What VAT Paid by the Offset Method Means
A search for “VAT method” usually refers to one of two things: the general procedure for crediting input VAT or the special reporting of imports of goods on which VAT is paid by the offset method. For an accountant, these are fundamentally different transactions. First, it is necessary to determine whether this concerns a regular purchase with an E-invoice or an import, and then check the source documents, the electronic invoice details, and the relevant section of the VAT return.
In general terms, a VAT credit reduces the amount of tax payable by the allowable input VAT on purchases. When the proportional method is applied, the amount allowable as a credit is determined based on the share of taxable turnover in total turnover. If there is no sales turnover during the tax period, the amount allowable as a credit is determined as the VAT attributable to the credit, taking into account adjustments (Article 488 of the Tax Code of the Republic of Kazakhstan). The transaction must be properly documented and recorded in the accounting system.
The special procedure for paying VAT by the offset method upon import is established separately: Article 508 of the Tax Code of the Republic of Kazakhstan applies to goods placed under the customs procedure of release for domestic consumption, while Article 509 of the Tax Code of the Republic of Kazakhstan applies to imports from EAEU member states. The article number is selected based on the direction of import and the circumstances of the transaction.
VAT Paid by the Offset Method upon Import
The phrase “import VAT by the offset method” refers to a separate procedure for accounting for imported goods. Before completing the reporting, it is important to establish:
- whether the imported goods are included in the established list of goods for which VAT may be paid by the offset method;
- whether the conditions for using the goods comply with the requirements of the special procedure;
- whether the information in the import documents matches the accounting records;
- whether the transaction date and tax period have been determined correctly;
- whether the required lines of the return and Appendix 300.03 have been completed;
- whether the latest updates to the accounting software have been installed.
Form 300.03 is intended for detailed reporting of information on imports of goods, including imports from EAEU member states, on which VAT is paid by the offset method. It applies to imports under Articles 508 and 509 of the Tax Code of the Republic of Kazakhstan. Appendix 300.03 is completed as part of the VAT return when the relevant transactions exist. Before submitting the form, the accountant should reconcile the information in the appendix with the import documents and accounting registers (Articles 508, 509 of the Tax Code of the Republic of Kazakhstan).
The amount of VAT paid by the offset method upon the import of goods provided for in Article 508 of the Tax Code of the Republic of Kazakhstan is reported in the VAT return simultaneously as accrued VAT and as a VAT credit. This procedure applies subject to compliance with the established requirements for the goods, the VAT payer, and the subsequent use of the imported goods (Article 508 of the Tax Code of the Republic of Kazakhstan).
This procedure should not be confused with a refund of excess VAT. A refund is a separate procedure for confirming the amount claimed. For example, special rules of a pilot project involving desk audit applied to grain market participants. These rules are not universal instructions for reporting every import using the offset method.
Before choosing how to report the transaction in the return, the type of goods and the import conditions must be checked. The name of the goods in an invoice or accounting database alone does not confirm that the special procedure applies. The Government of the Republic of Kazakhstan approves a list of goods that includes the items provided for by the Tax Code, subject to the established conditions (Articles 508, 509 of the Tax Code of the Republic of Kazakhstan).
Spare Parts under the VAT Offset Method
A search for “spare parts under the VAT offset method” requires checking not only the name of the goods but the entire transaction. The accountant must establish the origin of the spare parts, the method of import, the intended purpose of the purchase, and the availability of documents confirming the reported amounts.
The practical sequence may be as follows:
- Reconcile the names and quantities of spare parts in the contract, import documents, and accounting system.
- Check the cost and VAT amounts down to the kopeck.
- Make sure that the transaction was included in the correct tax period.
- Check that the goods were included in the approved list and that the conditions for applying the offset method were met as of the import date.
- Reconcile the figures in the VAT return, Appendix 300.03, and the accounting registers.
The offset method is provided not for all imported spare parts, but for spare parts for agricultural machinery, road freight rolling stock, helicopters and aircraft, sea vessels, railway locomotives, and railcars. The relevant goods must be included in the approved list (Articles 508, 509 of the Tax Code of the Republic of Kazakhstan).
In addition, the procedure applies when the conditions for using the imported goods are met. In particular, the goods must not be intended for subsequent sale or transfer under an international finance lease. A separate condition is provided for transfer under a finance lease, excluding international finance leases. Certain spare parts must also be used in the production of agricultural machinery included in the established list (Articles 508, 509 of the Tax Code of the Republic of Kazakhstan).
How to Check Form 300 and E-Invoice Data in 1C
If Appendix 300.03 is missing or completed incorrectly, the configuration version and installed fixes should be checked first. In 1C, the list of installed fixes can be viewed under Administration → Maintenance → Installed Fixes (Patches). After the update, the return must be generated again and the completion of the appendix checked.
It is not sufficient simply to resubmit the newly generated reporting. Form 300.03 should be opened, the information for each import transaction checked, and the result compared with the accounting registers. The path to the sections and the appearance of the form depend on the configuration version, so it is advisable to record the current database version and the list of installed fixes before making changes.
If there is an E-invoice crediting error, the fields in the notification and detail lines must be checked sequentially. All amounts should be compared down to the kopeck. If the system reports that the purchase turnover amount has not been written off under the E-invoice, the discrepancies must be resolved, the document sent for verification in the E-Invoicing IS, and, after successful processing, saved and posted in the accounting system.
Before submitting the reporting, it is useful to perform a final check:
- the E-invoice relates to the correct organization and transaction;
- the document details have been completed without discrepancies;
- the purchase turnover has been reported in full;
- the details match the totals;
- the document has been processed in the E-Invoicing IS;
- Form 300 was generated after the corrected documents were posted;
- imports with VAT paid by the offset method are reported in detail in Appendix 300.03;
- the figures in the appendix are consistent with the return and accounting records.
Frequently Asked Questions
Are VAT paid by the offset method and the regular crediting of input VAT the same thing? — No, these are different situations. The query may refer to crediting input VAT on purchases, including through the proportional method, or to the special procedure for paying VAT upon the import of certain goods (Articles 488, 508, 509 of the Tax Code of the Republic of Kazakhstan).
Where in 1C can updates for Form 300 be checked? — The list of fixes can be viewed under: Administration → Maintenance → Installed Fixes (Patches). After the required updates have been installed, the form must be generated again and rechecked.
Where should imports with VAT paid by the offset method be reported? — Detailed information on imports of goods on which VAT is paid by the offset method is reported in Appendix 300.03 to the VAT return. This also applies to imports from EAEU member states under the prescribed procedure (Articles 508, 509 of the Tax Code of the Republic of Kazakhstan).
Can the offset method be applied to all imported spare parts? — No. The procedure is provided for spare parts for the types of machinery and vehicles specified in the Tax Code, provided that the goods are included in the approved list and the import and use conditions are met (Articles 508, 509 of the Tax Code of the Republic of Kazakhstan).
What additional documents are required for imports from the EAEU? — The prescribed documents must be submitted together with the application for the importation of goods and payment of indirect taxes, as well as documents containing the main technical and commercial characteristics of the goods that make it possible to determine their commodity subheading under the EAEU Commodity Nomenclature of Foreign Economic Activity. If necessary, photographs, illustrations, drawings, product data sheets, and samples and specimens of goods are used (Article 509 of the Tax Code of the Republic of Kazakhstan).
What should be done if the purchase turnover is not written off under the E-invoice? — Check the notification and detail lines, compare the amounts down to the kopeck, process the document in the E-Invoicing IS, and then save and post the corrected document.
Sources
- Tax Code of the Republic of Kazakhstan: Article 488 on the proportional method for determining the VAT allowable as a credit.
- Tax Code of the Republic of Kazakhstan: Article 508 on the payment of VAT by the offset method on goods placed under the customs procedure of release for domestic consumption.
- Tax Code of the Republic of Kazakhstan: Article 509 on the payment of VAT by the offset method upon the import of goods from EAEU member states.
- Rules of the pilot project for the simplified refund of excess VAT to grain market participants