The government of Kazakhstan is going to exempt subsoil users from VAT on exploration works, KazTAG reported.
"The government wants to introduce such a system that would maximise and facilitate the financial issues related to exploration within the scope of fiscal policy.
"These are issues such as the exemption from value added tax and the possibility of subsoil users engaged in four or five projects to transfer their costs from one project to another and to show the total cost of their business in their balance sheets," Deputy Minister of Industry and New Technologies Nurlan Sauranbayev said during the Minex-2013 forum on Wednesday.
"It may be VAT on exploration and an opportunity of correlating these costs. If for example, the company is holding three or four projects, it can accumulate these costs and expose them because it lost three of them and realised the fourth one receiving a profit. For example, the company is implementing four or five projects, each with a cost of $ 1 million. It did not find anything from four of them and sells the fifth one for $6 million. If this project is considered separately, the company will pay taxes and as a result will lose," he said.
According to him, this practice is common worldwide and the state cannot make profits out of exploration costs which are considered as unprofitable.
The deputy minister noted that the social responsibility of subsoil users will come into force only after they find some reserves.
Sauranbayev stated that the sectorial development programme for 2015-2019 will be developed this year.
"The mineral complex sectorial development programme for 2015-2019 will be developed his year. If last year we adopted the development concept, this year we will prepare a sectorial programme which will clearly describe what we will do and where we will allocate state money in the next five years," he said.
According to him, before that, the project will be preliminarily discussed with sector representatives.
Sauranbayev noted that this year the Ministry of Industry and New Technologies is going to introduce 180 amendments on improving the legislative framework in the subsoil sector. In particular, the ministry proposes to grant subsoil users a back payment of 15-20 per cent of the amount of the declared extraction volume.