1. Problems of application of the New Law of RoK “On Transfer Pricing” in practice Arman Mendybayev GRATA Law Firm Аlmaty, March 27, 2009г.

2. Legal acts on transfer pricing valid from January 1,2009 Law of RoK “Оn state control over the application of transfer pricing” dated January 5,2001 Instruction on carrying out of state control over the application of transfer pricing at international business operations List of goods, deals under which is subject for deal monitoring List of official sources of market prices List of foreign states with favorable taxation

3. Legal acts on transfer pricing valid from January 1,2009 Law of RoK “On transfer pricing” Instruction to Transfer pricing Law - draft Rules of coordination between custom and tax authorities - draft List of exchange goods - draft List of goods, deals under which is subject for deal monitoring - approved List of official sources of market prices - approved List of foreign states with favorable taxation - approved Rules of concluding Agreements on transfer - approved

4. Problems of practice in application of New Law Determination of interrelated parties is expanded by the following clause: deal participants shall use a price of a deal under which there is a deviation from market price taking into account the price diapason in accordance with one of the authorized bodies. Moment of good realization is date of transferring the title to the buyer 10% corridor is abolished except for deals with farming production In case if your deal conducted on the territory of Kazakhstan afterwards was related with international business operation then such deal is subject to control

5. Official Information Sources Oil, oil products natural and liquefied gas, gas condensate – “Argus Media” from the list official information sources Oil products transportation services - Reuters Financial services – Reuters, web site Bloomberg

6. Deal Monitoring Rules Great amount of documents necessary to be presented at deal monitoring. Deal monitoring reporting must be provided annually before April 15. Differential is taken into account at determination of market price in case of timely and grounded presentation of information on deal monitoring. For the goods which not subject to deal monitoring, differential is taken into account at presence of confirming documents in course of tax audit.

7. Rules on Concluding of the Agreement Deal participants present to tax authorities notarized copy of the documents. Tax authorities conclude the Agreement within 60 days from the day of receiving the request. Agreement is valid for 3 years. In case of changes in market prices, authorized bodies and deal participants initiate inserting the amendment and additions to the Agreement. In case of disagreement, tax authorities send grounded refusal.

8. List of foreign states with favorable taxation List includes 63 states, some states included only certain territories. Switzerland, Luxembourg, Singapore, Netherlands (Aruba and Antilles), China (Macao and Hong Kong) etc are included to the list. Differential does not influence deals participants of which registered in the countries with favorable taxation and correction is done without infertile.

9. THANK YOU ANY QUESTIONS? Arman Mendybayev Partner GRATA Law Firm Director of Transfer Pricing Department mobile: +7-701-717-20-10 Email: amendybayev@gratanet.com