Introduction
The patent is the simplest and most convenient tax regime for self-employed entrepreneurs who have no employees. In this article, we will describe the option of patent-based individual entrepreneurship in detail.
 

Which individual entrepreneurs can work under the patent?

The main condition for application of the special regime "Patent-based individual entrepreneurship" is carrying out of individual entrepreneurship, i.e. absence of employees. Other conditions for applying for a patent and existing restrictions are set forth in Article 683 of the Tax Code of the Republic of Kazakhstan, according to which there are the following restrictions: on the amount of income (up to 3,528 MCI per year); on the types of activities (subject to the requirements of paragraph 3, clause 2, Article 683 of the Tax Code of the Republic of Kazakhstan and other restrictions).

If an annual income exceeds the established threshold, an individual entrepreneur loses the right to apply the patent and should switch either to another special tax regime, to simplified regime or to standard regime.

Individual entrepreneurs carrying out one or more of the following types of activities may work under a patent:

• plastering works;
• woodworking and carpentry;
• floor and wall covering;
• painting and glazing works;
• taxi activity;
• cargo transportation by road;
• real estate management for remuneration or on a contractual basis;
• activities in the field of photography;
• translation (oral and written) activities;
• property leasing;
• vehicle leasing;
• entertainment and sports equipment leasing;
• rent of videos and discs;
• rent of other personal consumption articles and household goods;
• lease of agricultural machinery and equipment;
• lease of office machinery and equipment, including computing hardware;
• services in the field of sports education and education of leisure professionals;
• education services in the field of culture;
• other education services;
• auxiliary educational services;
• activities in the field of art;
• repair of computers and peripheral equipment;
• repair of communication equipment;
• repair of personal items and household goods;
• hairdressing services;
• manicure and pedicure;
• veterinary services;
• land cultivation services;
• residential cleaning and housekeeping services;
• porter services at markets, train stations;
• production and repair of musical instruments;
• cattle grazing.

Trading under the patent is prohibited. If it is found that an activity is being carried out which is not included in this list, then the transfer will automatically be carried out from the patent regime to the generally established regime.

Entrepreneurs applying a special patent-based tax regime make monetary settlements with the mandatory use of cash registers, except for taxpayers whose activities are located in places where there is no public telecommunications network.

Individual entrepreneurs who deliver services based on agency agreements (contracts) are not entitled to apply a special patent-based tax regime.

For reference

Code of the Republic of Kazakhstan "On Taxes and Other Mandatory Payments to the Budget (Tax Code)", Articles 683, 685

To get a patent, an entrepreneur should first register as an individual entrepreneur. If an entrepreneur has indicated in the notification of registration as an individual entrepreneur a type of activity that does not correspond to the list of permitted types of activity (Article 685 of the Tax Code), the entrepreneur will not be able to obtain a patent. In order to apply a special patent-based tax regime, a calculation of patent value is submitted to a relevant tax agency at the place of location. The calculation is submitted on paper or in electronic form, including via the e-Government portal, by individual entrepreneurs:

1) newly established - no later than 3 working days from the date of submission of the notification of registration as an individual entrepreneur;

2) making the transition from a generally established procedure or other special tax regime, before the 1st day of the month of application of a special  patent-based tax regime; 3) to obtain another patent, before the expiration of the previous patent or the period of suspension of tax reporting.

The calculation is a tax report for calculating the value of a patent (911.00 form). The amount of income that is planned to be received during the period of patent validity is determined by a taxpayer. Payment of patent value is made by a taxpayer prior to submission of calculation. A patent cost includes the amount of individual income tax (except for individual income tax withheld at a source of payment) and social payments. Calculation of the amount of individual income tax included in a patent cost is carried out by applying a rate of 1 percent to the estimated income.

The social payments included in the patent price are calculated in accordance with the Law of the Republic of Kazakhstan "On Compulsory Social Health Insurance" and the "Social Code".

If the amount of income actually received during the patent period exceeds the amount of income specified in the calculation, the individual entrepreneur is obliged to submit a calculation of the excess amount in the form of an additional tax return within 5 working days and to pay tax on this amount.

If an entrepreneur plans to continue activities after patent expiration, then it is necessary to purchase the next patent prior to expiration of a previous one. If the individual entrepreneur plans to change the tax regime, then the notification of the change should be submitted before the beginning of the month in which the change is planned.

If it is planned to suspend activities, an application for suspension should also be submitted before the end date of a current patent.

If an entrepreneur simply "abandons" the patent at the end of its validity period, but does not file an application for suspension of activity, s/he will be subject to cancellation of registration as an individual entrepreneur by the tax authority within sixty calendar days from the date of expiry of the patent.

For reference:
Social Code of the Republic of Kazakhstan

Law of the Republic of Kazakhstan “On Compulsory Social Health Insurance”;

“On Taxes and Other Mandatory Payments to the Budget (Tax Code)”