What Is Import?
Import means bringing goods from another country into the territory of the Republic of Kazakhstan. For the accountant of a Kazakhstan company, such a transaction involves not only settlements with a foreign supplier, but also verification of the contract, shipping documents, actual receipt of the goods, and the documents required for the relevant import route.
The documentation procedure depends primarily on where the goods come from. When goods are imported from a member state of the Eurasian Economic Union, the EAEU import taxation procedure applies. When goods are supplied from a third country, they are processed under the rules applicable to customs declaration. Therefore, the word “import” itself in a contract or payment purpose does not determine the full set of documents and actions required from the accountant.
Before calculating taxes, it is necessary to check whether the goods fall within a category of imports exempt from VAT. In particular, an exemption is provided for banknotes and coins, except those of cultural and historical value, securities, certain goods for diplomatic missions and consular offices, as well as goods placed under a customs procedure that provides for exemption from taxes (Article 479 of the Tax Code of the RK).
Which Documents the Accountant Should Check
It is better to begin not by recording the amount in the accounts, but by checking the complete set of documents and the terms of the transaction. The accountant will need information about the seller, the country of dispatch, the name and quantity of the goods, their value, the contract currency, and the delivery terms. The specific set of documents is determined by the import route, the type of goods, and the applicable documentation procedure.
Before recording the transaction, the following should be checked:
- the foreign trade contract and its appendices;
- the supplier’s invoice or another settlement document;
- transport and shipping documents;
- documents confirming actual receipt of the goods;
- documents used for the customs or tax clearance of the import;
- permits and certificates required for the specific goods;
- the status of the submitted electronic documents and whether the information specified in them corresponds to the source documents.
Particular attention should be paid to whether the key details match: the names of the parties, their identification details, the contract number and date, the characteristics, quantity, and value of the goods. If discrepancies are found, the information should be corrected in accordance with the procedure established for the relevant document.
When goods are imported into the EAEU, an application for the import of goods and payment of indirect taxes is used. If information in a previously submitted application is changed without affecting the indirect tax base, the taxpayer withdraws it independently. If the application was submitted erroneously, it is established that no import occurred, or information affecting the tax base is changed, it is withdrawn by filing a tax application. Depending on the grounds for withdrawal, the Code provides for methods of deleting, replacing, and amending the application (Article 532 of the Tax Code of the RK).
How to Account for Imports
The accounting sequence is determined by the contract, source documents, and the actual movement of the goods. The accountant must compare the delivery terms, the date on which the goods were received, the carrier’s documents, and the acceptance documents. The date of payment to the foreign supplier, the date on which the goods cross the border, and the date on which they are received by the organization may differ, so each date must be supported by the relevant document.
The cost of the goods received is determined on the basis of confirmed amounts related to their acquisition. Transaction expenses should be analyzed according to their substance and recognized in accordance with the applicable accounting rules and the organization’s accounting policy. The existence of a contract or supplier’s invoice does not in itself replace documents confirming transportation, receipt of the goods, and other facts of the transaction.
If settlements are made in a foreign currency, the recognition of the liability to the supplier, payments made, and the outstanding balance must be monitored separately. The dates, amounts, and currencies used must be consistent with the contract, bank documents, and documents confirming receipt of the goods.
The tax treatment cannot be determined solely by the name of the transaction. The accountant must establish the import route, the status of the parties, the specific characteristics of the goods, and the availability of documents supporting the VAT exemption. For imports within the EAEU, Article 525 of the Tax Code of the RK provides an exemption, in particular, for certain categories of goods listed in Article 479 of the Tax Code of the RK, as well as for goods imported as part of warranty services provided for by the contract. Such warranty imports are supported by a contract providing for warranty services, shipping documents, a claim, and a defect report confirmed by the parties to the contract (Article 525 of the Tax Code of the RK).
What to Check Before Completing the Documentation
Before closing the transaction, it is useful to check the entire chain: contract — shipment — transportation — import clearance — acceptance — payment — accounting. This makes it possible to compare the information in all documents and promptly identify differences in the quantity, value, currency, parties to the transaction, or characteristics of the goods.
Check that:
- the goods have been recognized in the accounts in the quantity and assortment confirmed by the documents;
- the value and currency correspond to the contract and the supplier’s settlement document;
- the acquisition and delivery expenses are supported by documents and recorded consistently;
- settlements with the supplier correspond to the bank documents and the terms of the contract;
- the submitted electronic documents have a current status;
- the information in the application for the import of goods and payment of indirect taxes corresponds to the supply documents, if the application applies to the transaction;
- the documents have been retained in a manner that allows the sequence of the supply and settlements to be reconstructed.
If the import application contains erroneous or changed information, it is not sufficient to resubmit the document without determining the grounds for the correction. First, it must be established whether the change affects the tax base. This determines the withdrawal procedure: independent withdrawal, filing a tax application, replacing the previously submitted application with a new one, or another method provided for by Article 532 of the Tax Code of the RK (Article 532 of the Tax Code of the RK).
The grounds for VAT exemption should be checked separately. For example, in the case of warranty services, merely mentioning the warranty in correspondence is insufficient: Article 525 of the Tax Code of the RK expressly specifies a contract, shipping documents, a claim, and a defect report confirmed by the parties to the contract. For goods placed under a customs procedure providing an exemption from taxes, the grounds for the exemption are linked to the customs procedure applied (Articles 479, 525 of the Tax Code of the RK).
Frequently Asked Questions
Does import mean only bringing goods in from third countries? — No. For accounting purposes, it is important to distinguish between imports from EAEU member states and imports from third countries because the documents and clearance procedures differ.
Can an import be recorded solely on the basis of the foreign supplier’s invoice? — The invoice confirms the settlement information, but not the entire course of the supply. The contract, shipping, transport, acceptance, bank, and import documents are also used to record the transaction.
What should be done if an error is found in the import application? — The procedure depends on the nature of the error. If information that does not affect the indirect tax base is changed, independent withdrawal applies. If the application was submitted erroneously or information affecting the tax base is changed, a tax application for withdrawal must be filed. The available withdrawal methods are established by Article 532 of the Tax Code of the RK (Article 532 of the Tax Code of the RK).
Is every import subject to VAT? — No. The Tax Code of the RK provides for categories of imports exempt from VAT. The grounds for the exemption and the supporting documents depend on the type of goods and the import route (Articles 479, 525 of the Tax Code of the RK).
Which documents confirm the exemption for warranty imports from the EAEU? — A contract providing for warranty services, shipping documents, a claim, and a defect report confirmed by the parties to the contract (Article 525 of the Tax Code of the RK).
Sources
- Tax Code of the Republic of Kazakhstan, Article 479 “Imports Exempt from Value Added Tax.”
- Tax Code of the Republic of Kazakhstan, Article 525 “Turnover and Imports Exempt from Value Added Tax in the Eurasian Economic Union.”
- Tax Code of the Republic of Kazakhstan, Article 532 “Withdrawal of an Application for the Import of Goods and Payment of Indirect Taxes When Importing Goods into the Eurasian Economic Union.”