SIGNIFICANT DEVELOPMENTS
In 1998, there were significant changes in a few areas of Kazakhstan taxation. Specifically, the Kazakhstan definition of Kazakhstan source income was broadened to include ＂…income received for any types of operations(services) when it is assessed as a deduction of a permanent establishment…in Kazakhstan…＂This generally means that any services provided any place in the world may be subject to Kazakhstan withholding taxes if a Kazakhstan permanent establishment takes a deduction for the expense.
Also, from July 1,1998 through December 31,1998, an offset was available for VAT paid by a Kazakhstan taxpayer on goods or services provided in Kazakhstan by a non-Kazakhstan taxpayer. This was repealed, with the exception of VAT paid to certain countries with international agreements(predominately, participating CIS countries)at the end of 1998.
TERRITORIALITY AND RESIDENCE
Individuals are classified as nonresidents and are subject to taxation on their Kazakhstan-source income if they have been resident in Kazakhstan for less than 183 days in any 12-month period. They are classified as residents and subject to taxation on their worldwide income if they remain in Kazakhsatan for 183 days or more in any 12-month period, subject to double taxation treaty.
GROSS INCOME
Employee gross income/All types of direct and indirect income are included in taxable compensation. There are no concessions to shout-term residents.
Capital gains and investment income/Capital gains are taxed as regular income.
DEDUCTIONS
Business deductions/There are no business deductions allowed for employees. An individual may claim business deductions if registered as an entrepreneur. However, in practice foreign entrepreneurs are not granted the patent to operate a business as an individual.
Nonbusiness expenses/ There are no deductions for nonbusiness expenses.
Personal allowances/These allowances take the form of deductions(currently approximately US$92) per dependent.
Tax credits/No credits are available to short-term residents.
OTHER TAXES
Social security taxes/Effective as of January 1,1999, social security contributions have been restructured and now take the form of tax payments to the State Budget. These payments amount to 21% of gross income, plus 1.5% of gross income as a levy for social support, plus 10% of gross income to the Accumulated Pension Fund for Kazakhstani citizens, for a total of 32.5%. these are employer payments. There is no employee obligation.
Social tax/A social tax on the foreign labor force has been introduced. The tax amounts to approximately US$40 to US$80 per month.
Additional local taxes on income/There are no additional local taxes on income.
TAX ADMINISTRATION
Returns/Taxable years other than the calendar year are not permitted.
Tax returns are due on or before March 31 of each year following the tax year for which tax is due. If this date should fall on a weekend, the interpretation from the tax authorities is that the return would be due the Monday after the deadline. Any additional tax amounts required to be paid should be transferred within 10 days of filing the return, but not later than April 10.
If an individual leaves Kazakhstan permanently during a tax year, their tax return is due before or on departure.
The tax return requires basic information such as name, number of dependents and other relevant data, as well as the taxpayer's taxable income amounts. Finally, the return reflects the appropriate amount of the tax liability.
Payment of tax/Depending on the circumstances of the employment, either taxes should be withheld by the employer or advance payments of estimated tax should be made quarterly by the individual.
TAX RATES
The 1998 and 1999 individual rates are graduated, with indexed brackets taxed at rate ranging from 5% to 30%.
INDIVIDUAL TAX CALCULATION
Assumptions
1. Nonresident.
2. Annual salary-US$80,000.
3. Bonuses-US$2,000(assumes Kazakhstan-source income).
4. Living allowance-US$1,000(assumes Kazakhstan-source income).
5. Personal exemptions-Three dependents.
6. No tax credits or nonbusiness expenses.
7. Tax is paid by the individual.
Tax computation
Annual salary in ………………………………………………US$ 80,000
Bonuses………………………………………………………… 2,000
Living allowance……………………………………………… 1,000
Total income in 1998………………………………………… US$ 83,000
Exchange rate: US$= Ts83.8
Total amount of income in 1998……………………………… T 6,955,400
Less-Annual allowable deduction…………………………… 30,960
Taxable income……………………………………………… T 6,924,440
Amount of tax ………………………………………………
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