EPT on the solid commercial minerals is proposed for cancellation in Kazakhstan

Almaty. February 26. Silkroadnews - Chairman of the State Revenue Committee (SRC) of the Ministry of Finance of Kazakhstan, Daulet Yergozhin, offers to cancel the excess profit tax (EPT) in the field of solid commercial minerals production (SCM), KazTAG reports.
“Shortly touch on the initiative we launched on January 1, it is the development of a unified Code of public revenues with the single mechanism of taxes and customs duties administration, harmonization of tax and customs procedures and optimization of business processes management ... As a part of the Natural resources code development it is assumed to change the conceptual approaches for accounting and evaluation of mineral resources,” - said D. Yergozhin during a roundtable yesterday.
“It is proposed to discuss the introduction of a differentiated approach to taxation of hydrocarbons and solid minerals, including uranium, on all the special taxes and payments of subsoil users; for solid minerals - to abolish the tax on excess profits with the transfer of the tax burden to other types of taxes (in 2014 only seven subsoil users had the excess profit tax case among one hundred fifty subsoil users operating in mining sector - Silkroadnews); for hydrocarbon raw materials to keep the current tax regime, providing for the payment, including payment for reimbursement of historical costs, tax on natural resources production, EPT, the rent tax on exports and subscription bonus,” - he said.
Also, D. Yergozhin noted, the concept of the draft Code on mineral resources assumes a change in the contracting activity borders.
In this regard, according to the SRC head, the draft unified code provides for the possibility of legislative setting of the more detailed order of separate tax accounting between the contractual and extra-contractual activities (definition of costs, distribution of income and expenses between the contractual and extra-contractual activities as defined by the authorized body within the extraction and primary processing).
“In addition, it is proposed to exclude commercial discovery bonus to transfer the load on the tax on natural resources production, as in its essence a commercial discovery bonus is an “advance payment” on the mining operations,” - said D. Yergozhin.
According to him, there are significant differences in the conditions of mining and processing of minerals. In practice, users of mineral resources mining sector mainly carry out a full cycle of works - from the extraction (contract work) to the subsequent metallurgical processing of the extracted raw material (non-contractual). At the same time the income from contract activities is defined as a cost increased by 20%, thus, the profitability on the contract activity does not reach 25% and excess profit tax does not arise.