Expat taxes in Kazakhstan in 2021

Expat cost of living in Kazakhstan in 2021 – that will be the topic of today’s article.

Nothing written here should be considered formal tax, financial, legal or any other kind of advice advice, and is for entertainment purposes only.

The facts might have also changed since this article was written, but we have done our best to ensure its accuracy.

For any questions, or if you are looking to invest as an expat, you can contact me using  this form, or use the WhatsApp function below.

I specialise in expat investment and financial planning. The best time to review your situation is often when you are moving to a new country.

Introduction

The tax legislation of the Republic of Kazakhstan is based on the Constitution, consists of the Tax Code and other regulatory legal acts, the adoption of which is provided for by the Tax Code.

The Constitution contains general norms of tax legislation concerning the issues of the powers of state authorities in the tax area, as well as establishing the obligation to pay taxes and other mandatory payments.

The Tax Code regulates legal relations related to the introduction, calculation, collection of taxes and fees, as well as relations arising in connection with this between the taxpayer and the state represented by authorized state bodies.

The Tax Code consists of general and specific parts.

The general part establishes the principles of taxation, the basic concepts and terms used in the tax area, the rights and obligations of participants in tax legal relations, regulates various tax procedures related to the fulfillment of tax obligations.

A special part prescribes in detail the procedure, terms of collection of taxes and other payments, their rates, as well as special tax regimes.

The Republic of Kazakhstan levies a large number of taxes and other mandatory payments.

In general, the tax system can be characterized as a three-tier system, depending on the type and source of income, taxes are distributed to:

  • republican budget
  • regional budgets, budgets of the city of republican significance (Almaty) and the capital (Astana)
  • regional budgets, budgets of cities of regional significance.

The list of taxes to be credited to the budget of a particular level is contained in Articles 49-52 of the Budget Code of the Republic of Kazakhstan.

Taxes in Kazakhstan can be grouped as follows:

Income taxes

  1. Corporate income tax (goes to the republican budget). Payers are legal entities. The object of taxation is the total annual income minus deductions. The general rate is twenty percent, there are preferential rates for certain categories of payers in the amount of ten and fifteen percent. The corporate income tax rate is 20% for resident legal entities and non-resident legal entities operating in Kazakhstan through a registered permanent establishment (for non-residents, income tax is lower).
  2. Personal income tax (goes to regional, local budgets, as well as to the budgets of the city of republican significance and the capital). Payers are individuals who have objects of taxation. The object of taxation is annual income. The rate is ten percent. Personal income tax is 10% for residents and 15% for non-residents.
  3. Social tax (goes to regional, local budgets, as well as to the budgets of the city of republican significance and the capital). Payers are legal entities and entrepreneurs. The object for a legal entity is the number of employees, for an individual entrepreneur – his expenses in connection with the payment of remuneration to his employees. The general rate is eleven percent, there are preferential rates for agricultural producers. The social tax rate is paid by legal entities and is about 11% of salaries and in-kind benefits of employees.

Property taxes

  1. Property taxes for legal entities and individuals (go to local budgets and budgets of the city of republican significance and the capital). Payers are owners and owners of real estate. The tax base is the value of the property. The rate for legal entities and entrepreneurs is one and a half percent to the tax base, there are benefits for some categories of payers. The rate for individuals is progressive, it grows with the increase in the value of the property, the minimum is 0.05 percent of the value. Property tax applies only to the buildings and the tax rate is 1,5% for legal entities.
  2. Land tax (goes to local budgets and budgets of the city of republican significance and the capital). Payers – legal entities and individuals – owners and title owners of land plots. The tax base is the area of ​​the site. The rates are different and depend on the intended purpose of the plots. Land tax applies to legal entities owning land plots or the right to use them.
  3. Vehicle tax (goes to local budgets and budgets of the city of republican significance and the capital). Payers – legal entities and individuals – owners and owners of vehicles. The rate, depending on the type of vehicle, depends on the engine size, carrying capacity, power, and the number of seats.
  4. Taxes on goods, works, services produced domestically or imported into the country.
  5. VAT (goes to the republican budget). Indirect tax. Payers are legal entities with taxable turnover, as well as importers of goods. The rate is twelve percent, there are benefits for payment. The value added tax rate is 12% and applies to sales turnover in Kazakhstan and to imports of goods and services into Kazakhstan. The turnover threshold for registration as a value added tax payer is 38,190,000 tenge, or approximately 195,000 euros. Export of goods is subject to 0% value added tax.
  6. Excise taxes (go to the budgets of all levels). Indirect payments. Payers – manufacturers, distributors or importers of excisable products, which include: alcohol, tobacco products, fuel, oil products, vehicles. The rates depend on the type of product and are set in a fixed amount per unit. The excise tax applies to alcohol (up to 3 euros per liter), alcoholic beverages (up to 2.5 euros per liter), tobacco (up to 0.5 euros per unit), gasoline (up to 25 euros per ton), crude oil. (€ 0 per tonne), gas condensate-fueled vehicles (€ 0 per tonne) with an engine capacity of more than 3 liters (€ 0.5 per cubic centimeter of engine displacement), produced in Kazakhstan or imported to Kazakhstan.
  7. Gambling business tax (goes to the republican budget). Payers are legal entities that provide services in the gambling sector. The rate depends on the type of gambling activity, it is a multiple of the monthly calculated indicator established for each tax period by the law on the republican budget.
  8. Fixed tax (goes to local budgets and budgets of the city of republican significance and the capital). Payers are legal entities and entrepreneurs who carry out activities using certain types of gambling equipment, billiard tables, etc. The object of taxation is this equipment. The rate depends on the type of equipment and is a multiple of the monthly calculated indicator.

Foreign trade and foreign economic taxes

  1. Rent tax on export (goes to the republican budget). Payers are exporters of crude oil and petroleum products. The object of taxation is the volume of products sold. Base – the cost of the realized. The rate depends on the volume of sales and is progressive. The rent tax applies to the export of crude oil, gas condensate and coal. The tax rate depends on the market price of crude oil and gas condensate (from 0% when the market price of one barrel is US $ 20, to 32% when the market price of one barrel is US $ 200 or more).
  2. Import and export customs duties (go to the republican budget). The list of goods subject to duties and their sizes are approved by orders of the Minister of National Economy of the Republic of Kazakhstan.

Special payments and taxes for subsoil use

Special payments and taxes for the use of subsoil and other natural objects (go to the budgets of all levels).

For subsoil users: a subscription bonus (a fixed payment for the right to use subsoil in the contract territory, the rate depends on the type of subsoil use, the type of minerals, the cost of reserves); commercial discovery bonus (a fixed payment made upon the discovery of a deposit in the contract territory, the rate is 0.1 percent of the approved value of the discovered minerals); payment for the reimbursement of historical costs (a fixed payment reimbursing the state’s costs for geological study and exploration of deposits prior to the conclusion of a subsoil use contract. The amount is calculated by the authorized state body); mineral extraction tax (paid separately for each type of extracted mineral, the rate depends on its type and production volumes); excess profits tax (paid based on the amount of net income from mining, sliding scale).

  1. Payment for the use of land plots (rent), rates are established by land legislation.
  2. Payment for the use of surface water resources, rates are approved by the representative bodies of regions, a city of republican significance and the capital.
  3. Payment for emissions into the environment, the rate depends on the type and volume of harmful emissions, multiples of the monthly calculation index.
  4. Fee for the use of the animal world, the rate depends on the type of use, in multiples of the monthly calculation index.
  5. Fees for forest use, rates for some types of use are established by regional representative bodies, and for some are established directly by the Tax Code of the Republic of Kazakhstan.
  6. Payment for the use of specially protected natural areas. The rate for the use of such a territory of republican significance is equal to 0.1 monthly calculation index. If the territory is of local importance, then the rate is approved by the regional representative body.

Mandatory payments for the performance of legally significant actions

Obligatory payments for the performance of legally significant actions, obtaining permits and licenses go to the budgets of all levels.

  • National tax
  • consular fee
  • registration fees
  • collection for the passage of vehicles on the territory of the Republic of Kazakhstan
  • auction fee
  • license fee
  • fee for the issuance of permission to use the radio frequency spectrum for television and radio broadcasting organizations
  • civil aviation certification fee
  • spectrum usage fee
  • fee for the provision of long-distance and (or) international telephone communications, as well as cellular communications
  • navigable waterway fee
  • outdoor (visual) advertising placement fee

Special tax regimes

  1. for small businesses (based on a patent or a simplified tax return, they assume a simplified procedure for the payment of social tax, corporate and individual income taxes)
  2. for peasant farms (unified land tax, replaces individual income tax, environmental emissions fees, land tax, land use fees, partially vehicle tax and property tax)
  3. for agricultural producers (it is used both for peasant farms and for agricultural producers of other organizational and legal forms, provides for a special procedure for calculating income taxes, VAT, social tax, as well as taxes on property and vehicles)

Taxation of non-resident employees in Kazakhstan

Probably there are many non-residents working and living in Kazakhstan, and there are some points every non-resident should know about the taxes in this country. 

A foreigner can work and provide services on the territory of the Republic of Kazakhstan with or without a residence permit. When hiring such citizens, the employer must know that taxes are not paid for them on equal terms.

Taxes for a foreign worker with a residence permit

For a foreign worker with a residence permit, the employer pays the same taxes as for a citizen of the Republic of Kazakhstan, and at the same rates – individual income tax, social security contributions, mandatory pension contributions, contributions to the health insurance fund. Social tax is paid depending on the taxation system. 

So, if a limited liability partnership under the generally established taxation regime and a simplified taxation system pays social tax for a foreign worker at a rate of 9.5%, then an individual entrepreneur under the generally established regime – 1 MCI for each employee, and on a simplified tax system – does not pay at all.

Taxes for a foreign worker without a residence permit

A foreigner without a residence permit is obliged to obtain an IIN at the State Revenue Department at his place of residence. Only in this case he can officially perform work and provide services on the territory of the Republic of Kazakhstan, and the employer will be able to hire him and pay taxes for him. Unlike foreigners with a residence permit, such workers are not paid OPV, and they are not entitled to the IIT benefit, that is, they cannot use the deduction of 1 minimum wage.

Taxation of income of a foreign employee on wages

Foreigner without a residence permit (resident of the EAEU)  

  • Individual income tax – 10%
  • Social tax – 9.5%
  • Social contributions – 3.5%
  • Compulsory pension contributions – 0%
  • Compulsory social health insurance – 1.5%
  • Individual tax incentive (deduction) – no

Foreigner with a residence permit (resident of the EAEU)

  • Individual income tax – 10%
  • Social tax – 9.5%
  • Social contributions – 3.5%
  • Compulsory pension contributions – 10%
  • Compulsory social health insurance – 1.5%
  • Individual tax incentive (deduction) – yes

Despite the fact that the legislation of Kazakhstan provides for a large number of different taxes and fees, it should be noted that the rates on basic payments to the budget (on income taxes, VAT, excise taxes, etc.) are low in comparison not only with other CIS countries, but also with worldwide.

At the legislative level, much attention is paid to supporting rural producers. There are several special tax regimes for them, as well as various tax benefits when paying taxes according to general rules.

An interesting system is the distribution of tax revenues to the budgets of various levels. There are very few taxes and other payments to the budget of only one level. Basically, the same payments are distributed to different-level budgets depending on the source of their payment. This circumstance also makes it possible to finance state and local needs without taxing payers with an additional tax burden. It should be noted that special attention is paid to financing the city of republican significance Almaty and the capital of the state, Astana.

The main tax law carefully and in detail regulates all aspects of tax legal relations, this is for taxpayers an additional guarantee of their rights in the event of disputes.

From the foregoing, it can be concluded that the tax legislation of the Republic of Kazakhstan is modern, progressive and meets the needs of both the state and society.

Taxes for Americans in Kazakhstan

Let’s now review an example of US citizens who work and live in Kazakhstan and want to know about the possible taxes.

Employment income is taxed at a flat rate of 10% for residents and non-residents. Other income is taxed at a rate of 10% for residents and 20% for non-residents.

Dividends and capital gains are taxed at the rate of 5% for residents and 15% for non-residents.

Resident individuals are taxed on global income. Non-residents are taxed only on income from Kazakhstani sources.

How to know you are a resident?

An individual is a resident if he / she stays in Kazakhstan for 183 days or more during any consecutive 12-month period ending in the reporting tax year.

Tax filing status – Joint filing is not permitted; If necessary, each person must submit their own declaration.

Taxable Income – Income from Kazakhstani sources includes income from employment and other activities in Kazakhstan, as well as any other benefits received in this regard, regardless of where they are paid. Taxable income consists of employment income (including benefits earned as a result), business income, and passive income.

Capital gains – income earned from the sale of property is considered taxable capital gains, unless the individual has owned the property for more than 1 year. With some exceptions, income earned from the sale of equity interests and securities is treated as capital gains that are taxable.

Tax Deductions and Tax Benefits – Standard monthly deductions are allowed for tax residents such as minimum wage deduction (KZT 14,952 per month), mandatory pension contributions, medical expenses, etc., with some restrictions.

Other taxes on individuals

Good news! There are no capital fees for foreigners. Also no stamp duties, but authorities may charge a fee for various legal actions, such as issuing documents by government agencies. Capital Acquisition Taxes are also absent.

Real estate tax – Real estate tax is levied on real estate located in Kazakhstan at a progressive rate of 1% to 1.5%, depending on the value of the property. Land and transportation taxes vary based on the factors mentioned.

Inheritance / inheritance tax – No

Net Wealth Tax / Net Asset Value – None

Tax year

Filing and Payment – Personal Income Tax on income from employment is subject to withholding, payment and reporting by the employer. Payment is made by the 25th day of the month following the month of income payment. The income and tax report must be submitted quarterly by the 15th day of the second month following the reporting quarter.

In certain cases, when individuals receive income that is not subject to withholding tax, the tax return must be filed by March 31 of the year following the reporting year, with the payment of the final tax by April 10.

Fines – fines are applied for late payment of taxes, and administrative fines for non-compliance.

Corporate income tax in Kazakhstan

The current corporate income tax rate in Kazakhstan is 20%. The basic rate of 20% applies to both domestic and foreign companies.

Resident companies pay corporate income tax on their global income, while non-resident companies pay tax on income received from Kazakhstan.

A company is considered a resident if it is incorporated in accordance with the laws of Kazakhstan or if its governing body or place of actual management is located in Kazakhstan.

The tax is levied on all business income received in Kazakhstan and abroad (including capital gains), excluding expenses deductible from the tax base. The standard corporate income tax rate for 2009-2012 is 20%. Companies with land as their main production asset pay a 10% tax on profits from direct land use.

The tax year is the calendar year. Annual tax returns must be filed by March 31st after the end of the tax year. Companies are required to make advance tax payments on a monthly basis.

This is all you should know about expat taxes in Kazakhstan, in case you want to work there you have to pay some. Hope this blog post helped you to be informed. 

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