What “including VAT” means
The phrase “including VAT” means that the tax is already included in the stated total price. It should not be added to the amount again: the accountant must extract VAT from the total price and separately determine the price excluding tax. For example, if an agreement or source document states the total amount and includes the wording “including VAT,” that amount is treated as the price inclusive of tax.
The wordings “VAT included” and “including VAT” generally convey the same economic meaning: they indicate a total price that includes the tax. However, this wording alone is insufficient for tax accounting. The accountant must determine whether the transaction relates to taxable turnover, which rate applies, and the date as of which the tax is calculated.
In 2026, the standard VAT rate in Kazakhstan is 16%. However, the rate for a specific transaction is determined based on its substance and the applicable taxation procedure. The phrase “including VAT” describes the composition of the price but does not replace the classification of the transaction or the documents on the basis of which VAT is recorded in the accounts.
Calculating VAT when it is included
When the VAT-inclusive price is known, the tax is extracted using a calculation method. The general logic is as follows:
- the VAT-inclusive amount is the total price stated in the agreement or document;
- VAT is the portion of the total price calculated using the applicable rate;
- the price excluding VAT is the difference between the total price and the extracted tax.
If the rate is denoted by R and the total price by S, the calculation can be expressed by the following formula:
VAT = S × R / (100 + R)
The price excluding tax is then determined as follows:
Price excluding VAT = S − VAT
At the standard rate of 16%, the formula for extracting tax from the total price is: VAT = S × 16 / 116. The rate applicable specifically to the relevant transaction must be used in the calculation. It cannot be determined solely from the wording “including VAT”: this wording indicates that tax is included in the price, but does not in itself confirm the buyer’s right to claim a VAT credit.
If the agreement states the price excluding tax and provides for VAT to be charged on top, a different approach is used: the tax is calculated on the price excluding VAT and then added to it. Therefore, it is important to read the price clause literally before making the calculation. The wordings “the price is…, including VAT” and “the price is… excluding VAT” result in different calculations of the total amount.
A separate procedure applies to determining taxable imports. When goods are imported, the transaction price is determined according to the terms of the agreement. If the cost of the goods and other expenses are stated separately, the taxable import amount includes the cost of the purchased goods; if they are not stated separately, the transaction price specified in the agreement applies (Art. 518 of the TC RK). Therefore, for an import transaction, merely extracting VAT arithmetically from the contract price is insufficient: the taxable import amount must first be determined under the special rules.
When using automated accounting, the VAT rate, the method used to state the price, and the tax status of the transaction should be checked in the accounting system. These parameters must correspond to the agreement and source documents so that the software does not charge tax again on top of a price in which it is already included.
What the accountant should check
Before recording a transaction, it is useful to compare the agreement, the source document, and the document serving as the basis for claiming the VAT credit. The total amounts and the procedure for including the tax must not contradict one another. If the agreement states “including VAT,” but the document adds tax on top of the agreed price, a discrepancy arises between the contract price and the amount payable.
The practical review includes the following steps:
- Determine whether the stated price is inclusive or exclusive of tax.
- Check the recipient’s tax status and the nature of the transaction.
- Determine the applicable rate as of the date on which VAT is calculated.
- Extract VAT from the total price if it is already included in the price.
- Reconcile the price excluding VAT, the tax amount, and the overall total across all documents.
- Separately assess compliance with the conditions for claiming the VAT credit.
For a recipient of goods, work, or services, the VAT amount may be claimed as a credit if the established conditions are met: the recipient must be a VAT payer registered in the taxpayer database; the tax must be specified in a document prescribed by the TC; and the purchased goods, work, or services must be used or intended for use for taxable sales turnover (Art. 480 of the TC RK). Consequently, the phrase “including VAT” in the agreement is insufficient for claiming a VAT credit.
The VAT amount included in the price of an individual transaction should not be confused with a VAT excess. Tax included in the price is initially accounted for in relation to the specific transaction. The issue of an excess arises after comparing the tax-accounting amounts for the relevant period and is subject to a procedure different from extracting tax from the contract price.
Domestic sales must also be distinguished from imports of goods from EAEU member states. For such imports, the TC establishes a special procedure for calculating and paying VAT, submitting an application for the import of goods and payment of indirect taxes, and providing supporting documents (Art. 530 of the TC RK). The agreement’s price clause is considered together with the rules for determining taxable imports (Art. 518 of the TC RK).
Time limits for refunding a VAT excess
Extracting VAT from the price and refunding a VAT excess are different procedures. The formula S × R / (100 + R) is used to determine the tax within the total price, but it does not establish whether an amount is refundable, the refund period, or the procedure for a taxpayer’s application.
Article 480 of the TC RK defines the conditions for claiming a VAT credit, including requirements concerning the recipient’s status, the purpose of the purchase, and the document specifying the tax (Art. 480 of the TC RK). The time limits for refunding a VAT excess are governed by separate provisions and are not calculated from the date of the agreement or the date on which the tax is arithmetically extracted from the price.
A different deadline applies to goods imported into Kazakhstan from the territory of an EAEU member state: the application for the import of goods and payment of indirect taxes must be submitted to the tax authority at the place of business or residence no later than the 20th day of the month following the tax period. The prescribed documents must be submitted at the same time, including confirmation of the payment of indirect taxes or exemption, shipping documents, and invoices in the stipulated cases (Art. 530 of the TC RK).
This deadline applies to the application for imports from the EAEU. It is not the deadline for refunding a VAT excess, paying an invoice, or documenting a domestic transaction. Therefore, the accountant must first determine the type of transaction and the applicable procedure, and then apply the relevant deadline.
Frequently Asked Questions
What does “amount, including VAT” mean? — It is the total amount that already includes VAT. The tax should not be added to such a price again.
How is VAT calculated when it is included? — Multiply the tax-inclusive amount by the applicable rate and divide the result by 100 plus that rate. At the standard rate of 16%, the formula S × 16 / 116 applies.
Are “VAT included” and “VAT on top” the same? — No. In the first case, the tax is included in the stated price; in the second, it is charged in addition to the price excluding VAT.
Can VAT be claimed as a credit based solely on the wording in the agreement? — No. The recipient must be a VAT payer, the tax must be specified in a prescribed document, and the purchase must be used or intended for use for taxable sales turnover (Art. 480 of the TC RK).
When does VAT included in the price become a VAT excess? — The mere inclusion of tax in the price does not mean that a refundable amount has arisen. The excess is determined based on the tax-accounting results for the relevant period, and its refund is subject to a separate procedure.
Sources
- Tax Code of the Republic of Kazakhstan, Article 480 “Value Added Tax Credited.”
- Tax Code of the Republic of Kazakhstan, Article 518 “Determination of the Taxable Import Amount.”
- Tax Code of the Republic of Kazakhstan, Article 530 “Procedure for Calculating and Paying Value Added Tax on Imports of Goods into the EAEU.”