{"id":53252,"date":"2026-08-28T09:52:43","date_gmt":"2026-08-28T06:52:43","guid":{"rendered":"https:\/\/kz.f-chain.com\/?p=53252"},"modified":"2026-08-28T09:52:43","modified_gmt":"2026-08-28T06:52:43","slug":"long-term-construction-contracts-rk","status":"publish","type":"post","link":"https:\/\/kz.f-chain.com\/en\/feautured-post\/long-term-construction-contracts-rk\/","title":{"rendered":"Tax Accounting for Long-Term Construction Contracts"},"content":{"rendered":"

Tax Accounting for Long-Term Construction Contracts<\/strong><\/h2>\n

In the construction industry, contractors apply a special tax accounting procedure for long-term contracts. The new Tax Code of the Republic of Kazakhstan has clarified the criterion used to determine whether a construction contract qualifies as long-term and also provides methods for determining income under such contracts. Contractors should take these rules into account when maintaining tax records for each construction project.<\/p>\n

 <\/p>\n

Which Contracts Qualify as Long-Term Contracts<\/strong><\/h3>\n

Previously, a construction contract was considered long-term if the commencement and completion of construction fell within different reporting periods. The actual duration of construction was not taken into account. Under Article 294 of the new Tax Code of the Republic of Kazakhstan, the duration of construction is now the key criterion. A construction contract qualifies as long-term if the construction period exceeds 12 months, regardless of the dates on which the work begins and is completed. The special procedure for accounting for income under long-term contracts applies only to contractors. Tax accounting must be maintained separately for each construction project. This approach provides for the recognition of income throughout the entire period of construction and installation works in accordance with the applicable tax accounting method. At the same time, accounting and tax figures for the same project may differ. In certain months, the amount of income of a construction company confirmed by Form KS-2 and recognized for accounting purposes may differ from the income recognized under the same contract for tax purposes.<\/p>\n

 <\/p>\n

Which Tax Accounting Methods Are Available<\/strong><\/h3>\n

The Tax Code provides two methods for determining taxable income under a long-term contract:<\/p>\n

    \n
  1. actual method;<\/li>\n
  2. completion method.<\/li>\n<\/ol>\n

    The contractor independently selects the applicable method and records it in the tax register. If no method is specified, the actual method, based on actual costs, applies by default. The source material provides detailed rules for applying the actual method. As the calculation procedure under the completion method is not provided in the source material, only the actual method is considered below.<\/p>\n

     <\/p>\n

    How the Completion Date of a Long-Term Contract Is Determined<\/strong><\/h3>\n

    In accordance with Article 294 of the Tax Code of the Republic of Kazakhstan, the expiration date of a long-term contract is the later of the following two dates:<\/p>\n

      \n
    1. the date on which the certificate of completed works for the final stage or the entire scope of work under the contract is signed;<\/li>\n
    2. the date on which the acceptance certificate for commissioning the facility is signed.<\/li>\n<\/ol>\n

      Expenses incurred after the contract expiration date are not taken into account when determining income under the long-term contract. If the amounts of income or expenses change during the term of the contract, such changes are taken into account when determining income starting from the tax period in which they occurred.<\/p>\n

       <\/p>\n

      How the Actual Method Is Applied<\/strong><\/h3>\n

      The procedure for applying the actual method is established by Article 295 of the Tax Code of the Republic of Kazakhstan. Under this approach, income under a long-term contract for the reporting tax period is recognized as income receivable or received during that period. However, the amount of such income cannot be less than the amount of expenses deducted under the long-term contract for the corresponding period. Accordingly, when determining taxable income, the contractor must take into account not only the income actually received or receivable but also the amount of expenses recognized as deductions under the specific long-term contract. A separate procedure applies if, during the term of the contract, the income calculated under this method exceeds the total income determined for the entire duration of the contract. In the tax period in which such an excess arises, income is recognized as the positive difference between the total income under the contract for its entire term and the income already included in aggregate annual income in previous tax periods. In subsequent tax periods during the term of such a contract, the amount of income recognized is zero.<\/p>\n

       <\/p>\n

      Key Considerations for Contractors<\/strong><\/h3>\n

      The new construction duration criterion is particularly important when determining whether a specific contract qualifies as long-term. If the construction period exceeds 12 months, the contractor must apply the special tax accounting rules regardless of the reporting periods in which the work begins and ends. It is equally important to select the accounting method in advance and record it in the tax register. If no method is selected, the actual method applies by default. During the performance of the contract, income and expenses must also be accounted for separately for each construction project, with any changes reflected in the relevant tax period. Particular attention should be paid to potential differences between accounting and tax figures. Income recognized for accounting purposes based on documents confirming completed works may not always correspond to the amount of income recognized for tax purposes under a long-term contract.<\/p>\n

       <\/p>\n

      FChain Services for Construction Companies<\/strong><\/h3>\n

      Tax accounting for long-term construction contracts involves not only the proper recognition of transactions but also contractual terms and legal support for contractors\u2019 activities. FChain provides the following specialized services for companies operating in the construction industry:<\/p>\n