Kazakhstan: Corporate Tax: Kazakhstan 2016

Overview of corporate tax work

Type of work

In our view, corporate tax practice in Kazakhstan has not significantly changed in the last year. Tax lawyers were mostly involved in disputes regarding the appeal of additionally accrued taxes on the basis of audit results and less involved in tax consultancy and structuring.

As a rule, on the basis of audit results, the tax authorities charge additional amounts of corporate tax by reduction of expenses due to various reasons that were deducted by the taxpayer.

The Kazakh business sector still has another unresolved issue related to transactions with 'sham companies'.

Legally, a 'sham company' is defined as a legal entity established without the intention of performing entrepreneurial activity for criminal purposes and recognised as such by a court decision. If a taxpayer purchased goods or services from the company which was later recognised as a sham by the court, then upon adoption of the decision, the taxpayer will be obliged to exclude expenses related to such transaction from deductions and additionally pay CIT and VAT to the budget. Herewith, conscientious taxpayers are in fact deprived of the right to prove that the transaction actually took place and the goods were supplied, or services rendered.

In these circumstances, conscientious taxpayers would in fact pay taxes on transactions with the company recognised later as a sham twice: firstly for themselves; and secondly for the sham company thereafter.

Key developments affecting tax law and practice

Purely domestic changes

According to the policy on the integration of the tax and customs systems, the tax and customs authorities of Kazakhstan were joined in the unified State Revenue Body in 2014.1 The second step of this policy implementation is the joining of the Tax and Customs Codes (the "Unified Code"). At present, the unified main fiscal law of the country has been drafted and its adoption is expected in 2018.

The main purpose of joining the tax and customs systems is the development of the fiscal administration. In this regard, the Unified Code will provide for a single mechanism for the administration of taxes and customs payments, unification of tax and customs procedures and optimisation of administration business processes.

The main changes to the tax system of Kazakhstan have been introduced by the Unified Code:

1. Replacement of VAT by the Sales Tax

The complexity of the VAT administration as well as the administration of VAT return from the budget served as the main reason for the replacement of such tax. As reported by the Government, the budget is losing KZT 150–200bn annually due to unlawful VAT return from the budget.

However, the introduced sales tax also has significant disadvantages. In this regard, the final decision on the replacement of VAT by the Sales Tax has not yet been made. It is possible that VAT will be saved with the development of its administration.

2. Optimisation of special tax regimes for small and medium-sized businesses

The Government believes that the current special tax regimes are outdated and serve as a ground for illegal business, which as of today comprises 19.6% of business in Kazakhstan.

The main purpose of these changes is the introduction of transparency in the accounting of income and expenses of small and medium-sized businesses, while not increasing the tax burden.

3. Issues regarding optimisation of subsoil users' taxation as well as taxation differentiation of oil and gas companies and mining companies will also be considered within the Unified Code framework

Kazakhstan is not a member of the OECD. Herewith, the Government of Kazakhstan and the OECD concluded an Agreement on 'Cooperation Through the Global Links Program', providing for a two-year cooperation which includes the suggested Base Erosion and Profit Shifting actions. On the basis of such Agreement, the OECD will provide its recommendations to be considered and possibly recognised by Kazakh legislation.2 As of today, Kazakhstan is not considering any specific amendments to the current legislation in this respect.

In addition, please be informed that, at the end of 2015, Kazakhstan became a member of the World Trade Organization, which affected the fiscal regime regarding the import and export of goods.

Tax climate

One of the main purposes of Kazakhstan's economic policy is the diversification of the economy from resource-based to manufacturing in order to attract investors to the manufacturing industry, in particular the manufacturing of refined oil products, chemical industry products, pharmaceutical products, machinery and equipment, and the iron and steel industry, etc.3 In 2015, the Government introduced the following tax exemptions for investors performing projects in the specified industries:

  • Exemption from corporate income tax by 100% from seven to ten years.
  • Exemption from land tax from seven to ten years.
  • Exemption from property tax from seven to eight years.
  • Exemption from customs duties on import of spare parts to technical equipment, raw materials for five years.
  • Guarantee of stability of taxes and other obligatory payments to the budget in case of their increase.4

Kazakhstan is keen to develop a financial hub in the Central Asian Region. Hence, at the end of 2015, the Astana International Financial Center was established, which will be effective 1 January 2018. As it stated, the Financial Center was established for the maintenance of capital market and Islamic financing, development of new elite financial services as well as 'private banking'. It also provides for asset management and the introduction of a liberal tax regime in the Center. It also enables the creation of an offshore financial market as well as the introduction of investment residence following the Dubai example. English will be the official language of the Center.

The Financial Center will have specific legal regime, i.e. its own legislation (the acts of the Financial Center) based on the provisions and precedents of the law of England and Wales.

The court of the Center will not be part of the court system of Kazakhstan, but its decisions will have effect on the whole territory of the country, as the judges will serve the judges of the common law (the citizens of England, Australia and Singapore etc.).

The Financial Center will have a specific tax regime which provides:

  • exemption from corporate income tax on income from financial services (brokerage, dealer services, investment management of assets, etc.);
  • exemption from corporate income tax on income from legal, accounting, audit and consultancy services;
  • foreign employees of the Financial Center will be exempted from personal income tax; And
  • exemption from land tax, property tax and other exemptions.5

New concepts were also introduced on the protection of rights of investors and entrepreneurs:

  • Investment ombudsman.
  • Business ombudsman.
    The main purpose of ombudsmen is the protection of rights and representation of interests of entrepreneurs and investors before the state authorities, including the State Revenue Bodies. Ombudsmen are directly accountable to the President of Kazakhstan.6
  • Special Investment Court Board.
    Investment disputes and disputes related to investments including, among others, tax disputes, are subject to the jurisdiction of the Board. It is expected that the introduction of a separate board of judges will enable investors to have a more competent consideration of their cases by judges of the Astana Court and the Supreme Court of Kazakhstan in an expedited manner.7

Developments affecting attractiveness of Kazakhstan for holding companies

We have not observed any developments or changes affecting holding companies.

As a rule, Kazakhstan serves as a place for operating companies, such as companies engaged in deposit development. However, holding companies are generally located in jurisdictions with a more predictable economic and political situation; for example, the Netherlands, UK, UAE, etc.

Since 2009, Kazakhstan has had exemptions from tax on dividends and capital gain tax on the sale of shares upon the observance of a three-year holding period. We believe that by introduction of these tax exemptions, the Government intended to develop business through Kazakh holding companies. However, in our view, investors are not yet ready to use Kazakhstan as a holding jurisdiction.

Industry sector focus

As aforementioned, we believe that tax exemptions affected companies involved in the processing industry.

The year ahead

The main problem regarding the tax climate in Kazakhstan, which as a result is reflected in its investment climate, in our opinion, is law enforcement.

Despite the fact that the tax legislation in Kazakhstan is one of the most advanced among the CIS countries, in practice, the taxpayers, in particular foreign investors, are regularly confronted with inconsistent interpretation of the law and its selective application by the State Revenue Bodies.

Courts that are applied to by taxpayers for protection of their rights mostly adopt decisions a priori in favour of the budget.

As we noted above, earlier this year the Special Investment Court Board was established, which, inter alia, is entitled to consider disputes between the tax authorities and investors. In spring of this year the Board considered the largest tax dispute involving a subsoil user. The case, in our view, was considered fair, and a decision was made in favour of the subsoil user.8

We hope that this case law will continue to change the judicial practice regarding tax disputes in the country. This development, in our view, will show an improvement in the tax and investment climate in the country.


1 The Nation Plan – 100 specific steps on the implementation of five institutional reforms of the Head of the State Mr. Nazarbayev N., May 2015.

2 The Report of the First Vice Minister of the National Economy Mr. Kussainov M. on the conference organised by the Association of Taxpayers of Kazakhstan regarding the new Tax and Customs Code.

3 The Letter of the Ministry of the national economy of Kazakhstan dated 14 August 2015 placed at the Minister's blog.

4 The Entrepreneurial Code of the Republic of Kazakhstan dated 29 October 2015 No. 375-V.

5 The Constitutional Law of the Republic of Kazakhstan, dated 7 December 2015 No. 438-V 'On the International Financial Center, Astana'.

6 See endnote 4.

7 The Civil procedure code of the Republic of Kazakhstan dated 31 October 2015 No. 377-V.

8 The Decision of the Supreme Court of the Republic of Kazakhstan dated 27 April 2016 on case No. 6001-16-00-2/2.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions