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, and subsequent amendments.
The following information on taxes in the territory of the Republic of Kazakstan is based on the legislation as of August 1, 1997.
INCOME TAXES ON CORPORATIONS
1. Rates
Taxpayers are legal entities that receive taxable income during the tax year. The taxable income is taxed at the rate of 30%, unless the primary means of production is land, in which case the rate of 10% applies.
2. Local Income Taxes
There are no local income taxes, although other local taxes do apply.
3. Capital Gains Taxes
Capital gains are included in taxable income and are taxed accordingly. There is no special rate of tax for capital gains.
4. Branch Profits Taxes
Branches are currently taxed in the same manner and at the same rates as resident corporations but are subject to an additional 15% tax levied on profits after income tax.
5. Foreign Tax Reliefs
To prevent double taxation, credit is given for foreign income taxes against income tax payable in Kazakstan. The credit is limited to the amount of tax that would have been assessed by Kazakstan on the income.
If a resident directly or indirectly owns authorized capital or voting shares of a foreign legal person (or other form of business entity) that derives income from a country with privileged taxation,?the income attributable to the Kazak entity is included in its taxable income, whether or not the income is actually received. A country with a privileged taxation is one in which:
q The rate of tax is less than 2/3 of the rate in Kazakstan; or
q There are
laws concerning confidentiality that allow the ownership of income or property to be kept secret.
6. Classification of Corporations
Corporations are classified for Kazak tax purposes as either resident or nonresident. A resident corporation is one established in accordance with Kazak legislation or having its place of actual management in Kazakstan.
7. Payment of Taxes
Advance tax payments should be paid to the Budget not later than the twentieth day of each month on the basis of the relevant tax rate and ?of the expected income tax for the tax year declared to the tax inspectorate.Income taxes paid outside Kazakstan should be taken into account when paying Kazak income tax.
Declarations of aggregate annual income and deductions made by legal entities should be presented to the tax authorities before March 31 of the year following the reporting year.
All legal entities carrying out activities through a permanent establishment are required to present to the tax authorities a tax return and an auditors confirmation of the reliability of the information in the declaration. Taxes should be paid within ten days of submission of the tax return but not later than April 10 of the year following the reporting year.
8. Other Matters
Foreign Income. Kazak-source income of a nonresident foreign legal entity that carries out activities in Kazakstan, other than through a registered permanent establishment and arising from the provision of services, is subject to withholding tax at source at the rate of 20%.
Dividends. Dividends are subject to a final withholding tax at the rate of 15%.
Interest. Interest payable to legal entities is subject to a final withholding tax at the rate of 15%. Interest payable to resident banks is not subject to withholding tax.
INCOME TAXES ON INDIVIDUALS
9. Rates
The taxable income will depend on whether the individual is resident or nonresident for tax purposes. Nonresidents are taxable on Kazak-source income only, and residents are taxable on worldwide income. A resident is an individual who stays in Kazakstan for 183 or more days within any continuous 12-month period that 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 nonresident would be exempt 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 (or entrepreneur) taxable income calculated as the difference between total annual income and certain specified deductions. Tax rates are as follows:
Amount
(Minimum Annual Wage) Tax
Up to 10 times&n
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