Taxation in Kazakhstan

Corporate income tax payers are i) legal entities incorporated under the laws of Kazakhstan (residents), and ii) legal entities incorporated abroad (non-residents) a) doing business in Kazakhstan through permanent establishments or b) earning income from sources in Kazakhstan.

Residents are taxed on their worldwide income at the rate 30% with allowed deductions (in certain cases foreign tax relief is possible). On top of the 30% income tax, net profit of non-residents doing business in Kazakhstan through a “permanent establishment” (branch, representative office, etc.) is subject to a 15% net profit tax.

The following withholding tax rates apply to income from Kazakhstan sources where such income is not attributable to a non-resident's permanent establishment in Kazakhstan:

These rates may be reduced if the recipient of income is a resident of a country participating in a double tax treaty with Kazakhstan (for example, double tax treaty with PRC reduces tax on dividends to 10%).

Such withholding tax has to be withheld by Kazakhstani payers of income acting as “tax agents”.

Value-Added Tax (“VAT”)

VAT is imposed i) on supply of goods or services, if the place of such supply is in Kazakhstan and ii) on the import of goods.

The current VAT tax rate is 13% on taxable turnover and taxable imports. A zero VAT rate applies to export, turnover of precious metals by residents, international shipments, sale of goods in “special economic zones” and certain other cases. Specific turnover and import (such as contributions to a charter capital, property sold through privatisation of state property and others) are exempt from VAT.

VAT payers are legal entities-residents, individual entrepreneurs, non-residents doing business in Kazakhstan through permanent establishments (structural subdivisions may be recognised as independent payers of VAT by state bodies). Payers of the VAT on imported goods are importers of goods into the territory of Kazakhstan.

Social Tax is payable by the employer. The social tax base includes the gross remuneration of local and foreign personnel. Social tax is computed on a regressive scale from 13% to 5%.

Exercise duty applies to the sale and importation of the following products: alcohol, tobacco, petrol (except for aviation fuel), diesel fuel, motor vehicles, crude oil and gas condensate, and certain types of activities such as gambling business, organisation and conduct of lotteries.

Property Tax is calculated at a tax rate of 1% (applicable to legal entities) of the average annual net book value of depreciable assets including intangible assets, but excluding vehicles and land. Certain taxpayers are taxed at reduced tax rates (e.g. individuals entrepreneurs are taxed at 0.5%).

Vehicle Tax applies to owners of vehicles and depends on the type of a vehicle, a vehicle's engine capacity and a vehicle's year of production. Vehicle tax is paid annually not later than 1 July of the current year.

Land Tax is collected annually from legal entities and individuals that own land, have a land plot under right of permanent or temporary land use. The amount of tax varies depending on the area of a land plot, its quality and purpose. The Tax Code sets the same land tax rates for both individuals and legal entities. Legal entities are required to calculate the land tax payment and pay in quarterly, and make a final payment of the actual land tax by April 10 of the year following the reporting year.

Subsoil Users Taxation

Generally, there are two models of taxation regimes for subsoil users. The first model provides for payment of all taxes and mandatory payments under applicable tax legislation. The second model applies to subsoil users acting on the basis of a Production Sharing Agreement (PSA) with the Republic of Kazakhstan and exempts such subsoil users from payment of certain taxes in exchange of share in production. Special subsoil use taxes (applicable to the first model) include signing and commercial discovery bonuses, royalties, excess profit tax, special payments of subsoil users.