil Law Contract & Volodya is Individual Entrepreneur (IE)?

15. 3. How to calculate PIT & Social Tax ?

16. Step 2: How much is Tax of the Company? Taxed at Source (art. 160 &158) LABOR Contract Total Revenue (Art. 160) PIT Minus Deductions & Exemptions (Art. 155 & 156) Minus Pension & Minimum Salary (art. 166) = Taxable Income * 0.1 (Art. 158) Social Tax Minus Deductions (art. 155) Minus Pension (75) (Art. 357 (2/6) = Taxable Income * 0.11 (art. 358) CIVIL Contract Total Revenue Art. 158 PIT Minus Deductions & Exemptions (Art. 155 (19-26) & 156) = Taxable Income * 0.1 (Art. 158)

17. Example Company Arico hired Volodya as accountant for KZT 300,000 a month. Calculate Volodya’s INCOME that he will from company? 1. Labor Law Contract? 2. Civil Law Contract & Volodya is not IE? 3. Civil Law Contract & Volodya is Individual Entrepreneur (IE)?

18. Example Total revenue: KZT 300,000 a month. LABOR LAW 1. PIT = Taxable Income * 0.1 = (Total Revenue – (1) Deductions & Exemptions – (2) Pension & Minimum Salary) * 0.1 = (300,000 – 30,000 (pension) - - 19,966(minimum salary))*0.1 = 25,003.4(PIT) 2. NET INCOME = Total Revenue – Pension – PIT = = 300,000 – 30,000 (pension) – 25, 003.4 (PIT) = = 244,996.6 (NET INCOME)

19. Example Total revenue: KZT 300,000 a month. CIVIL LAW (Volodya is NOT IE): 1. PIT = Taxable Income * 0.1 = (Total Revenue – Deductions & Exemptions)* 0.1 = (300,000 – 0)*0.1 = = 30,000 2. NET INCOME = Total Revenue – PIT = = 300,000 – 30,000 (PIT) = 270,000 (NET INCOME)

20. Example Total revenue: KZT 300,000 a month. CIVIL LAW (Volodya is IE): 1. INCOME = Total Revenue = 300,000  Volodya will have to pay taxes himself

21. Example Company Arico hired Volodya as accountant for KZT 300,000 a month. Calculate Volodya’s NET INCOME that he will from company? 1. Labor Law Contract? 244,996.6 2. Civil Law Contract & Volodya is not IE? 270,000 3. Civil Law Contract & Volodya is Individual Entrepreneur (IE)? 300,000

22. Example Company Arico hired Volodya as accountant for KZT 300,000 a month. Calculate how much TAX the Company will have to pay for Volodya? 1. Labor Law Contract? 2. Civil Law Contract & Volodya is not IE? 3. Civil Law Contract & Volodya is Individual Entrepreneur (IE)?

23. Example Total revenue: KZT 300,000 a month. LABOR LAW 1. Social Tax = (Total Revenue – Pension) *0.11 = (300,000-30,000)*0.11 = = 29,700 (Social Tax) 2. TOTAL TAX = PIT + Social Tax = 25,003.4 + + 29,700 = = 54,703.4 (total tax to be paid)

24. Example Total revenue: KZT 300,000 a month. CIVIL LAW (Volodya is NOT IE): 1. TOTAL TAX = only PIT = = 30,000 (total tax)

25. Example Total revenue: KZT 300,000 a month. CIVIL LAW (Volodya is IE): 1. TAXES to be paid for Volodya = = 0

26. Example Company Arico hired Volodya as accountant for KZT 300,000 a month. Calculate how much TAX the Company will have to pay for Volodya? 1. Labor Law Contract? 54,703.4 2. Civil Law Contract & Volodya is not IE? 30,000 3. Civil Law Contract & Volodya is Individual Entrepreneur (IE)? 0