VAT under the simplified tax regime cannot be determined solely by the name of the tax regime. Article 723 of the Tax Code of the Republic of Kazakhstan regulates the conditions for applying the special tax regime based on a simplified declaration, while Article 724 of the Tax Code of the Republic of Kazakhstan establishes the procedure for determining income when applying it. These provisions do not themselves establish an entrepreneur’s VAT registration status or the taxation procedure for a specific transaction. Therefore, the accountant must separately check the eligibility for the simplified declaration and the tax consequences of each transaction.
Individual Entrepreneurs under the Simplified Tax Regime and VAT: Where to Start the Review
Individual entrepreneurs and legal entities that are residents of the Republic of Kazakhstan may apply the special tax regime based on a simplified declaration if they comply with the established conditions and do not fall under the exceptions listed in the Code. The income limit for a calendar year is 600 000 MCI effective as of 1 January of the relevant financial year. In addition, the activities carried out must not be included in the list of activities for which the application of this regime is prohibited (Article 723 of the Tax Code of the Republic of Kazakhstan).
With the MCI at 4 325 ₸, the income limit for 2026 is 2 595 000 000 ₸. To check compliance with this restriction, the taxable item determined under Article 724 of the Tax Code of the Republic of Kazakhstan is taken into account. Income from activities subject to the special tax regime for peasant or farm enterprises is not included in the calculation of the income limit (Article 723 of the Tax Code of the Republic of Kazakhstan).
The accountant should check the following in sequence:
- whether the individual entrepreneur is entitled to apply the special tax regime based on a simplified declaration;
- whether the activity carried out is included in the list of prohibited activities established by the Government;
- whether the income limit for the calendar year has been exceeded;
- whether the individual entrepreneur is registered for VAT as of the transaction date;
- what goods, work, or services are being sold;
- whether there are imports, exports, or transactions with non-residents;
- how the contract terms concerning price and taxes are worded;
- what documents are issued for the specific transaction.
Article 723 of the Tax Code of the Republic of Kazakhstan also contains a list of persons that are not entitled to apply the simplified declaration. In particular, restrictions are provided for certain legal entities depending on their ownership structure, non-profit organizations, participants in special economic and industrial zones, Astana Hub participants, as well as taxpayers with respect to activities carried out under joint activity agreements (Article 723 of the Tax Code of the Republic of Kazakhstan).
The status and terms of the transaction should be checked before documents are issued to the buyer. If a VAT amount is first specified in the contract or settlement documents and the applicable procedure is determined afterward, the parties may need to agree on the price and correct the documents.
A conclusion regarding one transaction should not automatically be applied to the entire business. Domestic sales in Kazakhstan, imports, exports, and transactions with non-residents differ in their factual circumstances. For each of them, the accountant must determine the applicable procedure as of the transaction date.
Individual Entrepreneurs under the Simplified Tax Regime with VAT: How to Document Transactions
An individual entrepreneur’s eligibility to apply the simplified declaration is confirmed according to the conditions of Article 723 of the Tax Code of the Republic of Kazakhstan. The entrepreneur’s VAT status and the procedure for documenting taxable transactions must be considered separately: Articles 723 and 724 of the Tax Code of the Republic of Kazakhstan do not contain rules on VAT registration, determining taxable turnover, issuing VAT documents, or claiming VAT as a credit.
At the same time, taxpayers applying the special tax regime based on a simplified declaration must organize and maintain tax accounting in accordance with Chapter 20 of the Tax Code of the Republic of Kazakhstan (Article 723 of the Tax Code of the Republic of Kazakhstan). In such accounting, it is important to distinguish between calculating the taxable item under the simplified declaration and accounting for transactions to which the VAT rules apply.
For each sale, it is recommended to check:
- whether the taxpayer remains eligible to apply the simplified declaration;
- whether the receipt is included in income under the special tax regime;
- what VAT status applies to the seller as of the transaction date;
- whether the contract, source document, and VAT document are consistent with one another;
- whether the transaction is correctly reflected in tax accounting and reporting.
The taxable item when applying the simplified declaration is income without deducting expenses that is receivable or received during the tax period under the accrual method. Therefore, this regime takes into account more than just the receipt of money: income is determined under the accrual method (Article 724 of the Tax Code of the Republic of Kazakhstan).
For the purposes of the simplified declaration, income includes, in particular, income from the sale of goods, performance of work, and provision of services, royalties, income from leasing property, income from the write-off of liabilities, income from the assignment of claims, certain fines and penalties, budget funds provided to cover costs, surpluses identified during inventory counts, and property received free of charge for business purposes (Article 724 of the Tax Code of the Republic of Kazakhstan).
Separate rules are established for income from activities under joint activity agreements. In addition, taxpayers are not entitled to apply the special tax regime based on a simplified declaration to activities carried out under such agreements (Article 723 of the Tax Code of the Republic of Kazakhstan). Therefore, the existence of such an agreement should be identified before determining the applicable tax procedure.
Particular attention should be paid to the contract price. The wordings “the price includes VAT” and “VAT is charged in addition to the price” have different commercial consequences. The contract term must correspond to the seller’s actual status and the procedure for documenting the sale.
A VAT amount charged by a supplier should not be claimed as a credit solely because it appears in a document. The accountant must apply the current VAT credit rules to the specific purchase and verify the complete set of documents. Articles 723 and 724 of the Tax Code of the Republic of Kazakhstan do not regulate such conditions.
If the tax status or eligibility for the special regime changed during the year, transactions before and after the relevant date should be analyzed separately. This will prevent new accounting settings from being applied to earlier documents and the previous procedure from being carried over to subsequent transactions.
VAT under the Simplified Tax Regime in 2026: Practical Procedure
Before commencing work in 2026, the accountant should review the accounting policy, contracts, and accounting system settings. The previous year’s procedure should not be continued automatically: eligibility for the special regime must first be confirmed, the income limit must be checked, and the taxpayer’s status as of the relevant date must be established.
The working procedure may be as follows:
- confirm the application of the special tax regime based on a simplified declaration;
- check compliance with the conditions of Article 723 of the Tax Code of the Republic of Kazakhstan;
- calculate income for the limit in accordance with Article 724 of the Tax Code of the Republic of Kazakhstan;
- check the VAT registration status;
- compile a list of the main types of sales and purchases;
- separately identify imports, exports, and settlements with non-residents;
- check the price and tax provisions of current contracts;
- compare source documents with tax accounting data;
- check user permissions and accounting software settings.
The taxable item under Article 724 of the Tax Code of the Republic of Kazakhstan is used to calculate the income limit. It includes income received or receivable in the Republic of Kazakhstan and abroad, taking into account the adjustments provided for by this article. Consequently, monitoring the limit cannot be restricted solely to bank receipts or solely to revenue from core sales (Article 724 of the Tax Code of the Republic of Kazakhstan).
It is useful to maintain an internal register of non-standard transactions. It may record the counterparty, subject matter of the transaction, date, applied tax procedure, set of supporting documents, and review result. This is particularly convenient if an individual entrepreneur combines retail sales, services, foreign economic transactions, or several lines of business.
Employers require separate monitoring. When calculating individual or corporate income tax, except for taxes withheld at the source of payment, the taxable item is reduced by expenses relating to employee income starting from the month in which the taxable item calculated cumulatively from the beginning of the calendar year exceeds 24 000 MCI (Article 724 of the Tax Code of the Republic of Kazakhstan). With the MCI at 4 325 ₸, the corresponding threshold in 2026 is 103 800 000 ₸.
When a new transaction arises, previous examples alone should not be relied upon. A change in the subject matter of the contract, the place of the transaction, the counterparty’s status, or the delivery method may result in a different accounting procedure. The tax consequences should be determined before the contract is signed and the sale is documented.
VAT registration conditions, reporting forms, and statutory deadlines must be applied in the version effective as of the transaction date or the date on which the obligation is fulfilled. Articles 723 and 724 of the Tax Code of the Republic of Kazakhstan confirm the conditions for applying the simplified declaration and the composition of income but do not replace the provisions regulating VAT.
What to Do If There Is an Error in the Documents
If an individual entrepreneur under the simplified tax regime incorrectly stated VAT or failed to report it when there was an established obligation to do so, the affected transactions and periods must first be identified. The accountant should then compare the registration status as of the date of each transaction, contracts, sales documents, payments, tax accounting records, and submitted returns.
At the same time, the income calculation under the simplified declaration must be checked. Since the taxable item is determined under the accrual method, the payment receipt date alone does not always determine when income is recognized under this regime (Article 724 of the Tax Code of the Republic of Kazakhstan).
The correction procedure depends on the nature of the error and the taxpayer’s actual status as of the transaction date. Adjustments should be consistently reflected in contractual, source, and tax documents, accounting registers, settlements with the buyer, and tax returns if the relevant figures were reported in them.
Before making corrections, it is advisable to compile a list of discrepancies for each transaction. It should specify the original data, corrected data, reason for the change, and documents that must be corrected or supplemented. After the corrections have been made, the accounting registers and tax returns must be reconciled again.
Frequently Asked Questions
Does an individual entrepreneur under the simplified tax regime pay VAT? — The mere fact that the simplified declaration is applied is insufficient to reach such a conclusion. Article 723 of the Tax Code of the Republic of Kazakhstan defines the conditions for applying the special regime but does not establish VAT registration and taxation rules. Therefore, the individual entrepreneur’s registration status and the procedure applicable to the specific transaction must be checked separately.
Can an individual entrepreneur operate under the simplified tax regime and pay VAT? — Article 723 of the Tax Code of the Republic of Kazakhstan does not list VAT status among the conditions for applying the simplified declaration and does not regulate the combination of these obligations. Eligibility for the special regime is confirmed according to the criteria of Article 723 of the Tax Code of the Republic of Kazakhstan, while VAT status and transactions are accounted for under the provisions regulating them.
What income limit is established for the simplified declaration? — The income limit for a calendar year is 600 000 MCI effective as of 1 January of the relevant financial year. In 2026, with the MCI at 4 325 ₸, this is 2 595 000 000 ₸. The taxable item under Article 724 of the Tax Code of the Republic of Kazakhstan is used for the calculation (Article 723 of the Tax Code of the Republic of Kazakhstan).
If an individual entrepreneur is not registered for VAT, can the tax be stated on an invoice? — A VAT amount cannot be stated based on an assumption. Before issuing the document, the accountant must establish the seller’s status and the legal basis for reflecting the tax on the specific transaction. Articles 723 and 724 of the Tax Code of the Republic of Kazakhstan do not answer this question.
Should VAT be accounted for in a transaction with a non-resident? — The transaction must be analyzed separately, taking into account its subject matter, the place of the transaction, and the status of the parties. The application of the simplified declaration alone does not determine the VAT treatment of such a transaction.
What should an accountant check at the beginning of 2026? — Eligibility for the special regime, income amount, types of activities, VAT registration status, contractual wording, and accounting settings. Income and the limit for the simplified declaration are checked under Articles 723 and 724 of the Tax Code of the Republic of Kazakhstan.
Sources
- Tax Code of the Republic of Kazakhstan, Article 723 — conditions for applying the special tax regime based on a simplified declaration.
- Tax Code of the Republic of Kazakhstan, Article 724 — procedure for determining income when applying the special tax regime based on a simplified declaration.