The following taxes are established in the Republic of Kazakhstan:
- Corporate income tax (CIT);
- Individual income tax;
- Value added tax (VAT);
- Export rent tax;
- Special payments and taxes of subsoil users;
- Social tax;
- Vehicles tax;
- Land tax;
- Property tax;
- Gambling tax;
- Fixed tax;
- Single land tax.
VAT and excises shall be deemed indirect (hidden) taxes for the purposes of application of international agreements.
The Kazakhstan tax treatment scheme is one of the most viable tax treatment schemes in the region.
Basic taxes rates in Kazakhstan, Russian and China
*evaluation cost,** rented property
Reference: Ministry of Finances of the Republic of Kazakhstan, Federal tax services of Russia, State Administration of Taxationof the People’s Republic of China
As of today, Kazakhstan entered into 53 Conventions for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital gains (double taxation treaties - DTT).
The full list of DTT conventions is publicly accessible and available at website of the State Revenues Committee of the Ministry of Finances of the Republic of Kazahstan: http://kgd.gov.kz/ru/content/konvencii-ob-izbezhanii-dvoynogo-nalogooblozheniya-i-predotvrashchenii-ukloneniya-ot
Non-resident and resident taxation
The resident of the Republic of Kazakhstan for the tax purposes is either:
1) an individual who permanently stays (183 days) in the Republic of Kazakhstan or does not stay permanently, but his/her vital interests centre is in Kazakhstan;
2) a legal entity registered under the laws of Kazakhstan or registered under the laws of a foreign state, but location of its management body (factual place of the management of body) is in Kazakhstan.
Staying of individual in the Republic of Kazakhstan more than 183 calendar days, including arrival and leaving dates, in any consecutive 12 months period triggers resident tax treatment .
Vital interests centre shall be deemed to be in the Republic of Kazakhstan, when all of the following are in place: individual is a Kazakhstan citizen or has residence permit, spouse or close relatives of an individual live in Kazakhstan. an individual has an immovable property, which belongs to individual or his/her spouse or close relatives, on ownership or other rights and accessible at any time for living for an individual, his/her spouse or close relatives.
Local and foreign sources Incomes of the Kazakhstani citizens are taxable pursuant to the Tax Code of the Republic of Kazakhstan. Non-residents should pay taxes on local source incomes and from foreign source incomes, when they carry out business activity in Kazakhstan through the permanent establishment given that such incomes are connected with the permanent establishment activity.
If none other is provided by international agreement, the permanent establishments of non-resident in the Republic of Kazakhstan can be any place, through which a non-resident carries out business activity, inter alia and not limited to this place of manufacturing, processing, assembly, packaging and/or supply, management, geological survey, sale in the territory of Kazakhstan, except for cases when goods are sold at exhibitions and fairs, irrespective of any time periods of such activity.
When the place of work or services provision is not in the list of permanent establishment places, which set out in the Tax Code, the permanent establishment is any place of services provision or work performance in the territory of the Republic of Kazakhstan, through employees or other personnel, hired by a non-resident for such purposes, if such activity continues in the territory of the Republic of Kazakhstan more than 183 calendar days within any consecutive 12-months period from the start date of such activity in frames of one or associated projects.
Any services and work provision more than 183 calendar days within any consecutive 12-months period triggers permanent establishment tax treatment .
Structural subdivisions of a non -resident should be treated as a permanent establishment of a non-resident, but the subdivisions may apply international treaties, regulating double taxation and tax evasion.
1. Corporate Income Tax (CIT)
The CIT rate is charged at rate of 20% . The CIT payers are legal entities - resident with the exception for state agencies and state educational entities of secondary education and also legal entities - non-residents, which carry out activity in Kazakhstan through the permanent establishment or derive incomes from sources in the Republic of Kazakhstan.
The CIT is levies upon:
1) taxable income;
2) income at the source of payment;
3) pure incomes of a legal entity - non-resident carrying out activity through the permanent establishment in the Republic of Kazakhstan.
Currently more and more states establish tax rules in relation of controlled foreign companies in order to prevent tax evasion. From 1 January, 2018 the taxable income includes also accumulated profit of controlled foreign companies (CFC) or permanent establishments of controlled foreign companies, determined as per the Tax Code.
CFC is a legal entity - non-resident or any other foreign business entity in which:
- 25% of shares of participatory shareholding belong directly or indirectly or structurally to Kazakhstan legal entity or Kazakhstan individual - resident;
- Kazakhstan legal entity or individual controls directly and indirectly CFC;
- CFC or permanent establishment of CFC are registered in one of the tax-heaven states or effective rate CFC or permanent establishment of CFC constitutes no less 10%.
Such amendments are substantiated by the global tax reforms, associated with drafting OECD Base Erosion and Profit Shifting project and final report “Designing effective controlled foreign company rules” (OECD BEPS Action 3: 2015 Final Report ).
Kazakhstan source incomes of a non -resident comprise of incomes from :
1) goods sale in the territory of the Republic of Kazakhstan, also income from goods sale in Kazakhstan and abroad in frames of foreign trade activity;
2) works performance, services provision in the territory of Kazakhstan;
3) management, finance, advisory, engineering, marketing, auditing, legal (except for representation and protection of rights and interests in courts, arbitration court or referees' court, notary services) services beyond the territory of the Republic of Kazakhstan.
The tax-heaven states list is established by the Order of the Minister of Finances of the Republic of Kazakhstan (please see this reference перечень) .
Incomes of a legal entity -non-resident, that carries out activity without creating a permanent establishment, are taxed CIT and withdrawing tax (WHT) as per the following rates:
1) local source incomes of non-resident as per the Tax Code - 20 percent;
2) insurance premium on risk insurance agreements - 15 percent;
3) Insurance premium on risk re-insurance agreements - 5 percent;
4) Incomes from services on international transport - 5 percent;
5) capital gain incomes, dividends, remuneration, royalty - 15 percent.
Incomes of entities, registered in a tax-heaven state, listed in the Order, should be taxed at rate of 20 percent.
2. Individual Income Tax (IIT)
The IIT rate is taxed at rate of 10%, except for the dividends that taxed at rate of 5%. The tax agents are in charge of IIT calculation, deduction and payment from incomes which are taxed at the source of payment.
3. Value added tax (VAT)
If goods, works and services turnover amounts more than 30 000 monthly calculation indices per year (KZT 2405 for 2018) it triggers taxation with VAT. Turnover of goods for export is taxed at zero rate of VAT (0%).
The legal entities - residents, non-residents, carrying out activity in the Republic of Kazakhstan through the branch, representative office, individual entrepreneurs must register as VAT payers when they have turnover amounts more than 30 000 monthly calculation indices.
The VAT rate is 12%, the Tax Code contains list of goods and services which are exempt from the VAT.
VAT reference account from 1 January 2019
From 1 January, 2019 the Tax Code will introduce the concept of VAT reference account, to be opened by a VAT payers in any bank of a second level in the territory of the Republic of Kazakhstan and to be used for VAT payments accounting, inter alia, for:
• VAT payment to budget (including VAT for import and for non-resident) to suppliers and purchasers;
• Money crediting from other bank account of a VAT payer.
Pursuant to the Tax Code, VAT amount, left on the reference VAT account after fulfillment of VAT tax duties, should be returned.
The list of excised goods and excise tax rates are set out in articles in 462-463 Tax Code of the Republic of Kazakhstan. The excised goods shall mean goods manufactured in the territory of the Republic of Kazakhstan, and imported to the Kazakhstan territory - all kinds of spirit, tobacco products, products with heated tobacco, nicotine fluids for smoke-free cigarettes, petroleum (except for aviation one), diesel fuel, motor vehicles, raw oil, gas condensate, spirit medical products registered as per the medicines laws of the Republic of Kazakhstan
The excise rats are established in amount per item in volume terms, for example KZT 600 per 1 liter.
5. Rent Export Tax
Payers of rent tax are individuals and legal entities carrying out export of raw oil, oil products and coal.
6. Subsoil users taxation
Special payments and taxes of subsoil users comprise of:
1. special payments (signature bonus, commercial discover bonus, специальные платежи (подписной бонус, бонус коммерческого обнаружения, reimbursement of past costs);
2. severance tax;
3. excess profit tax.
7. Social tax
The expenses and costs of an employer to be paid to staff personnel (residents and non-residents), including payments to foreign personnel are charged with social tax at rate of 11 percent. (11%)
8. Property tax
The property tax rate is 1,5% to average cost of taxation objects, however the Tax Code contains different property tax rates depending on status and business activity of a taxpayer.
9. Land tax
The land tax payers are individuals and legal entities, which have land taxes:
1. ownership right;
2. permanent land use right;
3. on primary free land use.
The land tax rates are set out in articles 503–510 Tax Code, the land tax rate depends on the category, location and other factors.
Contact details of the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan:
10 Beibitshilik str., Astana
Tel.: +7 (7172) 701487, 709932
Official website: www.kgd.gov.kz