The President of the Republic of Kazakhstan has repeatedly given instructions to streamline the procedure for VAT refunds for businesses, but the order adopted by the Ministry of Finance in March of this year has further complicated this issue. According to Order No. 137, in order for an exporter to refund VAT, his partner - the manufacturer of the goods - must voluntarily apply to the Ministry of Trade to include it in a specially created list. In Kazakhstan, there are only about 70 thousand grain producers who are counterparties to exporters. And if we take into account the number of counterparties in all sectors of the economy, the formation and approval of such a list will further delay the tax refund procedure. The Grain Union of Kazakhstan reported this
“By this decision, bona fide exporters who have the legal right to a VAT refund are made dependent on the desire of their counterparties - manufacturers of goods to apply to the authorized state body to include them in the specified List, taking into account which the State Revenue Committee of the Ministry of Finance is now considering exporters’ applications for a VAT refund. Accepting the arguments of the initiators of this approach about the need to counteract the conditions for unjustified VAT refunds, we consider it important to note that the legal rights of bona fide exporters should not be infringed, including restrictions on VAT refunds due to dependence on the inaction of counterparties - manufacturers of goods to include them in the specified List,” stated the Grain Union of Kazakhstan.
The Union noted that when introducing the new procedure, the Ministry of Trade did not carry out proper work to notify commodity producers and exporters about the conditions and procedure for the formation of the specified List, and market participants were not provided with access to the current list of manufacturers of goods of their own production.
The Grain Union of Kazakhstan proposes to create a list of manufacturers of goods of their own production without the need for grain producers to contact
Ministry of Trade and Integration. Instead, the Ministry of Trade is proposed to use information from the database of the Qoldau or Gosagro information systems, which contain current data on agricultural producers according to OKED.
In addition, taking into account the time it takes to process all potential requests from product manufacturers, we can predict low efficiency in updating the specified list. This, in turn, will affect the amount of VAT refunds and the replenishment of working capital of goods exporters, which, in turn, will lead to a decrease in the volume of exports and the share of Kazakhstani goods in traditional foreign markets.
The Grain Union previously appealed to the Ministry of Finance and the Ministry of Trade with a proposal to revise the procedure for creating the List of Manufacturers of Goods of its Own Production, but was refused. In this regard, KYC proposes to hold a working meeting at the NCE Atameken site in the near future with the participation of all interested associations and government agencies.