It is known that the business related to real estate, is one of the most profitable. Special "attraction" is made by transactions connected with rental real estate. However, not all participants of these transactions are familiar with the principles of taxation when renting real estate objects.
If you decide to sell immovable property and/or a vehicle do you need to pay tax?
If you sell a property and/or a vehicle that is on the property right more than 1 year from the date of registration of the property right, no property income arises, accordingly the presentation of a declaration on individual income tax is not required.
But, if you sell a property and/or a vehicle that is under ownership less than 1 year from the date of registration of the property right, a property income arises that is determined as a positive difference between the cost of selling the apartment and the cost of its acquisition. If such an income arises, you must submit a personal income tax return (form 240.00) no later than March 31 of the year following the year in which such income was received and pay an individual income tax of 10% of such income no later than April 10 of the year following the year in which such an income was received.
It’s not necessary to be IE to lease real estate
First of all you should note that to lease out real estate is available as forindividuals, including those who are without registerion as an individual entrepreneur, so for legal entities. Registration form – IE by the patent, IE by the simplified declaration or legal entity – affect on the amount of tax which is subject to payment.
Let’s consider the first case, when real estate is leased by the physical person not registered as individual entrepreneur.
Under the article 27 of RK Law "On private entrepreneurship" state registration of individuals engaged in private entrepreneurship without legal personality considers the registration as an individual entrepreneur in the territorial tax authority at the place of location. The law also clarifies that the physical person who does not employ workers on a permanent basis has the right not to register as an individual entrepreneur while obtaining of property income.
In accordance with Article 35 of the Business Code of the Republic of Kazakhstan, the state registration of individuals engaged in private business without the formation of a legal entity is to be registered as an individual entrepreneur in the state revenue body at the location declared as an individual entrepreneur under state registration.
In its turn, income received from the lease out the property refers to property income of physical person. Tax amount comprises 10% from income amount. The main thing in this case, pay the tax on time within 10 working days after the deadline set for the submission of declaration on individual income tax, i.e on the 31st of March next year.
In what cases is it obligatory to register as IE?
According to the Law state registration is compulsory for individual entrepreneurs who employ workers on a regular basis, have total annual income from private entrepreneurship in the amount exceeding tax-free amount of total annual income established for physical persons by RK laws.
According to article 157 of RK Tax Code, if the amount of income for the calendar year for physical person is 12- fold law on the national budget and valid on January 1 of correspondent financial year it’s necessary to register as an individual entrepreneur. Thus, if you use labor of employees, your income is above 12 MS, you must be registered as an IE.
Individual entrepreneur while lease out the property can choose one of the regimes for calculation and payment of taxes: - special tax regime based on a patent or a special tax regime based on simplified declaration.
If you have chosen the regime of patent, availability of cash register is not required. For those who works with simplified declaration, availability of a cash register and issue of cash receipt is obligatory.
According to the Tax code, an individual entrepreneur, working on the basis of simplified declaration shall pay the tax at 3% of income amount. When choosing the regime of patent - allocable tax amount is 1%.
If legal entity is a landlord or tenant
If a physical personrents leases out the property to legal entity or individual entrepreneur , the income received from the lease of property refers to income of physical person from tax agent and is subject to individual income tax at the source of payment. Therewith the obligation to calculation, withholding and transfer of tax at the source of payment are imposed on a legal entity or individual entrepreneur. Tax rate also comprises 10 % of the income amount.
If the landlord is a legal entity operating under the simplified regime, then according to the Tax Code (Article 687), income payments will be calculated at a rate of 3%. For a legal entity operating in the generally established manner, the tax on rental income will be 20%.
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Individual
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Individual entrepreneur
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Legal entity
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Chosen regime
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Simplified declaration
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Special regime based on a patent
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Simplified declaration
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Special regime
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Сумма налога
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10%
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3%
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1%
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3%
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20%
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Responsibility for mom-payment of taxes
According to the Code "On Administrative Offenses of the Republic of Kazakhstan" for failure to submit tax reports on time, as well as for engaging in business activities without registration, administrative liability is provided.
If you did not submit tax reports for the first time within the established timeframe, then a sanction measure will be applied to you - a "warning". For failure to submit tax reports to the tax authority, an administrative fine will amount to KZT36,075 (15 MCI) within a year after the imposition of an administrative penalty.
And in the case of engaging in entrepreneurial activities without registration, decisions on administrative liability of such persons are taken by the judicial authorities.
Imposed administrative penalty should be paid no later 30 calendar days from the date the judgment becomes final.
At the same time, if you do not have the opportunity to pay a fine within the time period established by law, you can apply to the state revenue authorities to postpone or install a payment of a fine.
