Kazakhstan

Country Name: Republic of Kazakhstan
Currency: Kazakhstani Tenge (KZT)
Primary Tax Authority: State Revenue Committee, Ministry of Finance
Key Legislation:

Tax Code of the Republic of Kazakhstan
Customs Code
Investment Law
Value Added Tax (VAT) Law

Fiscal Authority Allocation

Centralized Fiscal System:
Kazakhstan operates a centralized tax system. The State Revenue Committee under the Ministry of Finance is responsible for collecting taxes, including corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT), and other indirect taxes.

Corporate Income Tax (CIT)

Standard Rate: 20%
Kazakhstan imposes a flat corporate income tax rate of 20% on the taxable income of resident and non-resident companies.

Corporate Forms and Taxation:

Resident Companies: Taxed on worldwide income.
Non-Resident Companies: Taxed only on Kazakhstan-sourced income.

Exemptions and Incentives:

Investment Law: Kazakhstan offers significant tax incentives for companies investing in priority sectors such as agriculture, mining, energy, and manufacturing. Incentives include CIT exemptions, VAT deferrals, and customs duty exemptions for up to 10 years.
Special Economic Zones (SEZs): Businesses operating in SEZs benefit from tax holidays on profits, customs duty exemptions, and VAT exemptions on specific goods.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 12%
Kazakhstan imposes VAT at a standard rate of 12% on most goods and services. VAT is levied on both domestic production and imports.

Exemptions:
Certain goods and services, including healthcare, education, and financial services, are VAT-exempt. Exports are zero-rated, meaning businesses can reclaim VAT on inputs used to produce export goods.

Personal Income Tax (PIT)

Flat Rate: 10%
Kazakhstan imposes a flat personal income tax rate of 10% on both residents and non-residents. Residents are taxed on their worldwide income, while non-residents are taxed only on Kazakhstan-sourced income.

Deductions and Allowances:
Taxpayers can claim deductions for specific expenses, including social security contributions, mortgage interest, and charitable donations.

Additional Mandatory Contributions

Social Security Contributions:
Employers and employees are required to contribute to the social security system, which covers pensions, healthcare, and unemployment benefits.

Employer Contribution: 9.5% of gross salary.
Employee Contribution: 10% of gross salary.

Withholding Taxes

Dividends: 15%
Interest: 10%
Royalties: 20%
Kazakhstan imposes withholding taxes on payments to non-residents. These rates may be reduced under Kazakhstan’s double taxation agreements (DTAs).

Transfer Pricing Rules

Kazakhstan follows the arm’s-length principle for related-party transactions. Companies engaging in cross-border transactions must ensure that these transactions are priced in line with market conditions and must maintain transfer pricing documentation.

Special Tax Regimes

Special Economic Zones (SEZs): Companies in SEZs benefit from tax holidays on profits, VAT exemptions, and customs duty exemptions. SEZs are designed to promote industrial development, manufacturing, and export-oriented activities.
Investment Incentives: Under the Investment Law, companies in priority sectors can access tax holidays, reduced CIT rates, and exemptions from customs duties. These incentives are aimed at attracting foreign direct investment (FDI) and boosting economic growth in sectors such as renewable energy, infrastructure, and oil and gas.

Other Taxes

Customs Duties: Kazakhstan imposes customs duties on imports, with rates varying by product type. Certain goods, such as raw materials for industrial use, may be exempt or benefit from reduced rates.
Excise Taxes: Excise taxes are levied on alcohol, tobacco, fuel, and luxury goods. Rates vary depending on the product.
Property Tax: A 1.5% annual tax is imposed on the value of commercial real estate and industrial properties.

Double Taxation Agreements (DTAs)

Kazakhstan has signed over 50 double taxation agreements (DTAs) with countries including Russia, Germany, China, and the United States. These agreements help reduce withholding taxes on cross-border payments and prevent the double taxation of income earned in Kazakhstan and abroad.

Local Taxes

In addition to national taxes, local governments may impose minor taxes and fees, such as property taxes and business license fees. However, most significant taxes, including CIT, PIT, and VAT, are administered centrally by the State Revenue Committee.

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed by March 31st of the following year. Personal income tax returns are also due by March 31st. VAT returns are typically filed monthly, and businesses must remit VAT collected to the tax authorities.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on unpaid taxes. The State Revenue Committee may impose a penalty of 0.1% per day on overdue taxes, along with additional fines for underreporting or misreporting income.

Recent Developments

Focus on Green Economy:
Kazakhstan is promoting investment in renewable energy and environmental technologies. The government offers tax incentives for companies developing green energy projects, including reduced CIT rates and exemptions from VAT and customs duties on imported equipment.

Oil and Gas Sector Taxation:
Given Kazakhstan’s significant natural resources, the government continues to refine tax policies for the oil and gas sector. Companies engaged in oil exploration and production benefit from tax holidays, investment allowances, and reduced withholding tax rates.

Digital Economy and E-Commerce:
Kazakhstan is working to modernize its tax framework to accommodate the growing digital economy. This includes tax measures targeting e-commerce, digital services, and cross-border online transactions, as well as digital reporting systems for businesses.

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