Basic taxes


Entrepreneurial activity of a foreign investor is usually subject to the following taxes and duties:

CIT payers are legal entities: residents and non-residents which conduct its business through permanent agency or earn income from Kazakhstan sources.

CIT rates: for income from production, processing and sale of agricultural products - 10 %;
for passive income (fees, winnings, dividends) - 15%;
for taxable income – 20%.

Taxable income is reduced:

Period for carrying forward losses: arising before 01. 01.2009 - 3 years;
arising before 01.01.2009 and relating to activity under subsoil use contracts - 7 years;
arising from 01.01.2009 – 10 years.

Advance CIT payments shall be calculated and paid by large business only which total annual income inclusive of adjustments for tax period preceding the previous tax period exceeds the sum equal to 325,000-fold monthly calculation index (644,150 thousand KZT for 2015) during a tax period.

CIT set off on advance payments and deductions from payment sources is carried for the following ten years to reduce CIT for those years.

The tax period is a calendar year from January 1 to December 31.

CIT Declaration is submitted to the local taxation authority no later than March 31 of the year following the accounting tax period.

Advance CIT payments shall be made to the budget no later than the 25th day of each month.

CIT payment: within 10 calendar days after the date set for submission of the declaration; for tax agents, by the place of location of the tax agent, within 25 calendar days after the end of month when the payment was made.

IIT payers: individuals having tax entities.

IIT deduction from payment sourceis made for: employee’s income; income of an individual from a tax agent; pension payment from saving pension funds; dividend, fees, winnings; scholarships; income under saving insurance contracts. Assessment and payment of tax from self-declared income (property and other income, individual entrepreneur’s income) is performed by a taxpayer on its own.

IIT rates for dividend income - 5 %;
for other income - 10 %.

Tax deductions (reduced tax base): standard tax deductions: minimum salary; property-related tax deductions: repayment of loan benefits received in the housing construction savings banks to carry out activities to improve living conditions; social tax deductions: sums of obligatory pension taxes, medical service costs, insurance premium costs.

IIT advance payments are not made.

Tax period:

from income taxable at the payment source – a calendar month; from income non taxable at the payment source – the calendar year from January 1 to December 31.

IIT Declaration:

submitted by a tax agent to the local taxation authority no later than on the 15th day of the second month following the accounting quarter; submitted to taxation authority by place of location (residence) for income not taxable at the payment source no later than on March 31 of the year following the accounting tax period.

IIT payment period:

for income taxable at the payment source by a tax agent – on income paid on or prior to the 25th day of the month following the month of payment by place of its location; for income not taxable at the payment source – no later than 10 calendar days set to submit ITT Declaration.

Income exempted from IIT:

Dividends under the simultaneous fulfillment of the following conditions: the taxpayer holds shares or proportions to contribution, on which the dividends are paid, for more than three years on the day of dividends’ accrual;
a legal entity paying the dividends is not a subsoil user during the period, for which the dividends are paid;
property of a person (-s) being a subsoil user (-s), in the value of assets of the legal entity, paying the dividends, does not exceed 50 per cent on the day of dividends’ payment.
The provisions of this subparagraph shall apply for dividends received from a resident legal entity in the form of: the income payable on the shares, including proportions to contribution, which are underlying assets of depositary receipts; the part of the net income divided by a legal entity among its founders and participants;
the income from the property division in case of liquidation of the legal entity or decrease of the authorized capital by the proportional reduction of the size of contributions of the founders, participants or by the full or partial repayment of proportions of the founders, participants, as well as by the withdrawal by the founders, participants of their proportions to contribution in the legal entity, with the exception of property contributed by the founder, participant as a contribution to the authorized capital.
At the same time the share of property of the person (-s) being a subsoil user (-s) in the value of assets of the legal entity paying the dividends shall be determined in accordance with Article 197 of the Tax Code.
For the purposes of this subparagraph, the subsoil user, being such only because of having the right for the extraction of underground water for his/her own needs, shall not be recognized subsoil user.
The provisions of this subparagraph shall not apply for dividends received from a legal entity, which produces a one hundred per cent reduction of the corporate income tax calculated in accordance withArticle 139 of the Tax Code, in case of accrual of such dividends for the period, which is included in the tax period, in which such a reduction is produced.

Taxpayers on mining are mining companies engaged in the extraction of oil, mineral resources, underground water and therapeutic muds, including the extraction of minerals from technogenic mineral formations within each particular signed contract on subsoil use.

Tax rates on mining:
on crude oil, including gas condensate, natural gas are established in fixed terms depending on the volume of annual oil production.

In case of sale and (or) transfer of crude oil and gas condensate in the domestic market of the Republic of Kazakhstan, the reduction factor of 0.5 is applied to the established rates.

On all kinds of minerals and mineral raw materials extracted from the non-commercial reserves of the deposit are paid at the rate of 0 per cent.

Tax rates on mining rare and rare earth metals (lithium, beryllium, tantalum, yttrium, strontium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium) are established by the Government of the Republic of Kazakhstan.

Tax period is a calendar quarter.

Terms of payment are at the location not later than the 25th day of the second month following the tax period.

Tax declaration on mining shall be presented by the subsoil user to the tax authority at the location not later than the 15th day of the second month following the tax period.

Taxpayers on excess profit are subsoil users by their activities carried out within each particular contract on subsoil use, with the exception of contracts on subsoil use of common minerals and underground water.

The object of taxation is the part of the subsoil user's net income, as defined for the purposes of calculating the excess profit tax that exceeds an amount equal to 25% of the residues of the subsoil user for the purposes of calculating the excess profit tax.

Tax period is a calendar year from the 1st of January to the 31st of December.

Tax payment date:
Excess profit tax shall be paid to the budget at the location of the taxpayer not later than the 15th of April of the year following the tax period.

Tax declaration on excess profit shall be presented by the subsoil user to the tax authority at the location not later than the 10th of April of the year following the tax period.

VAT payers: persons registered by VAT in the Republic of Kazakhstan - individual entrepreneurs; resident legal entities, with the exception of public institutions; non-residents operating in the Republic of Kazakhstan through a branch office; trust managers engaged in the sale of goods, works and services under the trust management agreements with the trustors or beneficiary parties in other cases of trust management; persons importing goods into the territory of the Republic of Kazakhstan according to the customs legislation of the Customs Union and (or) customs legislation of the Republic of Kazakhstan. Threshold for compulsory VAT registration: sales turnover is 30 000 times the monthly calculation index established by the law on the national budget and being valid on the 1st of January of the relevant financial year (KZT 59 460 000 for 2015).

VAT rates:
12% - on the amount of taxable sales volume and taxable imports; 0% - when exporting goods, international transportations, for sales volume of home-produced goods for taxpayers conducting its business in Kazakhstan under subsoil use contracts as per which the imported goods are exempted from VAT as well as sale of petroleum, oil, lubricants via airports when fueling foreign airplanes which make international flights, international air traffic; turnovers for the sale of goods completely consumed on the territory of the Free Economic Zone (FEZ); sales on the territory of SEZ "Astana - new city" of goods completely consumed in the process of construction and commissioning of infrastructure facilities, hospitals, policlinics, schools, kindergartens, museums, theaters, universities and secondary schools, libraries, schoolchildren’s palaces, sports complex, administrative and residential complexes in accordance with project estimates, under the list of goods determined by the Government of the Republic of Kazakhstan, in case of sales by taxpayers engaged in the extraction and (or) production of gold to the National Bank of the Republic of Kazakhstan of fine gold from raw materials of their own production for the replenishment of assets in precious metals.

The following transactions are exempted from VAT: related to land and residence buildings; financial services, non-profit organization services; services and works related to culture, science and education; services in the field of formation of autonomous organizations of education; goods and services in the field of medical and veterinary activities, the place of sale for which is the Republic of Kazakhstan; state indicia, excise stamps (accounting and control stamps intended for marking excisable goods); services provided by the authorized public authorities, in connection with which the state duty is charged; property purchased for the state needs; fixed assets, real estate investments, intangible and biological assets transferred free of charge to the public institution or the state-owned enterprise; ritual services of funeral homes, cemeteries and crematoria services; lottery tickets, with the exception of services for their distribution; services to provide informational and technological interaction between the participants of settlements, including the provision of services for the collection, processing and mailing of information to the participants of settlements of transactions with payment cards and electronic money; works and services related to international transportation; services for the management, maintenance and exploitation of housing stock; banknotes and coins of the national currency; goods, works and services, with the exception of turnovers for the sale of goods, works and services from trading and intermediary activities and turnovers for the production and sale of excisable goods, public associations of disabled persons, as well as industrial organizations; works and services on free repair and (or) maintenance of goods; refined precious metals - gold, platinum made of raw materials of its own production; investment gold; services provided for the implementation of notarial acts, advocacy; borrowings in cash on terms of payment, urgency and repayment carried out by the national management holding, legal entities, 100 per cent of the voting shares of which belong to the national managing holding company; non-resident services provided by a grant under the intergovernmental agreement, the participant of which is the Republic of Kazakhstan, aimed to support (provide assistance) to needy citizens in the Republic of Kazakhstan; scrap and waste of ferrous and non-ferrous metals; tour operator services for inbound tourism; turnovers for the sale of goods produced on the territory, where the customs procedure of free warehouse is applied and sold from this territory to the rest of the territory of the Republic of Kazakhstan according to the list approved by the Government of the Republic of Kazakhstan.

Import of the following goods is exempted from VAT:
- banknotes and coins of national and foreign currencies as well as securities;
- goods imported by individuals according to the principles of duty free importation;
- goods except for excisable ones imported as humanitarian aid, charity; - goods imported for official use by foreign diplomatic and equivalent representative offices;
- goods subject to declaration according to the customs laws of Kazakhstan;
- medicines of any forms, medical goods and medical equipment; - investment gold;
- pharmaceuticals used (applied) in the veterinary field;
- products for veterinary use and veterinary equipment, surdo- and typhlo equipment, including prosthetic and orthopedic devices, special vehicles provided to disabled persons;
- materials, equipment and components for the production of all forms of pharmaceuticals, medical (veterinary) products, including prosthetic and orthopedic devices, and medical (veterinary) equipment, postage stamps (with the exception of collectible ones);
- raw material for production of currency notes performed by the National Bank of Kazakhstan and its institutions;
- goods by grants provided by states, governments and international organizations;
- religious items imported by religious associations registered in judicial authorities of the Republic of Kazakhstan.

The procedure for exemption of goods import from VAT was set by the Decree of the Government of Kazakhstan dated December 23, 2008 No. 1229.

VAT tax period is a calendar quarter.

VAT Declaration is submitted to the local taxation authority for each tax period no later than the 15th day of the second month following the accounting tax period.

VAT payment date:
no later than the 25th day of the second month following the accounting tax period;
for imported goods – on the day set by the customs laws of Kazakhstan for customs duties.

VAT return:
VAT excess is also to be reimbursed within 180 calendar days and according to sales volumes taxable at a zero rate amounting to over 70% in the total taxable volume, reimbursement is performed within 60 calendar days after submission of the VAT Declaration.

Simplified procedure is provided to reimburse VAT excess: within 15 business days from the last date set by the Tax Code (including the extension period) for submission to the tax authority of the VAT declaration for the tax period, in which the requirement for the refund of excess VAT is specified, – to the VAT payers as follows:

1) those, being monitored by large taxpayers for at least twelve consecutive months, and who do not have unliquidated tax obligations on tax reporting presentation on the date of the VAT declaration, with the requirement for the refund of excess VAT.

An excess VAT in the amount of no more than 70 per cent of the excess VAT formed for the reporting tax period shall not be subject to the refund in a simplified manner.

1-1) autonomous organizations of education specified by paragraph 1 of Article 135-1 of the Tax Code that do not have unliquidated tax obligations on tax reporting presentation on the date of the VAT declaration, with the requirement for the refund of excess VAT.
Monitoring of Large Taxpayers

According to the Tax Code, the largest taxpayers that have the highest total annual income exclusively of adjustment are to be monitored. Therewith, the restrictions have been set to consider persons which total book values of all assets are lower than 325,000-fold monthly calculation index year end when the list of large taxpayers is to be approved are to be monitored and number of workers is less than 250 persons as the large taxpayer.

This restriction does not cover a trustee (operator) and (or) subsoil user specified in production sharing agreement signed between the Government of Kazakhstan or the competent authority and a subsoil user before January 1, 2009 and undergone compulsory tax analysis.

Payers: legal entities having tax entities beneficially owned, on the basis of permanent land use, on the basis of primary free temporary land use, structural subdivisions of legal entities by the decision of the parent organization.

Tax base: plot of land area.

Tax rate: per 1 hectare or square meter, depending on the quality of the land estimated in points of land capability or type of settlement, respectively.

Payers: legal entities having tax entities beneficially owned, on the basis of economic control rights or of operational management in Kazakhstan, individual entrepreneurs having beneficially owned tax entities in Kazakhstan used in entrepreneurial activity, a concessionaire having a tax entity being concession entity on the basis of ownership according to Concession Contract, departments of legal entities as decided by parent organization, lessee according to the entities placed under finance lease, management company of investment fund according to tax entities included into the assets of such fund.

The tax base: an average annual carrying amount of tax objects determined on the basis of accounting data. In the absence of the average annual carrying amount of concession objects, the tax base is the value of such objects defined in the manner established by the Government of the Republic of Kazakhstan.

On tax objects of individual entrepreneurs and legal entities specified in subparagraph 1-1) of paragraph 1 of Article 396 of the Tax Code, the tax base is established in the amount of long-term receivables, determined in accordance with the International Financial Reporting Standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting as of January 1 of the tax reporting period; on tax objects of individual entrepreneurs that do not carry out accounting and financial reporting in accordance with the legislation of the Republic of Kazakhstan on accounting and financial reporting, the tax base is the total cost of their acquisition, production, construction, assembling, installation, and the cost of reconstruction and modernization.

The tax object: buildings and structures related to those, according to the classification established by the authorized public authority in the field of technical regulations, and taken into account as fixed assets or real estate investments in accordance with the International Financial Reporting Standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

buildings related to those, according to the classification established by the authorized public authority in the field of technical regulations, and parts of such buildings transferred to individuals on long term leasing agreements, taken into account in accordance with the International Financial Reporting Standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting as long-term receivables;

buildings and structures, which are the concession objects, dispossess, rights to use for which are transferred under the concession agreement;

for individual entrepreneurs that do not carry out accounting and financial reporting in accordance with the legislation of the Republic of Kazakhstan on accounting and financial reporting, tax objects are buildings and structures related to those according to the classification established by the authorized public authority in the field of technical regulations, which are on the territory of the Republic of Kazakhstan, and which are fixed assets in accordance with subparagraph 7) of Article 60-1 of this Code.

Rates:
1.5 % of the tax base for legal entities; 0.5 % of the tax base for legal entities applying a special tax regime on the basis of the simplified declaration and individual entrepreneurs; 0.1% for non-profit organizations, agencies conducting its activity in the following: social sphere, library service, state certification of scientific personnel; facilities of reservoirs, waterworks facilities and other environment-oriented water facilities; facilities of hydro land reclaiming systems; facilities of domestic water supply, management companies of special economic zones - on the objects of taxation within five tax periods, including the tax period, in which the tax obligation arose on the appropriate object; for technological parks on the objects used in the implementation of the main type of activities stipulated by the legislative act on state support for industrial innovation; a legal entity that meets the requirements of the second paragraph of paragraph 1 of Article 135-3 of the Tax Code, on the facilities of the international specialized exhibition located on the territory of the international specialized exhibition.
Coefficient 0% for the organizations located on the FEZ territory and used in the implementation of the activities provided for the FEZ territories, autonomous organizations of education.

Payers: legal entities, its departments having tax entities beneficially owned, on the basis of working management and economic control, structural subdivisions of legal entities by the decision of the parent organization.
Tax rate: set multiple to MCI or in percents of monthly calculation index, depending on the type of vehicle and its specifications, the date of importation into the territory of the Republic of Kazakhstan, the date of production (manufacturing and assembly) in the Republic of Kazakhstan.

Obligatory pension taxes at a rate of 10% of income of local employees shall be deducted and transferred to pension funds on a monthly basis. Monthly income exceeding 75-fold MMW[1] (approximately USD 8,615) is not subject to obligatory pension deductions. Obligatory pension deductions are ensured with a view of an individual income tax and social tax.

Social deductions are set at a rate of 5% and shall be paid by an employer according to income paid to an employee. Monthly income which exceeds the sum of ten-fold MMW (approximately USD 1,149) is not taxable in terms of social deductions. Also, individual entrepreneurs pay social deductions. Rate of social deductions for individual entrepreneurs is 5% as well. This rate is applied to MMW.
[1] MMW – minimal monthly wage. In 2015, the size of the MMW will be 21,364 tenge (~115 USD).

Source: Tax Code of the Republic of Kazakhstan



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