Kazahkstan Tax & Business Guide - Deloitte

/Home/K-L Countries/Kazakhstan (Country Code 7)/Kazahkstan Tax Resources

Basic facts
Population 15.1m Inflation 7.5% (2005)*
Main languages Kazakh, Russian GDP per head US$3,386*
Currency Tenge (KZT) GDP growth 9.0% (2005)*
Economic communities Commonwealth of Independent States
GDP sources 8.1% agriculture, 38.3% industry, 53.6% services
*Economist Intelligence Unit.
Political environment

Kazakhstan is a presidential republic. The president controls the government and sets national policy priorities. In the presidential election held on December 5th 2005, the incumbent, Nursultan Nazarbayev, was re-elected. Pro-presidential parties were victorious in the September 2004 elections to the Majilis (the lower house of parliament), and presidential supporters also control the Senate (the upper house). Daniyal Akhmetov has been prime minister since June 2003.
Foreign trade and investment
Exports US$26.2bn (2005)* Imports US$16.4bn (2005)*
*Economist Intelligence Unit.

Leading export markets: Switzerland, Italy, Russia and China.

Major exports: Oil and gas condensate, and base metals.

Kazakhstan ranks 55th of 60 countries in the Economist Intelligence UnitÌs business environment rankings.

KazakhstanÌs trade regime is fairly open, but licensing requirements are still in force for some goods. There are many non-tariff barriers. The country intends to join the World Trade Organisation within the decade.

Foreign direct investment (FDI) focuses on KazakhstanÌs vast oil wealth. The government has introduced a range of incentives in an attempt to diversify the economy.
Business and financing
Business forms Limited-liability partnerships, joint-stock companies, branches

The limited-liability partnership is the most popular company form. Under the Civil Code adopted in 1995, additional organisational forms include full partnerships, limited/mixed partnerships and joint-stock companies. Foreign firms not wishing to establish a Kazakhstan legal entity may choose between a representative office and a branch office. Representative offices may not conduct income-generating business; branches may do so.

Foreign investors tend to borrow from their home countries, and oil company subsidiaries usually borrow from their parent companies. Kazakh companies are increasingly raising money through bond issues.
Labour environment
Unemployment rate 7.8% (2005)* Minimum wage KZT 9,200 (monthly)
*Economist Intelligence Unit.

The minimum wage was increased to KZT 9,200 from July 1st 2005.

Social payroll tax is paid on a regressive scale of 20Ò7% (foreign specialists on a lower 11Ò5% scale). In addition, contributions to private pension accounts are mandatory at 10% of salary on monthly income and are capped at KZT 69,000 a month. Expatriate employees are exempt from pension contributions.
Taxation
Corporate tax
Main rate 30%

Resident companies pay tax on their worldwide income; non-resident companies pay tax only on income sourced in Kazakhstan. A company is resident if it is established under the laws of Kazakhstan, or has its governing bodies or place of actual management there. The main corporate tax rate is 30%, but companies whose main productive asset is land are taxed at 10% on income from use of the land. A 0% rate applies to enterprises operating in special economic zones. In addition to corporate tax, branches of non-resident companies pay branch profits tax of 15% of net after-tax income.
Individual tax
Progressive rates to 20%

Resident individuals are taxed on their worldwide income; non-residents are taxed only on income sourced in Kazakhstan. An individual is considered resident if present in Kazakhstan for 183 days in a 12-month period ending in the relevant tax year. Income tax is charged at progressive rates to 20%. Dividends are subject to a final 15% withholding tax.
Capital gains
Generally taxed as income

Capital gains of companies are included in business profits. Capital gains of individuals derived from real property, other tangible assets, foreign currency and jewellery are taxed at the normal income tax rate. Gains derived by individuals on securities are not included in taxable income but are subject to tax at a 15% rate.
Indirect tax
VAT standard rate 15%

The standard rate of value-added tax (VAT) is 15%. Exports are zero-rated. Exemptions include the lease and sale of land and residential buildings, financial services, infrastructure projects for the Kazakh government and international transport. A reverse-charge mechanism applies for certain payments to non-residents. Registration for VAT is compulsory for businesses.
Tax administration and compliance
Tax year Corporations: calendar year; Individuals: calendar year

Legal entities are required to make monthly advance payments of tax amounting to one-twelfth of the expected tax liability for the year. An estimate of income tax for the current tax year must be submitted by January 20th. Tax returns are due by March 31st following the tax year-end. A revised estimate of tax payable must be submitted within 20 days after filing the tax return and no later than April 20th. Employment income is taxed by withholding. Individuals who have income not taxed by withholding must file a self-assessment tax return by March 31st and submit the tax due within ten days of filing the return.
Additional tax information
Withholding taxes Dividends and interest 15%, Royalties and most other income 20%.
Tax treaties Kazakhstan has concluded more than 30 double-tax treaties.
Dividends Dividends are subject to a 15% final withholding tax.
Revenue protection There are transfer-pricing and thin-capitalisation rules.
Groups There is no provision for group taxation.
Incentives Law on Investments; special economic zones.
Other taxes Customs duties, excise duties, rent tax on the export of crude oil and gas condensate, property tax, registration fees, social tax, stamp duty, fees for the state registration of rights to intellectual property, land tax, vehicle tax.