Kazakhstan ratifies amendments to EAEU agreement on indirect tax collection in digital services sector

ASTANA. Feb 23 (Interfax) - Kazakh President Kassym-Jomart Tokayev has signed into law a bill establishing the order of collecting indirect taxes on digital services in the Eurasian Economic Union member states.

"To ratify the protocol amending the Eurasian Economic Union Treaty dated May 29, 2014, as regards the order of collecting indirect taxes on digital services, signed in Bishkek on December 9, 2022," the president's decree said.

It was reported earlier that the Tax Code regulates the collection of VAT from foreign companies engaged in online retail trade in Kazakhstan; however, non-residents provide many services online, without a fixed place of provision. This ambiguity poses challenges in determining the place of providing a service and VAT calculation.

The protocol introduces definitions such as digital services, specifies their types, and establishes their place of provision. VAT on digital services listed will be levied based on the principle of the destination country, or where the service is finally consumed. This approach aims to resolve disputes over VAT payment locations for electronic services and boost additional revenues for the country's budget.

This mechanism will become operational once all EAEU member states ratify the protocol. Currently, Armenia, Belarus, Kyrgyzstan, and Russia have ratified the protocol.