Business Environment

flag Kazakhstan Kazakhstan: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The financial year starts from 1st January and ends on 31st December of the same year.
Accounting Standards
According to the new Law, large business entities and organizations of public interests must prepare financial reports in accordance with IFRS. Other legal entities and individual entrepreneurs, at their discretion, may prepare financial reports in accordance with either IFRS or the National Accounting Standards, which generally refer to IFRS.
Accounting Regulation Bodies
Ministry of Finance
Accounting Reports
The accounting balance sheet is presented with shareholder capital and debts as liability, the latter will be broken down into long term and short term debts.
The income statement gives the priority to the referential of total production and classification of expenses per function.
(Russian model).
Publication Requirements
The law pertaining to companies in the Republic of Kazakhstan encourages companies to post up the operational accounts. The accounts should be established in national currency according to the new Russian accounting plan introduced in January 1992. Accounting should be held as per the standards in force but the companies do not have any obligations for the annual reports, except for financial reports.
Professional Accountancy Bodies
Chamber of Auditors of the Republic of Kazakhstan
Certification and Auditing
There is no formal obligation for the audit, except for registration of daily activity. However, the rights, obligations and qualifications of auditors tend to be more and more specific and subjected to laws and regulations.  Certain companies must undergo an annual statutory audit (banks, insurance companies, pension funds, and other financial institutions, joint stock companies, and companies operating under an investment contract concluded with the State). An audit company of their choice can perform this audit. Sometimes, however, it may be required that a statutory audit is performed by a Big 4 audit firm.
You can contact an external auditor: Deloitte, Ernst & Young, PricewaterhouseCoopers, KPMG.
Accounting News

Return to top

Tax Rates

Consumption Taxes

Nature of the Tax
Value added tax (VAT) - Қосылған құн салығы (ҚҚС)
Tax Rate
12%
Reduced Tax Rate
Several goods and services are VAT exempt, including turnover associated with land and residential buildings; specified financial services; services rendered by non-commercial organizations; services in the areas of culture, science and education; goods and services related to medical and veterinary activities; import of certain assets (a list is issued by the government); goods imported by individuals not for entrepreneurial purposes (subject to certain limitations); turnovers related to international transportation services; import of goods from the territory of a Eurasian Economic Union member country within the same legal entity (e.g., intra-entity transaction).
Zero-rated items include export sales of goods, except for those that are exempt from VAT; international transportation services; sale of oil and lubricants by airports when fuelling aircraft of a foreign air carrier performing international flights; sale of fine gold; sale of goods to the territory of Special Economic Zones.
Other Consumption Taxes
Excise duties on all types of spirits, alcohol (up to KZT 11,000 per litre) and tobacco products, petrol (except for aircraft), diesel fuel oil, and certain motor vehicles.

Return to top

Corporate Taxes

Company Tax
20%
Tax Rate For Foreign Companies
Non-residents are only taxed on Kazakhstan-source income. Kazakhstan offers investment incentives in free-trade zones in the form of total exemption from corporation tax and social tax as well as zero-rated property taxation. These incentives have specific expiry dates depending on the free trade area (between 2027 and 2043).
Non-residents without a permanent establishment in the country that receive income from sources in Kazakhstan are generally subject to income tax withheld at source of payment on Kazakhstan-sourced income.
Net income of a non-resident legal entity’s branch is subject to the 20% standard CIT rate and to a branch profits tax at a rate of 15% (bringing the effective rate to 32%; which may be reduced under a tax treaty).
Capital Gains Taxation
Capital gains are treated as normal income and taxed at the standard corporate tax rate of 20%. Capital gains realised from the sale of shares and participation interests in Kazakhstan that do not derive their value from subsurface use property and are held for more than three years may be exempt.
Main Allowable Deductions and Tax Credits
Documented expenses incurred to generate income are generally deductible.
Depreciation of tangible and intangible assets is tax-deductible (at rates ranging from 10% to 40%); however, the Kazakh Tax Code does not provide any arrangements for the amortisation of goodwill. Start-up costs, although not explicitly defined by the Kazakh Tax Code, are generally deductible.

Interest, receivables not recovered after a three-year deadline, fines (except those that go directly to the state budget) and taxes (except corporation tax, excess profits tax and taxes paid in jurisdictions with preferential tax treatment) are all tax-deductible. Donations to charitable organisations give rise to a reduction of the tax base, up to 4% of annual taxable income (3% for large taxpayers subject to monitoring). Payments to foreign affiliates are also deductible if they allow the company to earn income in Kazakhstan.

Tax losses can be carried forward for up to 10 years. The carryback of losses is not permitted.

Kazakhstan also offers investment incentives in free-trade zones in the form of total exemption from corporation tax and social tax as well as zero-rated property taxation. These incentives have specific expiry dates depending on the free trade area (between 2027 and 2043).
Other Corporate Taxes
Oil and gas companies are subject to excess profits tax at rates ranging from 10% to 60%. The tax base is the portion of net income that exceeds 25% of the deductions for this tax.
Employers are required to pay a social tax equal to 9.5% of the employee's gross salary (the monthly minimum base is 14 times the minimum calculation index - KZT 42,882 for 2022 -  and there is no maximum).
Furthermore, the employer pays a surcharge equal to 5% of the gross wage when the employee is engaged in a hazardous activity). Contributions paid by the employer to the Social Security Fund are at an effective rate of 3.5% (capped at KZT 420,000) while those paid to the Health Insurance Fund amount to 3% (the monthly base is capped at KZT 600,000).

A property tax is levied at rates varying between 0.1% and 1.5% (the most common rate) of the average net book value of the immovable property, depending on the taxpayer's activity.
A land tax is also levied at varying rates according to the size, quality and use of land.

There is no stamp duty, however, the Kazakh authorities reserve the right to impose a levy on the distribution of certain legal documents by public institutions.
A mineral extraction tax applies to the monetary value of the extracted volume of crude oil, gas condensate, natural gas, minerals, and groundwater. Rates for crude oil and gas condensate range from 5% to 18% (with a 50% reduction for hydrocarbons supplied to domestic refineries); that for natural gas is set at 10% (reduced to 0.5%-1.5% for domestic sales); and those for coal and minerals that have undergone initial processing are between 0% and 18.5%.
Other Domestic Resources
Consult the Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Kazakhstan Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 10.0 13.9 10.6 9.0
Time Taken For Administrative Formalities (Hours) 186.0 226.2 175.0 218.0
Total Share of Taxes (% of Profit) 28.4 36.5 36.6 48.8

Source: Doing Business - Latest available data.

Return to top

Individual Taxes

Tax Rate

Individual employment income is taxed at a flat rate 10%
 Kazakh-source dividends (residents) 5% (or 15% if from foreign sources)
Allowable Deductions and Tax Credits
A lump-sum deduction based on the minimum monthly applies to all Kazakh tax residents.
Obligatory and voluntary pension contributions are deductible.
Insurance premiums paid by employees are deductible. Expenses for medical services are also deductible (capped at 94 times the monthly calculation index - KZT 3.180 as of April 2022). Repayment of interest on housing is deductible.
Business expenses are only deductible for taxpayers that are registered as entrepreneurs.
From April 2022, the minimum calculated indexes are as follows:
- minimum salary (MS): KZT 60,000
- rate of state basic pension payment: KZT 20,191
- minimum pension rate: KZT 48,032
- minimum subsistence level for the calculation of basic social payments rates: KZT 37,389.
Special Expatriate Tax Regime
Non-residents are generally subject to the same tax liabilities as residents, but only on their Kazakhstan-source income. Residents are taxed on their worldwide income. Non-residents are taxed at 5% on insurance premiums under contracts of risk reinsurance and income from international transportation services; 10% on employment income; 15% on insurance premiums under contracts of risk insurance, dividends, interest, royalties, and capital gains. In all other cases, the rate is 20%.

Return to top

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
List of countries that have signed a Double Taxation Agreement with Kazakhstan.
Withholding Taxes
Dividends: 0 (resident companies)/5% (resident individuals)/15% (non-residents without a PE)/20% (dividends paid to entities registered in tax havens), Interest: 15% (resident companies)/10% (resident individuals)/20% (tax haven), Royalties: 0 (resident companies)/10% (resident individuals)/15% (non-residents without a PE)/20% (tax haven).

Return to top

Intellectual Property

National Organisations
National Institute of Intellectual Property
Regional Organisations
Member of the Eurasian Patent Organisation
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patent Law of 1999
Patents: 20 years, renewable over a period not exceeding 5 years Patent Cooperation Treaty (PCT)
Trademark
 
Law on trademarks and services and on origin manes, No456-I LRK dated 26 July 1999
10 years, renewable for consecutive periods of 10 years Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Patent Law, No. 428-I LRK dated 16 July 1999
10 years, renewable over a period not exceeding 5 years  
Copyright
 
WIPO Copyright Treaty

Return to top

Legal Framework

Independence of Justice
The Constitution of Kazakhstan restricts the independent power of the judiciary significantly, which is subordinate to the executive.
Equal Treatment of Nationals and Foreigners
Foreign nationals are not guaranteed the benefit of an impartial process regarding legal issues.
The Language of Justice
Two legal languages are used in the country: Kazakh and Russian.
Recourse to an Interpreter
Sources of the Law and Legal Similarities
The main source of the law is the new Constitution, adopted during the national referendum held in August 1995. The judicial system of the country is based on a system of civil law. The Constitution is available on-line on the Parliament website .
Checking National Laws Online
Website of the Parliament

Return to top

Standards

National Standards Organisations
Kazakh Institute of Standardization and Certification, (part of Committee for Technical Regulation and Metrology).
KAZMEMST, Committee for Technical Regulation and Metrology.
Kazakh Institute of Metrology, (part of Committee for Technical Regulation and Metrology).
NCA, National Centre of Accreditation
Integration in the International Standards Network
KAZMEMST is a committee member of the International Organization of Standardization (ISO), a member of the Euro-Asian Council for Standardization, Metrology and Certification (EASC), and the National Centre of Accreditation is associated with the International Laboratory Accreditation Cooperation (ILAC).
Classification of Standards
The standards of Kazakhstan are the ST RK.
Online Consultation of Standards
See the website of Kazmemst.
Certification Organisations
Kazakhstan Institute for Standardization and Certification

Return to top

Business Practices

General Information
Kwintessential, The Business Information Services for Newly Independent States
Commisceo Global, Kazakhstan Guide
Opening Hours and Days
The public agencies and most of the companies and banks are open from 0900 hrs or 1000 hrs to 1700 hrs or 1800 hrs with one hour lunch break between 1200 hrs and 1500 hrs for banks and between 1200 hrs and 1400 hrs for administrations. Some offices are open only in the morning.

Food stores and bakeries are open every day (including Sundays) from 0900 to 2000h with a break at noon. Supermarkets are open 24 /24 hrs and 7/7 days.

 

Public Holidays

New year 1 and 2 January
Women's day 8 March
Naouruz (Festival marking beginning of spring) 22 March
Solidarity day among Kazakh people 1 May
Victory of 1945 9 May
Constitution day 30 August
Republic day 25 October
Independence day 16 December
 
 

Periods When Companies Usually Close

 

Return to top

Any Comment About This Content? Report It to Us.

 

© Export Entreprises SA, All Rights Reserved.
Latest Update: November 2022