Kazakhstan: Tax Alert - November 2015


1. Regarding amendments to the legislative acts on labour law regulations

The Head of the Republic of Kazakhstan (further the "RoK") signed the Law "On amendments and additions to the legislative acts on labour law regulations" (further the "Law").

According to the Law, a new model of the Labour Code of the RoK offers to clearly define the boundaries of the government's intervention into the relationships between the employer and employee. In particular, the procedures for hiring, staff rotation, dismissal, determination of conditions and wages of employees have been simplified.

The Labour Code sets basic labour guarantees and rights of employees, which can be extended under a negotiated individual or collective labour agreement, as well as legal means to protect their rights and interests.

Additionally, the role of trade unions in ensuring employees' rights and interests is expanded.

New Labor Code becomes effective from January 1, 2016.

2. Regarding the Law of the RoK on Republican budget for 2016-2018

The Law of the RoK on Republican budget for 2016 2018 №426 V dated November 30, 2015 sets the following indicators:

  • minimum salary 22 859 tenge;
  • the amount of basic state pension payment 11 965 tenge;
  • minimum pension payment 25 854 tenge;
  • monthly calculated index (further "MCI") 2 121 tenge.

The changes become effective from January 1, 2016.

3. Regarding pre-trial tax dispute resolution

At presence the practice is such that tax inspections may result in an unjustified accrual of additional taxes, which in turn undermines the financial solvency of the enterprise, the National Chamber of Entrepreneurs "Atameken" (further "NCE") begins to officially represent interests of entrepreneurs in pre trial dispute resolutions.

In other words, entrepreneurs can challenge the results of tax inspections in a pre trial order, with the help of authorized representative, based on a power of attorney.

At the initial stage NCE plans to represent interests of:

  • the large taxpayers subject to monitoring;
  • subsoil users;
  • taxpayers, additional accruals of which are connected with application of the legislation on transfer pricing;
  • individual entrepreneurs facing additional accruals of taxes in the amount over 5 000 MCI;
  • legal entities facing additional accruals of taxes in the amount over 20 000 MCI.

Hence, taxpayers challenging the revenue authority's decision to assess additional taxes can appeal to NCE for representation of their interests.

4. Regarding the declaration of individuals' income and property in the RoK

As it was mentioned in the previous tax alerts, the Ministry of Finance of the RoK has considered the Law "On amendments and additions to certain legislative acts of the RoK on the declaration of income and property of individuals" (further the "Law on general declaration"), in accordance with which changes to introduction terms of general declaration are made.

Further, as it has become known that the President of the RoK signed the Law on general declaration.

As such, transition to the general declaration will be implemented in several stages:

  • at the 1st stage (starting from 2017) deputies, judges, government workers and their spouses, as well as employees of the national companies and state enterprises, will be subject to the declaration of income;
  • at the 2nd stage (dtarting from 2020) remaining population will be subject to the declaration of income.

In addition, according to the Law on general declaration, the system of declaration provides submission of 2 types of declarations:

  • the declaration on assets and obligations (the "entrye" declaration) to be submitted once. In this declaration individuals report their savings, assets (including receivables), local and foreign property and liabilities (except for loans received from banks);
  • the declaration on income and property of individuals to be submitted annually. In this declaration a taxpayer reports annual income, acquisitions and disposals of property which is subject to the state registration.

5. Regarding the Law "On mandatory social medical insurance"

The President of the RoK signed the Law "On mandatory social medical insurance" (further the "Law on medical insurance").

Thus, according to the Law on medical insurance, 2 types of medical service packages will be provided to citizens:

  • basic package the medical care guaranteed by the state and financed bythe republican budget;
  • insurance package provided by the newly created Health Insurance Fund.

Eligible persons are citizens of the RoK, foreign nationals and stateless individuals with a permanent resident status who participate in the obligatory social medical insurance system.

Both the employer and employee contribute to the Fund.

Employers' contribution rate will increase gradually by 1% per annum from 2% in 2017 to 5% in 2020. These contributions will be deductible for corporate income tax purposes.

Employees' contribution rate will increase gradually by 1% per annum from 2% in 2019 to 2% in 2020. These contributions will be deductible for personal income tax purposes.

This Law on medical insurance becomes effective from March 1, 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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