What Is VAT
VAT is value-added tax. For an accountant, its practical meaning lies in comparing VAT charged on taxable transactions with VAT allowable as a credit. If the amount of VAT allowable as a credit exceeds the VAT charged, a VAT excess arises.
For refund purposes, the excess is the difference reported in the declaration on a cumulative basis as of the end of the reporting tax period. Therefore, comparing individual documents or turnover for a single month is not sufficient to determine the amount: the accountant must rely on the figures in the relevant declaration (Art. 125 of the Tax Code of the RK).
VAT cannot be viewed solely as a surcharge on the price or a separate line in a document. In accounting, it involves several issues at once: whether the transaction is taxable, whether tax must be charged, whether the amount claimed as a credit is substantiated, and what result is reported in the declaration as of the end of the reporting period.
Therefore, it is important for an accountant to distinguish between three concepts:
- VAT charged — tax recorded for the relevant taxable transactions;
- VAT allowable as a credit — the amount credited when the prescribed conditions are met;
- VAT excess — the excess of VAT allowable as a credit over VAT charged, reported in the declaration on a cumulative basis as of the end of the reporting tax period (Art. 125 of the Tax Code of the RK).
The mere existence of an excess does not mean that the funds will automatically be transferred from the budget. The Code defines the categories of taxpayers to whom the amount may be refunded, exclusions from refunds, and the documents serving as grounds for refunding the confirmed amount (Art. 125 of the Tax Code of the RK).
How VAT Is Reflected in an Accountant’s Work
VAT accounting begins not with the final declaration but with source documents and the classification of each transaction. The accountant must consistently verify the substance of the transaction, the supplier’s and buyer’s documents, whether the transaction has been correctly recorded, and whether there are grounds for claiming VAT as a credit.
In simplified terms, the workflow is as follows:
- Determine whether the transaction falls within the scope of VAT.
- Establish whether VAT must be charged on it.
- Check the acquisition documents and the grounds for claiming VAT as a credit.
- Compare the VAT charged with the amount allowable as a credit.
- Determine the result reported in the declaration on a cumulative basis as of the end of the reporting tax period.
- If there is an excess, check whether the taxpayer belongs to a category of persons entitled to a refund and whether any exclusions stipulated by the Code apply.
Particular attention must be paid not only to amounts but also to tax periods. For refund purposes, the excess is determined specifically from the declaration on a cumulative basis as of the end of the reporting tax period, while the right to submit a refund claim is limited by the limitation period (Art. 125 of the Tax Code of the RK).
As a practical measure, it is useful to conduct an internal reconciliation before preparing the declaration: compare accounting records with source documents, verify that all supporting evidence is available, and separately analyze transactions that generated a material amount of VAT credits. If a refund is planned, the amounts expressly excluded from refunds by the Code should also be identified.
VAT Excess and Its Refund
The excess amount is not refundable to all VAT taxpayers. Article 125 of the Tax Code of the RK lists taxpayers that sell goods, works, or services taxable at the zero rate; conduct activities under the relevant subsoil use contract, except for the exclusions specified in the Code; or acquire goods, works, and services for the construction, under a long-term contract, of production buildings and structures commissioned for the first time in Kazakhstan (Art. 125 of the Tax Code of the RK).
The Code also specifies amounts that are not refundable. These include an excess claimed as a credit under invoices issued by a procurement organization in the agro-industrial sector; an excess relating to goods, works, and services connected with minerals transferred in fulfillment of a tax obligation in kind; and an excess arising for periods in which the taxpayer claimed an additional amount of tax as a credit (Art. 125 of the Tax Code of the RK).
A taxpayer may submit a claim for a refund of the excess amount in the next VAT declaration within the limitation period. Thus, the existence of an excess and the submission of a claim for its refund are separate stages: first, the amount must arise in the declaration, after which the taxpayer reports the claim in the next declaration (Art. 125 of the Tax Code of the RK).
A confirmed amount may be refunded on the basis of one of the documents listed in the Code: a notice of the excess amount confirmed for refund under the simplified procedure; a tax audit report, taking into account the results of an appeal; or a conclusion to the tax audit report. After the tax authority issues the relevant document, the taxpayer submits a tax application to the tax authority at its location (Art. 125 of the Tax Code of the RK).
A transitional rule applies to claims and tax applications submitted before 1 January 2026: they are reviewed in accordance with the procedure and time limits stipulated by the Tax Code dated 25 December 2017 (Art. 833 of the Tax Code of the RK). This distinction is important when handling refunds initiated before the new Code came into force.
What the Accountant Should Check
Before recording VAT and submitting a refund claim, it is advisable to check:
- whether the declaration data correspond to the accounting registers and source documents;
- whether each material amount of VAT claimed as a credit is substantiated;
- whether the reporting tax period has been determined correctly;
- the excess amount reported in the declaration on a cumulative basis as of the end of the period;
- whether the taxpayer belongs to one of the categories entitled to a refund of the excess;
- whether the claim excludes amounts expressly ineligible for refund;
- whether the limitation period is observed when reporting the claim in the next declaration;
- whether a document confirming the amount to be refunded is available before the tax application is submitted.
A distinction should also be made between a refund claim and a tax application. The taxpayer reports the claim in the next VAT declaration and submits the tax application after the tax authority issues the document serving as the basis for refunding the confirmed amount (Art. 125 of the Tax Code of the RK).
If the refund relates to previously submitted documents, the accountant must take into account the date on which they were submitted. Applications and claims submitted before 1 January 2026 are subject to the special transitional provision, while documents submitted from that date onward are governed by the procedure established by the new Tax Code (Art. 833 of the Tax Code of the RK).
VAT documents should preferably be organized by tax period and by transactions that generated the credit. This will make it possible to compare them with the declaration figures, separate amounts that are not refundable, and properly complete the claim and tax application in sequence.
Frequently Asked Questions
What is VAT in simple terms? — It is value-added tax. For tax accounting purposes, the amount charged is compared with VAT allowable as a credit when the prescribed conditions are met.
What does a VAT excess mean? — It is the excess of VAT allowable as a credit over VAT charged, reported in the declaration on a cumulative basis as of the end of the reporting tax period (Art. 125 of the Tax Code of the RK).
Is a VAT excess refunded automatically? — No. Refunds are available to the categories of taxpayers specified by the Code. The taxpayer must submit a claim in the next declaration, obtain confirmation of the amount, and then submit a tax application at its location (Art. 125 of the Tax Code of the RK).
Which documents confirm the amount to be refunded? — These are a notice of the amount confirmed under the simplified procedure, a tax audit report taking into account the results of an appeal, or a conclusion to the tax audit report (Art. 125 of the Tax Code of the RK).
Can any excess be included in a claim? — No. Article 125 of the Tax Code of the RK establishes both the categories of taxpayers entitled to a refund and the amounts that are not refundable.
How are claims submitted before 2026 reviewed? — Claims and tax applications submitted before 1 January 2026 are reviewed in accordance with the procedure and time limits of the Tax Code dated 25 December 2017 (Art. 833 of the Tax Code of the RK).