The definition of Kazakhstan-source income has been broadened to include income received for any type of operations or services that were previously assessed as a deduction for tax purposes from the income of a permanent establishment. In general, this means that services provided anywhere in the world may be subject to Kazakhstan withholding taxes if a Kazakhstan permanent establishment deducts expenses for such services.
From July 1,1998 through December 31,1998,VAT paid by a Kazakhstani taxpayer on goods and services provided in the state by a non-Kazakhstani taxpayer could be offset. This offset is no longer available, except for VAT paid to residents of certain countries with which Kazakhstan has treaties (predominately, praticipation CIS countries) that were in effect as of the end of 1998.
TAXES ON CORPORATE INCOME
The tax rate for corporations as of January 1998 is 30% and is based on a calendar year. All Kazakhstan legal entities and branches are subject to the income tax.
OTHER TAXES
Branch profits tax/Additional branch profits tax is 15%.
Value-added tax/The currenty VAT rate is 20%, with a few specific exemptions. This tax is applicable to the sales value of products and services and to imports. Exports are tax exempt.
Road fund levy/Before July 1998 a road fund levy was assessed at a rate of 0.5% of taxable turnover. Effective July 18, 1998 the tax rate became 0.1 percent of aggregate annual income. Recent changes made in the Tax Code, effective January 1,1999, recharacterized the road fund as a tax and increased the rate to 0.2% of aggregate annual income.
OTHER COSTS OF DOING BUSINESS
Royalty rates/Royalty rates are subject to negotiation by project.
Customs fees/A customs fee of 0.2% is levied on the fair market value of each item. In addition, depending on the applicable law, customs duties may be levied either per unit or as a percentage of the declared value. The list of items subject to customs duties is extensive.
Excise taxes/Excise taxes are levied either per unit or as a percentage o sales value (or custome value, for imported goods subject to excise tax), depending on the item.
TAX INCENTIVES
Tax incentives are available through double taxation treaties and individually negotiated foreign investment contracts.
WITHHOLDING TAXES
As of February 22,1999
RECIPIENT
DIVIDENDS INTEREST ROYALTIES
% % %
Nontreaty………………………………15 15 20
Treaty:
Azerbaijan……………………10 10 10
Belarus………………………15 10 15
Canada………………………5/15(1) 10 10
Germany……………………5/15(2) 10 10
Hungary……………………5/15(2) 10 10
India…………………………10 10 10
Italy………………………5/15(1) 10 10
Kyrgyzstan……………………10 10 10
Lithuania…………………5/15(2) 10 10
Netherlands………………5/15(1) 10 10
&n
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