Tax legislation in the Republic of Kazakstan is constantly evolving as part of the development of a young sovereign State.
The key changes in the tax legislation are provided in the Edict of the President of the Republic of Kazakstan "Concerning Taxes and Other Obligatory Payments to the Budget" which became effective July 1, 1995, as amended with effect from 1 January , 1996.
The following information on taxes operating in the territory of the Republic of Kazakstan is based on the legislation as at 1 August, 1996.
INCOME TAXES ON INDIVIDUALS
The taxable income will depend on whether an individual is resident or non-resident for tax purposes. Non-residents are taxable on Kazak-source income only, and residents are taxable on world-wide income. A resident is an individual who stays in Kazakstan for 183 or more days within any continuous 12 month period which begins or ends in a fiscal year, or serves the Government of Kazakstan abroad.
There is no minimum period of stay in Kazakstan in which a non-resident would be exempted from tax in accordance with the legislation. A business trip in Kazakstan of even one day could, under the current legislation, give rise to a Kazak tax liability.
The tax base is the individual's (or entrepreneurial's) taxable income calculated as the difference between total annual income and certain specified deductions. Tax rates are as follows:
Amount Tax (Minimum Annual Wage) Up to 10 times 5% of wages 10 - 20 times Tax on 10 times min. calculation ratio plus 10% on excess 20 - 30 times Tax on 20 times min. calculation ratio plus 15% on excess 30 - 40 times Tax on 30 times min. calculation ratio plus 20% on excess 40 - 50 times Tax on 40 times min. calculation ratio plus 30% on excess 50 + times Tax on 50 times min. calculation ratio plus 40% on excess
Effective August 1, 1996 the monthly calculation ratio is 460 tenge per month (approximately U.S. $7). Income tax is calculated and payable in tenge.
Interest and dividends paid to individuals are taxable at the source of payment at the rate of 15%. Payments by Kazak entities to non-resident individuals for certain services are subject to withholding tax as follows.
- Dividends and Interest: 15%
- Insurance payments, payable on insurance agreements: 5%
- Telecommunication or transportation services: 5%
- Royalties, services income including management services, consulting, rent payments and other income (e.g. income from lotteries, casinos): 20%
Local Income Taxes
There are no local income taxes.
Capital Gains Taxes
There are no capital gains taxes. Capital gains are treated as part of income for the purpose of income tax.
Foreign Tax Reliefs.
For both residents and non-residents, relief is provided for foreign tax paid in the same way as for a resident legal entity.
The tax year for both legal persons and individuals runs to 31 December of each year. A tax return must be submitted by the individual in Kazakstan before 31 March of the year following the reporting fiscal year. The tax return must be signed by the taxpayer or his legal representative.
The method of tax payment is dependent on the source of income. Salary paid from Kazak sources is subject to deduction of income tax at source at the time of payment. If salary is paid from offshore, in case of a Kazak citizen, tax must be paid before the twenty of the month following the month of payment. For payments from offshore to a foreign national, tax must be paid at the time of submission of the tax declaration.
The following types of income are not subject to taxation:
- Expenses for business travel within limits set by the Government of the Republic of Kazakstan.
- Contributions to the State Social Security Fund and to the State Employment Fund
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Jonathan Wale or Zaid Sethi on tel: +7 3272 622 101 or enter a text search 'Coopers & Lybrand' and 'Business Monitor'.