The Department of State Revenue for the North Kazakhstan Region clarifies the procedure for determining the foreign exchange rate upon initial recognition of goods imported from the Russian Federation.
In accordance with IAS 21, “The Effects of Changes in Foreign Exchange Rates,” a foreign currency transaction shall be translated into the functional currency upon initial recognition by applying the exchange rate at the date of the transaction.
According to paragraph 2 of Article 19 of the Law of the Republic of Kazakhstan “On Accounting and Financial Reporting,” financial statements shall be prepared in the national currency of the Republic of Kazakhstan.
How is the transaction date determined?
The transaction date is determined based on the actual circumstances of the delivery and the date on which the transaction first meets the recognition criteria for the relevant asset under the applicable financial reporting standards.
The date of registration of a Type 78 goods declaration and the date on which the goods physically cross the state border of the Republic of Kazakhstan do not, in themselves, determine the transaction date for the purposes of applying IAS 21.
Does participation in a Special Economic Zone affect the exchange rate determination procedure?
Participation in the Special Economic Zone does not alter the general rules for the initial recognition of imported goods or the determination of the exchange rate in accordance with IAS 21.
Tax incentives for participants in special economic zones are applied in accordance with the tax legislation of the Republic of Kazakhstan, subject to compliance with the established requirements.
Thus, when recognizing imported goods, entities should follow the applicable financial reporting standards and determine the exchange rate as at the transaction date, taking into account the criteria for asset recognition.
