Payments to Government
Based on the Uchet.kz data, KPO was recognized as the second largest taxpayer in the country among the 50 largest companies included into the list compiled by Grant Thornton. The Venture pays a significant part of all tax revenues to the state budget of the Republic of Qazaqstan (RoQ).
The KPO tax regime is regulated by the Production Sharing Agreement and the applicable tax legislation of the RoQ.
Taxes are an important source of revenues for the RoQ that enable for funding of such areas as education, healthcare, social infrastructure, etc.
Wherever possible, KPO strives to build an open dialogue and collaborative relationship with tax authorities based on mutual respect and transparency, and to contribute to creating a favourable environment for the development of business and social sector in West Qazaqstan Oblast. Whenever tax exemptions are applied, KPO also strives to ensure their transparency and compliance with legal and regulatory frameworks.
In practical terms, KPO tax strategy is to calculate taxes correctly, minimize risks of double taxation and prevent any disputes with tax authorities. Therefore, Company’s key principle is to timely pay taxes and to provide all requested information to relevant authorities, as might be required by law or as part of due diligence.
Currently, in Qazaqstan there are risk management systems (RMS) in place that cover planning and organization of tax audits; the risk assessment criteria have also been developed and approved. This system represents a set of measures implemented in order to assess the likelihood of taxpayer’s non-fulfilment and/or incomplete fulfilment of tax liabilities that can cause damage to the state. RMS also includes measures used by the tax authorities to identify and prevent risks. Types of tax control will be applied differentially based on the outcome of the risk assessment. Thus, as of the beginning of 2022, a low level of risk was assigned to KPO.
KPO strictly complies with tax regulations of the RoQ, and also works to ensure its taxes are appropriated in accordance with the global standard of the Extractive Industries Transparency Initiative (EITI), which serves as a watchdog for income transparency and accountability in the energy and mining sectors.
EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE
KPO supports the Extractive Industries Transparency Initiative (EITI) in order to ensure transparency of incomes and overall chain of value creation in the management of the natural resources of the RoQ.
In 2021, KPO paid taxes and mandatory payments to the RoQ budget in the amount totalling US$ 1.6 bln (at the exchange rate of KPO SAP accounting system) according to the EITI submission requirements. This data is reported in the 17th National Report on Implementation of the RoQ Extractive Industries Transparency Initiative for 2021.
KPO has been directly submitting the EITI reports on its tax liabilities to the RoQ authorised bodies since 2014.
History of KPO payments from 2014 through 2021 is shown in Table 5.
Data about taxes paid by KPO to the state budget is publicly available at http://egsu.energo.gov.kz (section ‘Final Report on tax and non-tax payments/receipts from payers of oil & gas and mining sectors of the RoQ’).
Tab. 5. Taxes and mandatory payments paid by KPO to the RoQ Budget in 2014–2021 (in US$)
|
2014 |
2015 |
2016 |
2017* |
2018 |
2019 |
2020** |
2021 |
|
2.1 bln |
1.2 bln |
0.369 bln |
0.746 bln |
1.9 bln |
1.6 bln |
0.971 bln |
1.6 bln |
*Variance against 897 mln, which was published in the KPO Sustainability Report 2017, is explained by reflection of the refund amount post data reconciliation between taxpayer and recipient at a later date.
**Starting from 2020, while converting from Qazaqstani Tenge into US Dollars KPO has applied the exchange rate as of the date of payment according to its internal SAP accounting system, and not the exchange rate of the RoQ National Bank at the end of a reporting period..
KPO supports the Extractive Industries Transparency Initiative (EITI) in order to ensure transparency of incomes and overall chain of value creation in the management of the natural resources of the RoQ.
In 2021, KPO paid taxes and mandatory payments to the RoQ budget in the amount totalling