Tax Law #2 Zhanat Alimanov, assistant professor. Home assignment (2-3 per day) Calculate tax burden...

Tax Law #2

Zhanat Alimanov, assistant professor

Home assignment (2-3 per day)

Calculate tax burden of the company on Masha’s income: under (1) Labor Law, (2) Civil Law (not IE), & (3) Civil law (IE):

1. Salary is KZT 276,000 a month & free lunch (2,900 per lunch, 14 lunches a month)

2. Salary is KZT 347,000 a month & free delivery from work to home (cost of the delivery is 900 per day, 23 days).

3. Salary is KZT 174,000 a month & bonus 344,0004. Salary is KZT 575,000 a month & business trip

within KZ (19 nights, hotel 21,000 a night, food 3,500 a day)

5. Salary is KZT 3 mln. a month & gave clients 9 dinners (50,000)

6. Salary is KZT 547,000 a month & vacation (750,000)7. Salary is KZT 570,000 a month & forgave the loan

from the company in the amount of 300,000.

Example

Calculate tax burden of the company on Volodya’s income: under (1) Labor Law, (2) Civil Law (not IE), & (3) Civil law (IE). Salary is KZT 170,000 a month

1. Labor Law: PIT + Social Tax PIT = Taxable income * 0.1= (Total Revenue –

Deductions&Exemptions – Pension – Minimum Salary)*0.1= (170,000 - 0 – 17,000 (pension) – 19,966 (minimum salary))*0.1 = 13, 303.4

Social Tax = Taxable income*0.11 = (Total revenue – Pension)*0.11=(170,000-17,000)*0.11=16,830

2. Civil Law (not IE): PIT PIT = Taxable income * 0.1= (Total Revenue –

Deductions&Exemptions)*0.1= (170,000 - 0)*0.1 = 17,000

3. Civil Law (IE): no tax on company

Terms

1. Tax – налог

2. Revenue (Income) – Доход

3. Total Personal Revenue – Совокупный личный доход

4. Net Income – Чистый доход

5. Personal Income Tax – Индивидуальный подоходный налог

Plan

I. Personal Income Tax & Social Tax

1. When company has to pay Personal Income Tax?

How to calculate PIT & Social Tax

Differences of taxation of Civil & Labour Contracts

How to calculate PIT & Social Tax

Differences of taxation of Civil & Labour

Contracts

Example 1

Masha is a student. She works

on a part time basis for KPMD.

Her salary is 49,000. She asked

also free lunches there. They

agreed. Each lunch is worth

KZT700 (24 in month).

How much will be company’s

tax burden? (Labor Law & Civil

Law (IE & not IE))?

Step 1: Calculate Total Personal Revenue (TPR)

Total Personal Revenue

Taxed at Source (art. 160)

Not Taxed at Source (art. 177)

Company would pay PIT for Physical Person

Company would not pay PIT for Physical Person, he will

pay PIT himself

Step 2: How much is Tax of the Company?

Taxed at Source(art. 160 &158)

LABOR Contract CIVIL Contract

Total Revenue(Art. 160)

Total RevenueArt. 158

PIT

Minus Deductions &

Exemptions (Art. 155 & 156)

Minus Pension

& Minimum Salary (art. 166)

Social Tax

Minus Deductions (art. 155)

= Taxable Income * 0.1 (Art. 158)

Minus Pension (75) (Art. 357 (2/6)

PIT

Minus Deductions & Exemptions (Art. 155 (19-26) & 156)


= Taxable Income * 0.11 (art. 358)

Example

LABOR LAW

Total revenue (Art.163)=all money + in kind income= 35,000 + 800*24 = 54,200

1. PIT = Taxable Income * 0.1= Total Revenue – – (1) Deductions & Exemptions – (2) Pension &Minimum Salary)*0.1 = (54,200 – 0 –5,420 (pension) - 19,966 (minimum salary))*0.1 = 2,881.4

2. Social Tax = (Total Revenue – Deductions - Pension)*0.11 = (54,200-0-5,420)*0.11 = 5,365.8

TOTAL TAX = PIT + Social Tax = 2,881.4 + 5,365.8 =

8247.2

Example

CIVIL LAW (Not IE)

Total revenue (Art.168)=all money + in kind income= 35,000 + 800*24 = 54,200

1. PIT = Taxable Income * 0.1= Total Revenue – – (1) Deductions & Exemptions)*0.1 = (54,200 – 0) *0.1 = 5,420

TOTAL TAX = PIT =

5,420

Example

CIVIL LAW (IE)

“0” taxes on company

Example 2Alex’s salary is KZT 1 mln. He went on abusiness trip for 12 days to Paris.

He stayed at the Carlton hotel there for 12 nights.The cost per night was KZT 0.5 mln.

At the end, he received bonus from the company inthe amount of KZT 1 mln. and a vacation inHawaii (5 mln. worth). Also, company renovatedhis house (0.7 mln).

How much will be tax burden of the company on Alex’s income?

Step 1: Calculate Total Personal Revenue (TPR)

Total Personal Revenue

Taxed at Source (art. 160)

Not Taxed at Source (art. 177)

Company would pay PIT for Physical Person

Company would not pay PIT for Physical Person, he will

pay PIT himself

Step 2: How much is Tax of the Company?

Taxed at Source(art. 160 &158)

LABOR Contract CIVIL Contract

Total Revenue(Art. 160)

Total RevenueArt. 158

PIT

Minus Deductions &

Exemptions (Art. 155 & 156)

Minus Pension

& Minimum Salary (art. 166)

Social Tax

Minus Deductions (art. 155)


Minus Pension (75) (Art. 357 (2/6)

PIT

Minus Deductions & Exemptions (Art. 155 (19-26) & 156)


= Taxable Income * 0.11 (art. 358)

1. Total revenue

1. Total revenue = all income (in money or in kind, art. 163) =

= Salary + Bonus + Hawaii + Renovation + Hotel stay =

= 1 mln.(salary) + 1 mln.(bonus) + 5mln.(Hawaii) + 0.7 mln.(Renovation) + 0.5

mln.*12 (hotel stay) =

13,700 000Monthly payment indicator = KZT 1,731

2. Deductions & Exemptions (art. 155, par. 3 & 156)

Deductions & Exemptions (art. 155 & 156) =

= business trip (art. 155 (3/4)

= 8*1852*12 days (business trip) =

=177,792

Monthly payment indicator = KZT 1,731

3. Maximum Pension

Maximum Pension =

= (75 * 19,966)*0.1 =

=149,745


4. PIT (Labor Law)

PIT = Taxable income *0.1= (Total Revenue – Deductions & Exemptions – Pension – Minimum

Salary)*0.1 =

=(13,700,000 (total revenue) –177,792 (deductions & exemptions) –

149,745(pension) – 19,966(minimum salary))*0.1=

=1 335 249.7


4. Social Tax (Labor Law)

ST = Taxable income *0.11

= (Total Revenue – Deductions - Pension)*0.11 =

=(13,700,000 (total revenue) – 177,792(deductions) –

149,745(pension))*0.11=

= 1 470 970.93


4. Tax burden (Labor Law)

Tax Burden of the Company = PIT + Social Tax =

= 1 335 249.7 + 1 470 970. 93 =

= 2 806 220.63


1. Tax burden (Civil Law, not IE)

1. Total revenue = all income (in money or in kind, art. 163) =

= Salary + Bonus + Hawaii + Renovation + Hotel stay =

= 1 mln.(salary) + 1 mln.(bonus) + 5mln.(Hawaii) + 0.7 mln.(Renovation) + 0.5 mln.*12 (hotel stay) = (13 700 000 – 0

(deductions)) * 0.1 =

1 370 000


1. Tax burden (Civil Law, IE)

= 0


Tax Law #2 Zhanat Alimanov, assistant professor. Home assignment (2-3 per day) Calculate tax burden...

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