Almaty

Taxation in Almaty, Kazakhstan

What are the tax rates in Almaty, Kazakhstan? How are corporations taxed? Here’s Teleports overview of personal, corporate and other taxation topics in Almaty, Kazakhstan.

Personal taxation in Almaty

Effective personal income tax rate

Annual income$25,000$40,000$80,000$125,000$200,000
Rate10%10%10%10%10%

Teleport city rankings for personal income tax

Personal taxation puts Almaty in position 8 of all Teleport Cities.
WORSTBEST

Basis

Resident individuals are taxed on worldwide income. Nonresidents are taxed only on their Kazakh-source income.

Residence

Tax residence is based on whether an individual is permanently residing in or has his/her center of vital interests in Kazakhstan. The permanent residence test is based on the number of days of presence in Kazakhstan: a foreign individual is deemed to be a resident if he/she is present in Kazakhstan no less than 183 days in any consecutive 12-month period ending in the reporting tax year. The center of vital interests test is based on whether an individual is a citizen or a holder of a Kazakh residence permit and has family and a place of abode in Kazakhstan.

Filing status

Joint filing is not permitted; each individual must file his/her own return, if required.

Rates

Employment income is taxed at a flat rate of 10% for both residents and nonresidents. Dividends are taxed at 5% for residents. Dividends and capital gains are taxed at 15% for nonresidents. Other income is taxed at 10% for residents and 20% for nonresidents.

Deductions and allowances

Standard monthly deductions are allowed for tax residents, such as a minimum monthly salary deduction (KZT 22,859 per month) and deductions for obligatory pension fund contributions, medical costs, etc., with certain limitations.

Taxable income

Kazakh-source income includes income from employment and other activities in Kazakhstan and any other benefits received in this respect, regardless of where payment is made. Taxable income is comprised of employment income (including benefits in kind), income from a business and passive income.

Capital gains

Income derived from the sale of property is treated as capital gains subject to taxation unless the individual has held the property for more than one year. Subject to certain exceptions, income derived from the sale of shares of participations and securities is treated as capital gains subject to taxation. Income in the form of capital gains is taxed at the rate generally applicable to the individual.

Other taxes on individuals

Real property tax

Property tax is levied on immovable property located in Kazakhstan at progressive rates, depending on the value of the property. The applicable rate of taxation varies from 0.05% to KZT 2,946,600 + 2% of (property value minus KZT 450 million).

Penalties

Penalties apply for late payment of taxes, and administrative fines are imposed for noncompliance.

Filing and payment

Individual income tax on employment income is subject to withholding, payment and reporting by the employer. Payment is due by the 25th day of the month following the month in which the income was paid. Income and tax should be reported on a quarterly basis by the 15th day of the second month following the reporting quarter.

Social security

See under “Other taxes on corporations,” above. Compliance for individuals:

Corporate taxation in Almaty

Teleport city rankings for corporate income tax

Corporate taxation puts Almaty in position 38 of all Teleport Cities.
WORSTBEST

Basis

Resident companies are taxed on worldwide income. Nonresidents generally are taxed only on Kazakhstan-source income.

Taxation of dividends

Dividends received (other than from risk investment funds, which are exempt if certain criteria are satisfied) are effectively exempt from income taxation.

Residence

A company is considered to be a Kazakh tax resident if it is established under the laws of Kazakhstan or if its governing body/place of actual management and control is located in Kazakhstan.

Losses

Operating losses generally may be carried forward for up to 10 years following the year in which the loss is incurred. The carryback of losses is not permitted.

Incentives

Certain incentives are available in the form of accelerated tax deductions for capital expenditure, provided certain requirements are met. There also are incentives for investments in priority economic sectors relating to business in special economic zones, and investments in qualifying investment priority projects. In addition, special tax regimes/incentives are available for qualifying nonprofit organizations and organizations operating in social spheres.

Rate

The main corporate income tax rate of 20% applies to domestic and foreign companies.

Surtax

A surtax exists in the form of an excess profit tax levied on subsurface users.

Foreign tax credit

A credit generally is available for foreign taxes paid on foreign-source income, based on documentation confirming the foreign income tax payment.

Taxable income

Entities are subject to corporate income tax on trading profits and other taxable income. Expenses that are wholly and exclusively incurred for business-related purposes and that are supported by appropriate documentation may be deducted against income.

Capital gains

Capital gains are treated as normal income and taxed at the standard tax rate. Certain categories of capital gains (including gains derived from the sale of shares that principally do not derive their value from subsurface use property) are exempt if certain conditions are satisfied.

Other taxes on corporations

Stamp duty

No standalone stamp duty regime exists. However, the authorities may impose a levy on various legal actions, such as the issuance of documents by state bodies.

Social security

The employer must pay social security contributions to the State Social Security Fund at an effective rate of 5% (with an income cap of KZT 228,590), in addition to local employees’ salaries. Any social contributions paid ultimately reduce the amounts of social tax due (see under “Payroll tax,” above).

Other

Corporate taxpayers undertaking licensed activity to extract mineral resources in Kazakhstan are subject to a specific subsurface user taxation regime, which includes the excess profit tax (see under “Surtax,” above), mineral extraction tax and rent tax on exports, in addition to bonuses payable upon signature of license agreements and upon confirmation of commercial discoveries.

Payroll tax

An employer is required to remit social tax at a flat rate of 11%, applied to an employee’s gross salary (both local and foreign), at its own expense.

Real property tax

Property tax is levied on immovable property located in Kazakhstan at progressive rates ranging from 0.1% to 1.5%, depending on a taxpayer’s activities.

Other taxation in Almaty

Value added tax

Filing and payment

Payment is due by the 25th day of the second month following the reporting quarter. VAT and related turnover should be reported on a quarterly basis, by the 15th day of the second month following the reporting quarter.

Rates

The standard rate is 12%. Certain exemptions exist for exports and for financial and other transactions.

Taxable transactions

VAT is levied on the supply of goods and services and on imports. A reverse charge applies in certain cases.

Registration

Registration is compulsory for companies whose turnover exceeds KZT 63,630,000 in a calendar-year period. Otherwise, registration is optional.

Anti-avoidance rules

Transfer pricing

The Kazakh transfer pricing regime adopts the arm’s length standard and includes reporting requirements. A framework for advance pricing agreements is included in the domestic legislation.

Penalties

Penalties are assessed at 2.5 times the official refinancing rate established by the national bank for each day of delay in paying the tax due.

Thin capitalization

The deduction of interest generally is limited by reference to either the lower of the market rate or a specific debt-to- equity formula provided by the tax authorities. Excess interest paid is not recharacterized as a deemed dividend.

Rulings

The tax authorities generally issue nonbinding rulings of an explanatory nature. Advance pricing agreements also are possible.

Filing requirements

The corporate income tax return is due by 31 March of the year following the reporting tax year. A one-month extension may be obtained for electronically filed tax returns.

Consolidated returns

Consolidated returns are not permitted; each company must file a separate return. However, nonresidents with several PEs in Kazakhstan may opt to file a consolidated tax return.

Controlled foreign companies

CFC rules apply to residents with at least a 10% shareholding in a tax haven entity. The government has issued a list of tax haven jurisdictions. Kazakh residents holding shares in CFCs are required to include their proportionate shares of CFC profits in aggregate annual income.

Investment basics

Foreign exchange control

Payments between residents and nonresidents may be made in any currency. Certain transactions may be subject to the national bank’s notification or registration regime.

Accounting principles/financial statements

Large entities and public companies in Kazakhstan must use IFRS, while small and medium-size enterprises, branches and representative offices of foreign entities may use IFRS or national financial reporting standards.

Principal business entities

Principal forms of business include the joint stock company, limited liability company, partnership, branch and representative office of a foreign corporation.

Withholding tax

Dividends

A withholding tax of 15% is levied on dividends paid to nonresidents without a permanent establishment (PE) in Kazakhstan. A 20% tax rate applies to dividends paid to nonresidents registered in a tax haven jurisdiction. The tax rate may be reduced in line with the corresponding provisions of an applicable tax treaty in force with Kazakhstan.

Branch remittance tax

A net profit tax applies. A PE of a nonresident foreign company is subject to a net profits tax of 15% on net after-tax income (unless the rate is reduced under a tax treaty), in

Technical service fees

Technical service fees paid to nonresidents without a PE in Kazakhstan are subject to withholding tax. In the event that the services in question are classified as royalties, a 15% tax rate would apply, as stated above. If fees paid are classified as income of a nonresident from the provision of general technical services, a 20% rate applies under domestic tax law. A 20% rate applies to technical service fees paid to a nonresident registered in a tax haven, regardless of the nature of services provided.

Interest

A 15% withholding tax is levied on interest paid to nonresidents without a PE in Kazakhstan. Interest paid to nonresidents registered in a tax haven jurisdiction is subject to a 20% rate. The tax rate may be reduced in line with the corresponding provisions of an applicable tax treaty in force with Kazakhstan.

Royalties

Royalties paid to nonresidents without a PE in Kazakhstan are subject to a 15% withholding tax. A 20% rate applies to royalties paid to nonresidents registered in a tax haven. The tax rate may be reduced in line with the corresponding provisions of an applicable tax treaty in force with Kazakhstan.