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Tax Uncertainties in Asset Securitizations in Kazakhstan

Tax Uncertainties in Asset Securitizations in Kazakhstan. Next 15 minutes…. Structuring a Securitisation Transaction : Role of a Tax Advisor What Structural Issues should be Solved? Overview of Securitization Activities in Kazakhstan and Discussion of Tax Uncertainties.

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Tax Uncertainties in Asset Securitizations in Kazakhstan

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  1. Tax Uncertainties in Asset Securitizations in Kazakhstan

  2. Next 15 minutes… • Structuring a Securitisation Transaction: Role of a Tax Advisor • What Structural Issues should be Solved? • Overview of Securitization Activities in Kazakhstan and Discussion of Tax Uncertainties

  3. Structuring a Securitisation TransactionRole of a Tax Advisor • Analysis and advice regarding structuring to ensure tax efficiency and to achieve tax neutrality, mitigation of VAT and profits tax risks • Review of tax aspects of securitisation documentation to achieve tax efficiency and preparation of tax opinion • Modelling of tax obligations of Issuer and tax compliance of securitisation companies and Issuers • Dealing with the local Tax Authorities in respect of advance clearances and post-transaction enquiries • Provision of practical guidance on post transaction monitoring to ensure that the structure is being properly maintained from a tax perspective

  4. What Structural Issues Should Be Solved? • Tax treatment of assets forsale/pledge • Determination of the way to transfer the pool of assets: true saleor pledge to the Issuer or combination of both • Jurisdiction for incorporation of the Issuer • Structuring of the cash flows at the warehouse stage • Profit extraction mechanism for a true sale. Transfer pricing analysis given the fluctuation of a profit extraction flow • Servicing of the portfolio and enforcement • Other issues (upfront expenses, hedging, etc.)

  5. Recent transactions analysis • Tax benefits available for local issuers from 2007 such as tax exemption and extended period of carry-over of losses. Though local ABS deals in Kazakhstan have not yet been closed • No special tax regime is applicable for the originator in a deal • No official clarifications are available. An individual ruling may be obtained with respect to a particular question in a transaction • Characterization of the payments made by obligors/debtors • As gain from the receipt of payments from purchased debt claims • As interest income (and related income)

  6. Recent transactions analysis • Uncertainty in withholding tax mechanism for non-resident issuer • Capacity of debtors/obligors as withholding tax agents • Characterization of servicer as withholding tax agent • Uncertainty of continuing availability of tax exemptions by Originator on mortgage loan payments • Uncertainty of Application of Article 178(8) – interest income by non-residents from non-residents with property in Kazakhstan “related” to interest payments

  7. Contact details Jude Ocampo Director Tax and Legal Department Global Financial Services Industry Deloitte Kazakhstan Tel: +7 (727) 258 1340 Fax: +7 (727) 258 1341 Email: jocampo@deloitte.kz

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