An organization operating in the territory of a special economic zone, when determining the amount of corporate income tax payable to the budget, reduces the amount of the calculated corporate income tax by 100 percent on income received from the sale of goods, works, services resulting from the implementation of priority activities.
An organization or an individual entrepreneur operating on the territory of a special economic zone shall keep separate tax records of taxable items and (or) tax-related items in order to calculate tax liabilities for the corresponding priority type of activity and other types of activity.
In the event of termination by the management company of a special economic zone of an agreement on the implementation of activities as a participant in a special economic zone in accordance with the legislation of the Republic of Kazakhstan on special economic and industrial zones, preferences in taxes and fees are canceled from the date of the beginning of the tax period in which the violation was committed, which is the reason for termination of the contract.
The management company of the special economic zone, no later than thirty calendar days from the date of termination of the contract, submits information about the participants of the special economic zone with whom the contracts were terminated, indicating the date of the violation that was the reason for the termination of the contract, to the tax authorities at the location of such participants.
In this case, the taxpayer is obliged, no later than thirty calendar days from the date of termination of the contract, to submit additional tax reports for the tax period in which the violation was committed, which was the reason for the termination of the contract.
For the purposes of applying the provisions of the Tax Code, an organization operating in the territory of a special economic zone is also recognized as a legal entity that simultaneously meets the following conditions:
Exemption from VAT on imports of raw materials and (or) materials
According to subparagraph 14 of paragraph 1 of Article 399 of the Tax Code, the import of raw materials and (or) materials within the framework of an investment contract is exempted from value added tax, while simultaneously meeting the following conditions:
An organization implementing an investment priority project for the creation of new production facilities and (or) for the expansion, renewal of existing production facilities:
An organization implementing an investment priority project is a legal entity that simultaneously meets the following conditions:
1. Corporate income tax (CIT)
The general CIT rate is 20% of the taxable income. Payers of corporate income tax are legal entities-residents of the Republic of Kazakhstan, with the exception of state institutions and state educational institutions of secondary education, as well as non-resident legal entities operating in the Republic of Kazakhstan through a permanent establishment or receiving income from sources in the Republic of Kazakhstan.
The objects of corporate income tax are:
In accordance with the current Tax Code, the list of taxable income has been supplemented, which also includes the total profit of controlled foreign companies and permanent establishments of controlled foreign companies, determined in accordance with the Tax Law.
Controlled foreign companies (CFCs)
Nowadays, more and more states are adopting in their tax legislation rules for controlled foreign companies, aimed at counteracting tax evasion. Kazakhstan is also no exception.
From January 1, 2018, the income of a resident legal entity or individual includes the profit of its controlled foreign company (CFC).
A controlled foreign company is a person who meets the following conditions at the same time:
1) such person is one of the following persons:
2) as of December 31 of the reporting period, such a person meets one of the following conditions:
3) such person meets one of the following conditions:
These changes are driven in part by global tax reforms related to the development of the OECD Base Erosion and Profit Shifting Project and the OECD Final Report on Developing Effective Rules for Controlled Foreign Companies (OECD BEPS Action 3: 2015 Final Report “Designing effective controlled foreign company rules”).
The list of states with preferential taxation was approved by order of the Minister of Finance of the Republic of Kazakhstan.
According to Article 645, income from sources in the Republic of Kazakhstan of a non-resident legal entity, whose activities do not lead to the formation of a permanent establishment in the Republic of Kazakhstan, are subject to corporate income tax at the source of payment without deductions. Calculation and withholding of corporate income tax on income taxed at the source of payment is carried out by the tax agent:
At the same time, CIT at the source of payment is withheld by the tax agent regardless of the form and place of payment of income to a non-resident.
at the following rates:
Income of a person registered in a state with preferential taxation included in the approved scroll are subject to taxation at the source of payment at the rate of 20 percent.
2. Individual income tax (IIT)
Income is subject to PIT at a rate of 10%, except for income in the form of dividends, which is taxed at a rate of 5%. Calculation, withholding and payment of tax on income taxed at the source of payment are made by tax agents.
3. Social tax
Payers of social tax are: individual entrepreneurs, private practitioners, legal entities-residents of the Republic of Kazakhstan, unless otherwise provided by the Tax Code, non-resident legal entities operating in the Republic of Kazakhstan through permanent establishments, non-resident legal entities operating through a structural unit that does not lead to the formation of a permanent establishment.
Social tax is calculated at the rate:
from January 1, 2018 - 9.5 percent;
from January 1, 2025 - 11 percent.
4. Value Added Tax (VAT)
The value added tax rate is 12 percent and is applied to the amount of taxable turnover and taxable imports.
Mandatory staging
Legal entities-residents, non-residents operating in the Republic of Kazakhstan through a branch, representative office, individual entrepreneurs, persons engaged in private practice are subject to mandatory registration for value added tax, if the amount of turnover for the purpose of registration for VAT exceeds during a calendar year 30,000 times the size monthly calculation indexestablished by the law on the republican budget and effective as of January 1 of the corresponding financial year ( 2,917 tenge from January 1, 2021 ).
These persons are required to submit to the tax authority at the location tax statement on registration accounting for value added tax.
A tax application is submitted no later than ten business days from the end of the month in which the excess of the turnover over the minimum turnover occurred in one of the following ways:
Registration as a taxpayer carrying out certain types of activities shall be subject to taxpayers carrying out the following activities:
Voluntary staging
Persons not listed above, i.e. not subject to mandatory registration for VAT in accordance with the Tax Code, have the right to register for value added tax by filing tax statement on registration accounting for value added tax in one of the following ways:
Are not entitled to voluntary registration for value added tax:
The Tax Code of the Republic of Kazakhstan establishes a list of goods (services), the turnover and import of which are exempt from VAT.
5. Excise taxes
The list of excisable goods, as well as the rates for calculating the amount of excise taxes, are specified in Articles 462-463 of the Tax Code of the Republic of Kazakhstan.
Objects produced on the territory of the Republic of Kazakhstan and imported into the territory:
1) all types of alcohol;
2) alcoholic beverages;
3) tobacco products;
4) products with heated tobacco, nicotine-containing liquids for use in electronic cigarettes;
5) gasoline (except for aviation), diesel fuel;
6) motor vehicles designed to carry 10 or more people with an engine capacity of more than 3000 cubic centimeters, with the exception of minibuses, buses and trolleybuses;
passenger cars and other motor vehicles intended for the transport of people with an engine capacity of more than 3000 cubic centimeters (except for cars with manual control or a manual control adapter specially designed for disabled people);
motor vehicles on the chassis of a passenger car with a platform for goods and a driver's cab, separated from the cargo compartment by a rigid stationary partition, with an engine capacity of more than 3000 cubic centimeters (except for cars with manual control or a manual control adapter specially designed for disabled people);
7) crude oil, gas condensate;
8) alcohol-containing medical products registered in accordance with the legislation of the Republic of Kazakhstan as a medicine.
Excise rates are set in absolute amounts per unit of measurement in kind. For example: 600 tenge / liter.
6. Rent tax
Payers: individuals and legal entities selling crude oil and crude oil products for export , with the exception of :
Crude oil and refined petroleum products are goods classified in subheading 2709 00 unified nomenclature of goods subject to foreign trade of the EAEU...
When exporting crude oil and crude petroleum products, the export rental tax is calculated based on the world price per barrel of crude oil as a percentage. For example: up to $ 20 per barrel - 0%; up to $ 200 per barrel - 32%.
7. Taxation of subsoil users
Special payments and taxes of subsoil users include:
Order assignment of a deposit (a group of deposits, a part of a deposit) to the category of low-profit, high-viscosity, watered, marginal and depleted, their scroll and order taxation in terms of mineral extraction tax are determined by the Government of the Republic of Kazakhstan.
8. Tax on property of legal entities and individual entrepreneurs
Property tax payers are:
A legal entity, by its decision, has the right to recognize its structural unit as an independent property tax payer.
The general tax rate is 1.5% of the average annual value of taxable items, however, the Tax Code of the Republic of Kazakhstan provides for other rates depending on the status and type of activity of the taxpayer.
Property tax at a rate of 0.5 percent to the tax base is calculated by the following payers:
Property tax of individuals, the tax base for which is determined in accordance with with article 529 of the Tax Code, calculated depending on the value of taxable items at the rates specified in article 531 of the Tax Code.
9. Land tax
Payers - individuals and legal entities with taxable objects:
The object of taxation is a land plot (with a common share ownership of a land plot - a land share). Tax rates are established in Articles 503-510 of the Tax Code of the Republic of Kazakhstan, depending on the purpose of lands, their location, etc.
In the Republic of Kazakhstan, there are:
Tax |
Payments |
|
|
For the purposes of applying international treaties, indirect taxes are value added tax and excise taxes.
Taxation of income of residents and non-residents
A resident of the Republic of Kazakhstan for tax purposes is:
1) an individual:
2) legal entity:
An individual is recognized as permanently residing in the Republic of Kazakhstan for the current tax period if he is in the Republic of Kazakhstan for at least one hundred and eighty three calendar days (including days of arrival and departure) in any consecutive twelve month period ending in the current tax period. The center of vital interests of an individual is recognized as located in the Republic of Kazakhstan if the following conditions are met simultaneously:
Residents of the Republic of Kazakhstan pay taxes in the Republic of Kazakhstan in accordance with the provisions of the Tax Code on income from sources in the Republic of Kazakhstan and abroad. Non-residents pay taxes in the Republic of Kazakhstan on income from sources in the Republic of Kazakhstan in accordance with tax legislation. Non-residents carrying out entrepreneurial activities in the Republic of Kazakhstan through a permanent establishment shall also pay taxes in the Republic of Kazakhstan in accordance with tax legislation on income from sources outside the Republic of Kazakhstan associated with the activities of such a permanent establishment.
Permanent establishment of a non-resident
In accordance with the Tax Code, unless otherwise established by an international treaty, a permanent establishment of a non-resident in the Republic of Kazakhstan is recognized as one of the following places of business through which a non-resident carries out business activities in the territory of the Republic of Kazakhstan, regardless of the timing of such activities:
I. PLACE:
If the place of provision of services or work is not indicated in one of the above-mentioned points, then the place of provision of services, performance of work in the territory of the Republic of Kazakhstan, through employees or other personnel hired by a non-resident for such purposes, is recognized as a permanent establishment of a non-resident, if activities of this nature continue in the territory Of the Republic of Kazakhstan more than one hundred and eighty three calendar days within any consecutive twelve month period from the date of commencement of entrepreneurial activity within the framework of one project or related projects.
If a non-resident carries out activities through a structural unit that does not lead to the formation of a permanent establishment in accordance with an international treaty governing the avoidance of double taxation and prevention of tax evasion, then the provisions of the Tax Code provided for a permanent non-resident institutions. At the same time, such a structural unit has the right to apply the provisions of an international treaty regulating issues of avoidance of double taxation and prevention of tax evasion.
Dependent agent
If a non-resident carries out business activities on the territory of the Republic of Kazakhstan through a dependent agent, then such a non-resident will be considered as having a permanent establishment in connection with any activity that the dependent agent carries out for this non-resident, regardless of the timing of such activities.
A dependent agent is an individual or legal entity who, on the basis of contractual relations , is authorized to represent the interests of a non-resident in the Republic of Kazakhstan, to act and (or) perform certain legal actions on behalf and at the expense of a non-resident, including concluding an agreement for the provision of services for a fee or playing a major role in concluding such an agreement or transferring ownership (right to use) property belonging to a non-resident on the basis of ownership (right to use), except when such activity is carried out by him within the framework of the customs a representative, a professional participant in the securities market and other brokerage activities, with the exception of the activities of an insurance broker and cases when such an agent acts exclusively or primarily on behalf of a non-resident.
II. The activities of a non-resident carried out in the territory of the Republic of Kazakhstan through a subsidiary established in accordance with the legislation of the Republic of Kazakhstan, leads to the formation of a permanent establishment of a non-resident, if the subsidiary is recognized as a dependent agent in accordance withparagraph 3 of Article 220 of the Tax Code of the Republic of Kazakhstan.
III. A non-resident forms a permanent establishment in the Republic of Kazakhstan when selling goods at exhibitions and fairs held on the territory of the Republic of Kazakhstan, if such sale lasts more than ten calendar days.
IV. The following types of non-resident's activities, which are exclusively preparatory or auxiliary in nature, are not part of the main types of business activities of a non-resident and last no more than three years, do not lead to the formation of a permanent establishment of a non-resident in the Republic of Kazakhstan:
Kazakhstan has one of the most competitive tax regimes in the region.
Comparison of the main tax rates in Kazakhstan, Russia and China
Tax |
Kazakhstan |
Russia |
China |
CIT |
twenty% |
twenty% |
25% |
VAT |
12% |
twenty% |
thirteen% |
Land tax |
$ 0.03- $ 0.16 / 1 m 2 |
0.3%, 1.5% |
- |
Property tax |
1.5% |
2.2% |
1.2% *, 12% ** |
Source: Ministry of Finance of the Republic of Kazakhstan, Federal Tax Service of Russia, State Administration of Taxation of the People's Republic of China
Currently, the Republic of Kazakhstan has 55 Conventions for the avoidance of double taxation and the prevention of tax evasion on income and capital, concluded with foreign states. Elimination of double taxation is a procedure when each of the contracting states provides the taxpayer with the opportunity to pay tax only once - in one of the contracting states. A complete list of Conventions is available on the official website of the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan.
More details: https://kgd.gov.kz/en/content/conventions-avoidance-double-taxation-and-prevention-fiscal-evasion-respect-taxes-income-and
National legislation
The tax legislation of the Republic of Kazakhstan is based on The Constitution Of the Republic of Kazakhstan, consists of the Law of the Republic of Kazakhstan "On taxes and other obligatory payments to the budget" (Tax Code), as well as regulatory legal acts, the adoption of which is provided for by the Tax Code.
On December 25, 2017, the President of the Republic of Kazakhstan signed and put into effect the New Tax Code, which was developed within the framework of the President's Address “Kazakhstan in a new global reality: growth, reforms, development” and the Plan of the Nation “100 Concrete Steps” to implement five institutional reforms. The most significant change is that the interpretation of all uncertainties and unresolved issues of tax legislation will be in favor of taxpayers. Also, the New Tax Code provides for the stimulation of the taxation regime for subsoil users and other sectors, an increase in the time for taxpayers to study the changes introduced to legislation during the year, and also simplified tax administration.
More details: https://kgd.gov.kz/en/content/tax-code-rk-2015