Taxation in Kazakhstan
The main legal act establishing and regulating taxation in Kazakhstan is the Code of the Republic of Kazakhstan On Taxes and Other Obligatory Payments to the Budget (the “Tax Code”). The Tax Code was adopted on 10 December 2008 and came into effect as of 1 January 2009.
Kazakhstan declared its sovereignty as a member of the USSR in October 1990, and following the dissolution of the Soviet Union the country declared independence in December 1991. The first piece of Tax Legislation of the sovereign republic was the 1991 decree “On Taxes from Enterprises, Associations and Organizations”.
In 1995 the President issued a Decree “On Taxes and Other Obligatory Payments to the Budget" (the “Decree”), which regulated the tax system in Kazakhstan. The Decree only provided for general information on taxes and referred to several instructions which provided for specific information on each of the taxes.
In 2002 the Code of the Republic of Kazakhstan On Taxes and Other Obligatory Payments to the Budget (the “2002 Tax Code”) came into force. The 2002 Tax Code was a more comprehensive legal act than the Decree. In fact, the 2002 Tax Code regulated the relationships between the state and the taxpayer and provided for procedures on calculation and payment of taxes.
In 2008 the President announced that the Republic of Kazakhstan requires a new tax code, which should provide for lower tax rates and simplified tax administration procedures. As a result, the Code of the Republic of Kazakhstan On Taxes and Other Obligatory Payments to the Budget (the “Tax Code”) was adopted on 10 December 2008 and came into force as of 1 January 2009.
Types of Taxes
|Corporate income tax||The corporate income tax rate amounts to 20% in 2010, both for resident legal entities and non-resident legal entities operating in Kazakhstan through a registered permanent establishment (for non-residents also see branch profit tax below).|
|Value added tax||The value added tax rate is 12% and applies to sales turnover in Kazakhstan and to imports of goods and services to Kazakhstan. The turnover threshold for registering as a value added tax payer is KZT 38,190,000 or, approximately EUR 195,000. Export of goods is subject to 0% value added tax rate.|
|Personal income tax||Personal income tax is 10% for residents and 15% for non-residents.|
|Social tax||The social tax rate is paid by legal entities and amounts to 11% of salaries and in-kind benefits of employees.|
|Branch profit tax||A branch profit tax of 15% has to be paid on the net income after corporate income tax of permanent establishments of foreign legal entities operating in Kazakhstan.|
|Income tax withheld at source of payment||Income tax withheld at source of payment is levied on the income of non-residents from Kazakhstani sources. The tax rate is currently 15% in most cases. For residents of “tax havens” the tax rate is 20%. A lower tax rate of 5% applies to income from insurance premiums payable in accordance with reinsurance risk agreements and to income from international transportation services|
|Property tax||Property tax applies only to the buildings and the tax rate is 1,5% for legal entities.|
|Excise||Excise tax applies to alcohol (up to EUR 3 per liter), liquors (up to EUR 2,5 per liter), tobaccos (up to EUR 0,5 per piece), gasoline (up to EUR 25 per ton), crude oil (EUR 0 per ton), gas condensate (EUR 0 per ton) vehicles with engine volume of over 3 liters (EUR 0,5 per cubic centimeter of engine volume) produced in Kazakhstan or imported to Kazakhstan.|
|Rental tax on exports||The rental tax applies to export of crude oil, gas condensate and coal. The tax rate depends on the market price of crude oil and gas condensate (from 0% when the market price of one barrel is USD 20 to 32% when market price for one barrel is USD 200 or higher).|
|Subsurface use taxation||The subsurface use taxes include signature bonus and commercial discovery bonuses, payments to compensate historic costs, tax on the production of minerals and an excess profit tax.|
|Vehicle tax||The vehicle tax is levied based on engine volume, vehicle weight or quantity of seats.|
|Land tax||Land tax applies to legal entities possessing plots of land or the right to use them.|
|Other taxes, state fees and dues||Other taxes include among others special taxes for gambling businesses. The state further levies different kinds fees on registration, licensing, environment pollution, for the use of water resources, forests etc.|