Doing business

in Kazakhstan
An introductory guide
to tax and legal issues
2 Doing business in Kazakhstan
Preface
This publication is intended to provide a useful practical summary
of some of the legal and tax issues that investors may face when
starting and building a business in Kazakhstan. We hope that it will
help investors to avoid common pitfalls and highlight areas where
some forethought and planning can prevent problems from arising.
Kazakhstan offers many opportunities and is strongly committed to
encouraging foreign investment in key sectors of the economy.

This guide is split into five sections:

1. Welcome to Kazakhstan

2. Our top 10 tax and legal tips for prospering in Kazakhstan

3. Getting started

4. An overview of tax rules in Kazakhstan

5. An overview of other laws affecting business administration.

This guide is a high-level summary of the rules in force as of

1 January 2021. It is not a substitute for comprehensive
professional advice, which should be sought before engaging in
any significant transaction. It should also be noted that this guide
does not cover all taxes in Kazakhstan (of which there are more
than 30). Here, we cover only the most important taxes, so advice
should be sought as to the actual taxes applicable to any particular
business.

We wish you every success in this exciting and dynamic

environment.

Doing business in Kazakhstan 1

 Contents

2 Doing business in Kazakhstan

Welcome to Kazakhstan . . . . . . . . . . . . . . . . . . . . . . . . . 4 Overview of other laws that affect
Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 business administration . . . . . . . . . . . . . . . . . . . . . . . . 50
System of government. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Transfer pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Employment regulations . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Business hours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Import and export formalities and customs duties. . . . . . 53
Kazakhstan fact sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Licensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Our top 10 tax and legal tips. . . . . . . . . . . . . . . . . . . . 10 Banking regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Currency regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Tax tips. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Currency regimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Legal tips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
EY in Kazakhstan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Getting started . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
About EY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Arriving in Kazakhstan. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Encouraging investment. . . . . . . . . . . . . . . . . . . . . . . . . . 65
Post-arrival procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Supporting our clients in the dynamic landscape. . . . . . . 65
Types of legal entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Office locations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Establishing a legal presence. . . . . . . . . . . . . . . . . . . . . . . 20
EY Kazakhstan at social media . . . . . . . . . . . . . . . . . . . . . 66
Incentives for investors . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Overview of tax rules in Kazakhstan. . . . . . . . . . . . . . . 30
Double tax treaties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Personal income tax (“PIT”) . . . . . . . . . . . . . . . . . . . . . . . 31
List of countries with preferential tax regimes . . . . . . . . . 70
Social tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Key macroeconomic indicators of Kazakhstan . . . . . . . . . 71
Corporate income tax (CIT). . . . . . . . . . . . . . . . . . . . . . . . 38
Withholding tax (WHT) (other than PIT). . . . . . . . . . . . . . 40
Value added tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Subsurface use taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Tax administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Doing business in Kazakhstan 3

1 Welcome to
Kazakhstan

4 Doing business in Kazakhstan

Highlights
US$24,263
• On 1 January 2015, the Treaty
on the Eurasian Economic Union
• Kazakhstan posted an annual average (EAEU) entered into force. The union
GDP growth rate of 5.2% from 2005
to 2019, with GDP in 2019 reaching
of Armenia, Belarus, Kazakhstan,
Kyrgyzstan and Russia comprises a
million
US$180.2 billion (US$9,731.2 per market of 184 million consumers. gross FDI inflows recorded
capita). In the first 9 months of 2019
• In December 2012, the former by Kazakhstan in 2018
the growth rate accelerated to 4.5%
from 4.1% in 2019.1 The country’s President of Kazakhstan, Nursultan
GDP shrank by 2.6% in 2020 as it Nazarbayev, in his annual address to
took a heavy hit from the coronavirus the nation, unveiled the Kazakhstan
pandemic. In October 2020, the 2050 Strategy, which aims to make

184
Ministry of National Economy of Kazakhstan one of the world’s 30
Kazakhstan announced an updated most developed countries. The strate-
GDP forecast for 2021, predicting a gy is to be realized through a number
real GDP growth rate of 2.8% in 2021.2 of key initiatives: a comprehensive
million consumers
and pragmatic economic policy (infra-
• Foreign direct investment (FDI) inflows structure development, modernized make up the EAEU market
into Kazakhstan have been strong in systems for managing state assets
recent decades. Kazakhstan’s success and natural resources, accelerated
in attracting FDI may be attributed industrialization, modernization of
to its vast natural resources and the agriculture and new policies on water
commitment of the country’s leader- resources), the development of a
ship to welcoming FDI and promoting
the country’s stable economic growth,
culture of entrepreneurship, new
social policies, targeted development
November 2014
as well as to developing non-extractive of knowledge and professional skills, Infrastructure development
sectors such as agriculture, renewable further strengthening of state gover-
energy, infrastructure, logistics and nance and democracy, consistent and
program launched in Kazakhstan
transport. In 2019, Kazakhstan posted predictable foreign policy, and a new
gross FDI inflow of US$24.1 billion national patriotism.
compared to US$24.3 billion in 2018.
• The Nurly Zhol (Shining Path)
• Kazakhstan is ranked 25th for Ease infrastructure development program
of Doing Business in the World Bank’s was launched in November 2014
Doing Business 2020 report. The with the aim of creating an efficient
country has moved up three positions transport and logistics infrastructure
compared with the previous year.3 in Kazakhstan.4,5

1  World Bank Data.

2  The Ministry of the National Economy of Kazakhstan.
3  Doing Business 2020, the World Bank, October 2019.
4  Official Information Source of the Prime Minister of the Republic of Kazakhstan, 22.10.2019,
https://www.government.kz/en/news/realizaciya-novoy-gosprogrammy-nu-rly-zhol-na-2020-2025-gody-pozvolit-sozdat-bolee-550-tys-rabochih-mest
5  Astana Times, 24.10.2019, https://astanatimes.com/2019/10/kazakh-government-estimates-nurly-zhol-programme-will-cost-16-91-billion-over-next-five-years/

Doing business in Kazakhstan 5

KZT 5.8 trillion
• KZT 5.8 trillion was invested in civil service, rule of law, industrializa-
Kazakhstan’s transport industry tion and economic growth, a unified
under the Nurly Zhol program nation, and the transparency and
was invested in Kazakhstan’s in 2015–2019. Of this, 56% was accountability of the state. The new
funded with the involvement of the President of Kazakhstan, Kassym-
transport industry
private sector, the rest by the state Jomart Tokayev, has continued the
course and confirmed institutional
• 3,000 km of republican roads
reforms as a key priority in ac-
were built or rebuilt, including
celerating Kazakhstan’s economic
completion of the Western
development.6

3,000 km
Europe­ — Western China
international transport corridor • The ‘Digital Kazakhstan’ state
program was launched in 2017.
• 1,400 km of new railways were
It aims to accelerate economic
of republican roads commissioned: Zhezkazgan–Beineu
development and improve the quality
were built or rebuilt (1,040 km), Arkalyk–Shubarkol
of life of the people of Kazakhstan
(214 km), Borzhakty–Yersai
with the aid of digital technologies.
(14 km) and the second track of
the Almaty–Shu section (111 km) • The first wave of privatization in
Kazakhstan laid the foundations of
• 6 runways were upgraded at the
the market economy in the 1990s.

1,400 km
airports of Uralsk, Petropavlovsk,
At the end of 2015, Kazakhstan
Almaty, Semey, Kostanay and
announced a new privatization plan
Balkhash.
that seeks to shrink state ownership
of new railways were The program will include the follow- of the national economy from more
commissioned ing projects: completion of 3,800 km than 40% to around 15%. However,
of roads; rebuilding of the runways real progress has been slow.
at Kostanay and Balkhash airports;
• On 30 November 2015, the World
modernization of the Dostyk–Moyynty
Trade Organization (WTO) welcomed
railway line and electrification of the
Kazakhstan as its 162nd member.
Moyynty–Aktogay railway line; develop-

6 runways
Kazakhstan has successfully
ment of water transport through the
negotiated arrangements on sensitive
purchase of 48 ships, including six mer-
economic issues, including support
chant fleets, and major repairs to locks.
were upgraded for agriculture, financial services
• In June 2015, in line with the and telecommunications, and has
at the airports Kazakhstan 2050 Strategy, former coordinated its WTO and EAEU
President Nursultan Nazarbayev set commitments in line with national
out 100 steps for the implementation interests. Kazakhstan became an
of five institutional reforms aimed at associate member of the OECD
promoting a modern and professional Investment Committee in 2017

6  Official website of the President of the Republic of Kazakhstan,

https://www.akorda.kz/ru/official_documents/strategies_and_programs

6 Doing business in Kazakhstan

 and a participant in the Public • The annual PowerExpo Almaty providing certain financial services
Governance and Environmental Policy international exhibition presents the on the territory of AIFC, and personal
Committees in 2019. The country latest equipment, technologies and income tax on income of foreign
has also joined the OECD’s Base services for the energy industry. employees. As of 2021, more than
Erosion and Profit-Shifting (BEPS) It has become an established 700 companies from 42 countries
Project, an initiative involving over platform for business meetings, have been registered in the AIFC.
100 countries in an effort to tackle exchange of experience and They represent the United Kingdom,
tax avoidance strategies that exploit negotiations. 118 enterprises from the USA, China, Russia, Estonia,
gaps and mismatches in tax rules to 13 countries, including Austria, Latvia, Italy, Finland, South Korea,
artificially shift profits to low- or no- Azerbaijan, Belarus, Germany, Italy, Singapore, Malaysia, India, the United
tax locations7. Kazakhstan, China, Poland, South Arab Emirates, Turkey and other
Korea, Russia, Singapore, Ukraine leading economies.
• The New Silk Road is an ambitious
and the Czech Republic, took part in
transport infrastructure project that • The Khorgos-Eastern Gate special
the exhibition in 2019, with national
will enable goods to be delivered economic zone (SEZ) comprises a
stands presented by companies from
from the Pacific coast to Europe. dry port, a logistics and industrial
China, Russia and Poland9.
Redirecting cargo traffic to the zone, a railway station and the
mainland is no easy task, as the • In July 2018 Kazakhstan officially Altynkol Kazakh-Chinese Khorgos
current sea route is significantly launched the Astana International International Centre of Boundary
cheaper. However, the new overland Financial Centre (AIFC) on the site of Cooperation. In July 2015, the
route through Kazakhstan allows the EXPO-2017 exhibition. It is set to country’s first dry port, with an
delivery times to be reduced from serve as a financial hub for Central area of 149 hectares and planned
40–60 days to 13–14 days. A railway Asia, the Caucasus, the Eurasian capacity of 500,000 twenty-foot
corridor connecting the Pacific coast Economic Union and Mongolia. The equivalent units (TEU), was launched
of China to the Caspian Sea is already centre has a special legal regime in the SEZ. Thanks to the dry port,
in operation. It will provide access to which differs from the legislation shipments that used to take up to 40
many major markets when integrated of Kazakhstan and is based on the days by sea from Asia to Europe can
with the Kazakhstan — Turkmenistan — principles of English law and best now be transported in just 10 days.
Iran and Azerbaijan — Georgia — Turkey practices of world-leading financial In 2018, Khorgos processed 311
railway systems. A joint industry and centres. Participants enjoy special tax, container trains along the China-
investment cooperation program is currency and visa regimes, as well as Europe transport route and more
underway between Kazakhstan and a favourable framework for attracting than 1.2 million people visited the
China. It comprises 51 projects worth foreign labour. Tax incentives include duty-free trade zone. So far, over
more than US$27b and infrastructure a nearly 50-year exemption from US$1.4 billion has been invested in
forms an important part of it.8 corporate income tax and VAT for the project10.

7  OECD, https://www.oecd.org/eurasia/countries/kazakhstan/
8  Belt and Road News, 09.06.2019, https://www.beltandroad.news/2019/06/09/kazakh-chinese-one-belt-one-road-cooperation-discussed-in-astana/
9  Official website of PowerExpo Almaty, https://www.powerexpo.kz/en/exhibition/about-the-exhibition
10  Forbes, 14.03.2019, https://www.forbes.ru/biznes/373183-baraholka-s-oborotom-eu18-mlrd-novaya-mekka-chelnokov

Doing business in Kazakhstan 7

System of government Time Public holidays
The Republic of Kazakhstan gained Kazakhstan’s time zones range from five and days off
independence on 16 December 1991. hours ahead of Greenwich Mean Time The following table presents
Under the constitution adopted on (GMT) in the western part of the country Kazakhstan’s official public holidays
30 August 1995, Kazakhstan is a to six hours ahead of GMT in the other and days off.
democratic, secular, legal and social regions. Nur-Sultan and Almaty are six
state. State power is divided into hours ahead of GMT. Holiday Date
legislative, executive and judicial New Year holidays 1–2 January
branches. Kazakhstan is a unitary
state with presidential rule. Legislative Business hours Orthodox Christmas 7 January

functions are performed by the International 8 March

Kazakh offices are generally open from
Women’s Day
Parliament of Kazakhstan, which is 9:00 am to 6:00 pm Monday to Friday,
the supreme representative body and Nauryz Meyrami 21–23 March
and closed Saturdays and Sundays.
consists of two chambers, the Senate Kazakhstan People’s 1 May
and the Majilis. The Government Unity Day
of Kazakhstan acts as the supreme Defender of the 7 May
executive body, headed by the Prime Fatherland Day
Minister. Judicial authority is vested in Victory Day 9 May
the Supreme Court.
Capital Day 6 July
The first day of 20 July in 2021
Kurban Ait (observed in
accordance with the
Islamic Calendar)
Constitution Day 30 August
The First President of 1 December
Kazakhstan Day
Independence Day 16–17 December

8 Doing business in Kazakhstan

Kazakhstan fact sheet

Capital Nur-Sultan
Administration Kazakhstan is divided into 14 provinces and 3 cities of national significance: Nur-Sultan,
Almaty and Shymkent
Bordering countries Russia, China, Uzbekistan, Kyrgyzstan and Turkmenistan
Land area 2,724,900 km2
Population (November 2020) 18.8 million
Urban population, % (November 2020) 59% of the total population
Age structure (2020) 0-15 years (29.9%); 16-62 years (59.1%); 63 and above (11.0%)
Languages Kazakh (official language), Russian (interethnic communication)
President Kassym-Jomart Tokayev (since 20 March 2019)
Prime Minister Askar Mamin (since 25 February 2019)
Nominal GDP (2019) US$181.666 billion
GDP growth (2019) 4.5%
GDP per capita (2019) 9,731.2
GDP composition by sector (2019) Agriculture (55.5 %); industry (33 %); services 4 %)
External debt as a percentage of GDP (Q2 2020) 89.6%
Labour force (2020) 9.06 million
Unemployment rate (December 2020) 4.55%
CPI inflation (November 2020) 7.5%
Stock exchange Kazakhstan Stock Exchange (KASE)
Central Bank National Bank of Kazakhstan
Corporate income tax rate 20%
Individual income tax rate 10%
State value added tax 12%
Major cities Nur-Sultan, Almaty, Shymkent, Karaganda, Atyrau, Aktau
Currency unit Kazakhstan tenge (KZT)
Annual average exchange rate (2020) US$1=KZT 416.7; EUR1=KZT 477.98; RUR1=KZT 5.69; CNY1=KZT 60.8
Exchange rate as of 1 December 2020 11
US$1=KZT 425.05; EUR1=KZT 509.29; RUR1=KZT 5.58; CNY1=KZT 64.66

Sources: Official website of the President of the Republic of Kazakhstan; the National Bank of Kazakhstan; the Statistics Agency of Kazakhstan.

11  Hereafter in this guide, all calculations in US$ are made based on the exchange rate as of 1 December 2020

Doing business in Kazakhstan 9

2
Our top 10
tax and legal tips

10 Doing business in Kazakhstan

In this section we set out our top
tax and legal tips for prospective
investors.
Tax tips

1 3
Should you need more
information on any of these
issues, EY is happy to assist you
in the following areas:
• Tax planning and compliance, Recent years have shown that Kazakh The scope of withholding taxes (WHTs)
both in Kazakhstan and law is subject to frequent changes. on cross-border payments is wide, and
internationally This makes it important to have robust rates are high (sometimes even when
tax planning to enable businesses the recipient has never entered Kazakh-
• Business accounting and to cope with changes in the law and stan). However, Kazakhstan has tax
payroll implement structural changes as treaties with many countries which allow
• A full range of legal consulting required without significant tax costs. for withholding taxes to be reduced or
services in Kazakhstan, as well avoided if all the necessary documenta-
tion is in place place (though, the MLI

2
as tax litigation services
provisions, which entered into force in
• Transaction advisory services Kazakhstan from 1 October 2020, should
and legal and tax due diligence be considered and properly supported).
Otherwise, tax will be withheld, and
• Immigration support and obtaining a refund may be a complex and
performance and reward Corporate and personal income tax rates
time-consuming process with an uncer-
planning in Kazakhstan are low by international
tain outcome. Moreover, Kazakhstan
standards, but penalties for non-
• Assurance services has a unique position on transfer pricing
payment and non-reporting, whether
whereby all cross-border transactions
intentional or not, are high. The first
may potentially be inspected for transfer
focus of tax planning in Kazakhstan
pricing compliance, regardless of wheth-
should be to confirm that all tax that
er the parties are in any way related.
ought to be paid in Kazakhstan is paid
and reported. In addition, Kazakhstan

4
is a documentation-driven country,
and keeping documentation in order
(including supporting documentation)
is of paramount importance

There are many downsides to dealing

with tax havens when structuring cross-
border investments or transactions in
Kazakhstan. Thus, tax havens should
not usually form part of tax planning
in Kazakhstan.

Doing business in Kazakhstan 11

 5 7 9
The rules for determining whether There is a safe harbour allowing an In many cases, exemption from capital
a business dealing with Kazakhstan has entity that seconds staff to Kazakhstan gains tax may be obtained upon with-
a taxable presence for corporate income to avoid a taxable presence. Provided drawal from an investment in Kazakhstan
tax (CIT) purposes in Kazakhstan the arrangements are properly provided that the correct structuring
(a permanent establishment) are very structured, this is likely to be more tax- was used when the investment was first
broad and can apply collectively to efficient than using the same staff to made. The complexity of the structuring
whole groups of companies if they have provide consulting or other services. depends on the nature of the asset.
been in the country for over six months.
Some, but not all, of Kazakhstan’s tax

8 10
treaties (with MLI limitations) protect
against this. Therefore, if more than one
group entity is used to do business in
Kazakhstan, the position of all entities
involved should be reviewed collectively.
Branch profit tax applies to all According to currently enacted tax law,
permanent establishments of foreign income received by foreign individuals

6
legal entities at a standard rate of 15%. (cash and in-kind) for work performed
It is usually reduced by tax treaties. in Kazakhstan (regardless of where the
There is an equivalent tax on dividends income is paid) is treated as Kazakh-
at the same standard rate, which may source income and is subject to Kazakh
also be reduced by treaties (with MLI personal income tax (PIT). Generally,
limitations). In the case of dividends, Kazakh-source income is reported and
Deductibility of interest on investor
the rate is zero after an investment has taxed in Kazakhstan using one of the
loans is subject to a debt-to-equity ratio
been held for three years (except for following methods: (i) self-assessment
of 4:1 (7:1 for financial organizations).
investments in oil and gas or mining via an annual PIT return or (ii) at source
At best, an investor will pay 10%
operations (unless a certain portion via a local company acting as a so-called
WHT on cross-border interest (under
of minerals is refined), dividends paid “tax agent”. In most cases, the law
a double tax treaty) and be able to
to entities registered in tax havens places tax and reporting obligations
claim a CIT deduction of 20%, while for
and investments in certain CIT-exempt for Kazakh-source income of foreign
certain borrowings accrued interest
entities). individuals on the local tax agent (e. g.,
expense may be deducted only when
a foreign legal entity with a registered
paid. Furthermore, exchange gains and
presence in Kazakhstan (a branch or rep-
losses on loans are recognised for tax
resentative office) or a local entity that
purposes.
uses services of a non-resident employer
delivered through foreign employees).

12 Doing business in Kazakhstan

Legal tips
1 3 6
Most investors use a Kazakh limited There is an extensive range of business The process of hiring foreign employees
liability partnership (LLP) as their and professional activities that are is complex and strictly regulated in
investment vehicle. subject to licensing requirements, and Kazakhstan. Immigration and labour
it is important for investors to determine law has undergone numerous changes
in advance whether they need a licence. resulting in frequent inspections of

2
The penalties for failure to obtain a companies that employ foreign workers
licence can be significant, including and increased penalties for violations
potential criminal liability. of labour and migration rules (including
discriminatory remuneration terms and
payment of salaries in foreign currency).

4
Settlements between residents of
Kazakhstan (Kazakh legal entities,

7
branches/representative offices of
foreign non-financial entities, and
Kazakh citizens) must be made in KZT
(with a few exceptions — e. g., branches Kazakhstan often takes a formalistic
of non-financial entities may transact approach to procedural matters. In most
with each other in foreign currency). cases, a company’s representatives must Kazakhstan generally permits foreign
Settlements between non-residents have a detailed power of attorney and law to be the governing law for
(foreign legal entities and citizens) and will regularly be required to refer to it — commercial contracts, except for
Kazakh residents may generally be for example, when signing contracts. subsurface use contracts with the
made in any currency but may have to state, foundation agreements of a
be reported to the National Bank if they Kazakh legal entity, agreements on the

5
hit certain thresholds. transfer of participating interests in a
legal entity and transactions involving
immovable property. Regulatory acts of
the AIFC governing relations between
AIFC participants may be based on the
Compliance with local content
“principles, norms and cases” of the law
requirements is very important for
of England and Wales and standards of
mining and oil and gas companies and
international financial centres.
their subcontractors and is constantly
monitored by government authorities.

Doing business in Kazakhstan 13

 8 10
In certain cases, Kazakh law requires At the same time, Kazakh legal entities
approval to be sought from government have access to the AIFC’s court and
authorities for the acquisition of international arbitration centre, whose
shares/participating interests in legal decisions are recognised and enforced in
entities operating in fields covered by Kazakhstan in a similar way to decisions
competition and natural monopoly of arbitration and international courts.
regulations and by legislation relating to
subsurface use. It is therefore important
to analyse the requirements of Kazakh
laws on a case-by-case basis before
entering into such transactions.

9
Disputes between Kazakh legal entities
are resolved either through amicable
procedures (mediation, amicable
settlement and participatory procedure)
or by courts and local arbitration, as well
as by international courts if a provision
allowing such dispute resolution is
contained in the relevant agreement
between the parties. Public disputes
with Kazakh government authorities can
be resolved either in court or through a
pre-litigation procedure.

14 Doing business in Kazakhstan

Doing business in Kazakhstan 15
3
Getting
started

16 Doing business in Kazakhstan

Arriving in Kazakhstan Business visas (Category B) are An individual may obtain certain
issued to foreign individuals arriving types of official business and private
The Kazakh authorities issue the in Kazakhstan for business purposes visas without a letter of invitation by
following categories of visa: (e. g., negotiations, conclusion of submitting a written application to
• Category A: diplomatic, official and contracts, provision of consulting or the Kazakh consular establishment in
investor audit services, provision of installation, the respective country if he or she is a
repair or maintenance services and citizen of one of the following countries:
• Category B (short-term stay): attendance of conferences, symposiums,
business visa, visa for international forums, exhibitions and concerts). • Australia • Lithuania
road haulage, visa for crew members
of aircraft, marine and river vessels Work visas (Category C) are issued to • Austria • Luxembourg
and trains, visa for religious foreign individuals entering or staying • Belgium • Malaysia
events, visa for practical training in Kazakhstan for employment and • Brazil • Malta
or internships, visa for permanent members of their families. In general,
• Bulgaria • Monaco
residence in Kazakhstan, private visa, a work visa is issued based on a work
• Canada • Netherlands
visa for adoption of Kazakh citizens, permit. See the “Work permits” section
for details. • Croatia • New Zealand
tourist visa, transit visa and exit visa
to leave Kazakhstan • Cyprus • Norway
In Kazakhstan, visas are issued by the
• Czech Republic • Oman
• Category C (long-term stay): visa for Ministry of Internal Affairs (MIA) of
Kazakhstan. Elsewhere, they are issued • Denmark • Poland
permanent residence in Kazakhstan
by Kazakh consulates (for example, the • Estonia • Portugal
(for ethnic Kazakhs), family reunion
visa, work visa, visa for missionary Consular Department of the Embassy of • Finland • Qatar
activities, humanitarian visa, Kazakhstan). Business and work visas • France • Romania
study visa, private visa (for ethnic are issued based on a letter of invitation • Germany • Saudi Arabia
Kazakhs), visa for minors and medical issued by a local Kazakh company or
• Greece • Singapore
treatment visa. a branch or representative office of a
• Hungary • Slovak Republic
foreign company. The state duty for the
Visas of the above categories may execution of invitations is 0.5 times the • Iceland • Slovenia
be issued for single or multiple entry monthly calculation index (MCI).12 The • Ireland • Spain
depending on the category and type fee for issuing a visa ranges from US$20 • Israel • Sweden
of visa. Exit visas are issued only for to US$1,000 depending on the country • Italy • Switzerland
single use. of residence of the invited party and the • Japan • United Arab
type of visa requested. A visa should be Emirates
• Jordan
issued within five business days.
• Korea (South) • United Kingdom
• Latvia • United States
• Liechtenstein

12  The MCI was established by the Law of the Republic of Kazakhstan «On the Budget of the Republic for 2021–2023» Effective on 1 January 2021, 1 MCI = KZT 2,917
(approximately US$7)

Doing business in Kazakhstan 17

Kazakhstan has a visa-free regime with Under this visa-free regime, citizens The letter will then be forwarded to the
certain countries based on international of the above countries may enter IC for further consideration. The IC will
agreements (for example, Belarus and Kazakhstan without a visa for a period consider requests on a case-by-case
the Russian Federation). not exceeding 30 calendar days from basis within 5 working days (although it
the date of crossing the border and not may take longer in practice). In the event
Kazakh migration law allows citizens of
more than 90 calendar days in total in of a favourable decision, the IC will issue
the following countries to enter and exit
any 180-calendar day period. If a foreign a protocol containing the name of the
Kazakhstan without visas:
individual wishes to stay in Kazakhstan company and the foreign individual and
for a longer period, he or she may apply he/she will be able to enter Kazakhstan
• Australia • Luxembourg for a single-entry business or investor based on that protocol provided that
• Austria • Malaysia visa while in Kazakhstan. Investor all other visas and work permits are in
• Bahrein • Malta visas are issued to certain categories place.
• Belgium • Mexico of business immigration applicants
• Bulgaria • Monaco (managers of companies that carry out
investment activities in Kazakhstan and Post-arrival procedures
• Canada • Netherlands
members of their families) and provide Until 10 January 2020, foreign
• Chile • New Zealand certain privileges. individuals arriving in Kazakhstan for
• Columbia • Norway
It should be noted that, due to the more than five calendar days were
• Croatia • Oman normally required to register with
coronavirus pandemic, the visa-free
• Cyprus • Philippines regime with the above-listed 57 the Ministry of Internal Affairs (MIA).
• Czech Republic • Poland countries has been suspended until However, this has been replaced by an
• Denmark • Portugal 1 May 2021. obligation on the part of the inviting
• Estonia • Qatar party to obtain a temporary stay permit
In view of the pandemic and related for the foreign citizen.
• Finland • Romania quarantine measures, obtaining entry
• France • Saudi Arabia to Kazakhstan is currently a more In addition, the inviting party must
• Germany • Singapore challenging and complex process notify the MIA within three working days
for foreigners. A separate written of the arrival of the foreign individual in
• Greece • Slovak Republic
approval from the Interdepartmental Kazakhstan.
• Hungary • Slovenia
Commission (“IC”) chaired by the Immigration records are kept by the
• Iceland • Spain
Deputy Prime Minister of the Republic MIA based on information from inviting
• Indonesia • Sweden of Kazakhstan is required for foreign parties and by the National Security
• Ireland • Switzerland individuals to enter the country. This Committee of Kazakhstan based on
• Israel • Thailand means that, when a foreign individual information from Kazakh border control
• Italy • Turkey seeks entry to Kazakhstan for work, authorities.
• Japan • United Arab business or other purposes, the inviting
company must first prepare an official A temporary stay permit allows a foreign
• Korea (South)  Emirates
request addressed to the head of the individual to stay for a definite period
• Kuwait • United Kingdom
administration of the respective city (e. g., the length of an employment
• Latvia • United States agreement) and must be obtained by the
(the city governor). That request must
• Liechtenstein • Vatican set out the reasons why the company inviting party. A temporary stay permit is
• Lithuania • Vietnam needs the foreign employee in question. issued based on applications from:

18 Doing business in Kazakhstan

1. Individuals inviting foreign Various sanctions are prescribed for Limited liability partnerships (LLPs)
individuals for family reunion non-compliance with immigration The main difference between a JSC
requirements. Please refer to the and an LLP is that an LLP does not
2. Individuals or legal entities that
relevant section for details. issue shares; instead, participants hold
have concluded an employment
agreement with a foreign individual interests in the partnership. An LLP may
Should you require assistance in be formed by one or more participants.
3. Educational organizations planning and managing your human Generally, the participants in an LLP are
capital needs, EY can assist with not liable for the LLP’s debts beyond the
4. Medical organizations
business and work visas, work permit value of their contributions. There are a
5. Religious organizations applications for foreign employees, number of exceptions to this rule under
Kazakh law.
6. Local authorities inviting individuals tax registration, tax and legal compli-
to engage in entrepreneurial ance for expatriate individuals and the The minimum capital requirement for
activities (business immigrants). drafting of secondment agreements. an LLP is 100 MCI (approximately
US$694), with the exception of small
However, foreign individuals in posses- businesses, for which the minimum is
sion of a visa issued after 1 July 2018 set at zero. Participants’ interests are
do not need to obtain a temporary stay Types of legal entities proportional to their contributions to the
permit. Relevant data will be automati- Under the Civil Code, foreign and charter capital, unless the foundation
cally recorded in the Berkut electronic local investors may use a number documents provide otherwise.
database based on information provided of organizational forms to do Participants have pre-emptive rights to
in the letter of invitation. For foreigners business in Kazakhstan, including each other’s interests.
entering Kazakhstan under a visa-free simple partnerships, limited liability
regime, the new rule described above Importantly, LLPs in Kazakhstan are
partnerships, additional liability limited
will apply. The period of stay in Kazakh- separate legal entities that are distinct
partnerships, production cooperatives
stan ends upon the expiry of the visa or, from their participants. As a legal entity,
and joint stock companies.
for visa-free visitors, after 30 calendar an LLP is subject to state registration
days or the period indicated in the tem- In this section we give details of those and taxation in its own right, i. e., it is
types of business vehicles that are most not tax-transparent.
porary stay permit.
widely used in practice.
In addition, Kazakh law allows a foreign
Starting from 2020, the temporary stay
Joint stock companies (JSCs) company to establish branches and
of foreign individuals arriving in Kazakh-
representative offices. Under the Civil
stan under a visa-free regime (including A JSC is a legal entity that issues shares
Code, branches and representative
the 57 countries listed above) must not in order to attract investments to
offices are not considered separate legal
exceed 30 calendar days from the day finance its activities. A JSC is separate
entities.
of crossing the Kazakh border and must and distinct from its shareholders,
not exceed 90 calendar days in any i. e., shareholders are not liable for Representative office
180-calendar day period unless other- the JSC’s liabilities. It may have one
A representative office is established
wise provided in an agreement between or more shareholders. The minimum
to represent a foreign entity’s interests
Kazakhstan and the foreign country con- capital required for a JSC is 50,000 MCI
in Kazakhstan. A representative office
cerned or decided by the Government of (approximately US$350,000).
protects and represents the interests
Kazakhstan. This rule does not apply to of the foreign legal entity and carries
individuals who have a temporary stay out preparatory and auxiliary activities,
permit as described above.

Doing business in Kazakhstan 19

 such as marketing and advertising.
Generally, a representative office may
not engage in commercial activities.

Branch
A branch is a subdivision of a foreign
legal entity that performs all or part
of the foreign entity’s functions. In
particular, it may engage in commercial
activities.
Should you require more information
on the nature and uses of the various
types of business entities in Kazakhstan,
EY offers tax and legal advice on how
to structure a business, as well as a
full range of company formation and
registration services.

Establishing a legal
presence
As a rule, all legal entities, branches and
representative offices in Kazakhstan
must be registered with the state. It is
important to determine whether any
specific approvals and/or consents
must be obtained from government
authorities before proceeding with state
registration.

State registration
State registration in Kazakhstan
follows a “one-stop shop” principle:
all registration documents must be
submitted to a single government
authority, the Government for Citizens.
Under the law on state registration,
the procedure should take from 1 to
5 business days. In practice, general
registration can take up to one month.

20 Doing business in Kazakhstan

The law prescribes a standard set of If entities are not actually present National Bank of Kazakhstan of the
documents that must be submitted for at their legal address, i. e., the state opening of a bank account abroad by
the state registration of a company. revenue authorities cannot find anyone applying for a registration number to
Having all the right documents is key to representing an entity at the time of be assigned to the bank account by
a successful registration process. It is observation, they may be penalized. the National Bank of Kazakhstan
essential to ensure that the documents Specifically, they may be deregistered
• Kazakh legal entities, branches and
have been duly signed, sealed, notarized for VAT purposes or their bank accounts
representative offices of Kazakh legal
and legalized, or apostilled if they may be frozen. It is therefore important
entities are required to provide the
were executed abroad; otherwise, for entities to be actually present at the
National Bank of Kazakhstan with
the registration process may be legal address stated in their foundation
information on any transactions
considerably delayed. documents and registration records, or
on bank accounts held with foreign
at least to ensure that, if the authorities
The state registration fee is currently banks
visit (or if they send correspondence
6.5 MCI (approximately US$43).
or call the contact telephone number), • Kazakh legal entities, branches and
Location (legal address) there is someone who can confirm the representative offices of Kazakh legal
validity of the legal address. entities are required to notify the
A legal entity’s location is the address
National Bank of Kazakhstan of the
indicated in its foundation documents Kazakh law stipulates that entities
closure of or changes in details of
(e. g., its charter). Under Kazakh law, that are not present at their registered
bank accounts held abroad.
a legal entity is located in the same address for one year or more may be
place as its permanently operating liquidated/deregistered based on a court See the “Banking regulations” and
governing body (i. e., its director or decision. “Currency regulations” sections for
board of directors). Location plays more details.
an important part in a legal entity’s Opening a bank account
registration and other legal events, such (legal entities and individuals) Categories of work immigrants,
as the determination of the court with Bank accounts may be opened with a work permits and secondment
which an appeal against such entity local bank in Kazakhstan in the national
should be filed (usually a court in the The Law of the Republic of Kazakhstan
currency and/or in a foreign currency. on Population Migration, adopted on
defendant’s location) and the state Branches and representative offices
revenue authority to which tax and 22 July 2011, establishes the following
of foreign legal entities may opt to use categories of immigrants entering the
other payments must be made. offshore (foreign) bank accounts. country for employment purposes:
Under Kazakh law, government Kazakh legal entities are permitted to
authorities, including state revenue • Foreign immigrant workers, i. e.,
hold bank accounts outside Kazakhstan persons who come to Kazakhstan to
authorities, require legal entities, without restrictions.
branches and representative offices engage in independently arranged em-
(“entities”) to be present at the legal Under currency law, the rules for ployment in high demand occupations
addresses indicated in their foundation notifying the National Bank of in priority economic sectors (business
documents and registration records. The Kazakhstan of the opening of a bank areas), and persons who are engaged
state revenue authorities may visit them account with foreign banks are as follows: by employers to work in Kazakhstan,
at their legal address under the so-called including by intra-corporate transfer
• Kazakh legal entities, branches and
“observation procedure”. representative offices of Kazakh legal • Business immigrants, i. e.,
entities are required to notify the persons who come to engage

Doing business in Kazakhstan 21

 in entrepreneurial activities in agreements, which are commonly used There is, however, a restriction on the
accordance with Kazakh law around the world) and (iii) transfer number of foreign employees that
• Seasonal foreign workers, i. e., of a foreigner to a local branch/ may be hired by a Kazakh employer/
immigrants hired to perform representative office/subsidiary from local host entity — the so-called “ratio
seasonal work during specific periods a parent company based in a WTO requirement”. Currently, the total
(seasons) determined by climatic or country (intra-corporate transfer). number of foreign employees of a
other natural conditions, but not for A work permit is obtained by submitting Kazakh employer/local host entity must
more than one year documents to the local authorities under not exceed:
one of two procedures: the standard
• Labour immigrants who come to • 30% of the total number of Category
procedure or intra-corporate transfer.
Kazakhstan as domestic workers 1 and 2 employees
The latter option is available as a result
to perform household-based work
of Kazakhstan joining the World Trade • 10% of the total number of Category
(services) for individuals (employers)
Organization (WTO). 3 and 4 employees
under a labour immigrant permit.
Work permits Standard procedure An exemption from the ratio requirement
Work permits are issued by local applies for small businesses, state
There are two types of permits
authorities within the quota allocated enterprises and agencies, self-employed
allowing foreign individuals to work in
by the Ministry of Labour and Social foreign individuals, permits issued within
Kazakhstan:
Protection on an annual basis. The quota the quotas for particular countries of
• A permit to engage foreign labour is the maximum number of foreign origin and branches and representative
individuals who can be hired to work in offices of foreign legal entities with no
• A permit issued to a foreign
Kazakhstan in particular regions. Quotas more than 30 employees.
individual who independently came
to Kazakhstan to work in a particular are determined mainly on the basis of To obtain a work permit, each foreign
occupation. The Kazakh government annual applications from employers, individual must meet the set qualification
approves the list of such occupations. which must be submitted by 1 October. requirements.

As in many other countries, employers The government may decide to reduce A work permit under the standard
in Kazakhstan must obtain a permit to the overall quota for a particular year procedure is issued for the following
employ foreign citizens. (for instance, the quota for 2020 was durations:
reduced by 40% compared with 2019).
There is a reasonable amount of • Category 1 — 1, 2 and 3 years with
flexibility in the process of hiring For the purposes of work permits issued annual extension by 1, 2, or 3 years
foreigners in Kazakhstan. Unlike under the standard procedure, foreign
individuals are divided into the following • Category 2 — 12 months with annual
many countries where employers
categories: extension by 12 months, but no more
are required to sign employment
than 3 times
contracts with foreign nationals to hire • Category 1 — CEOs and deputy CEOs
them as local employees, Kazakhstan of companies • Category 3 — 12 months with annual
offers different options, including (i) extension by 12 months, but no more
employing a foreigner directly as a • Category 2 — Leaders of business than 3 times
local employee, (ii) engaging foreign divisions/department
• Category 4 — 12 months with no
specialists through a service contract • Category 3 — Professionals option to extend
with a foreign contractor not present
in Kazakhstan (including secondment • Category 4 — Skilled workers

22 Doing business in Kazakhstan

An employer is charged a state duty the transfer period, but not more than new jobs for Kazakh citizens, retraining
for the issuance or extension of a work 3 years (36 months) with the option to of Kazakh citizens, etc.). No special
permit. The amount of the duty is extend it once by 1 year (12 months). conditions are imposed on the host
established by the Kazakh government company when hiring executives.
ICT-based work permits are issued free
and depends on the type of business
of state duties and are not subject to the Work permit exemptions
of the employer and the category of
foreign labour quota. To encourage foreign investment,
the foreign employee. The amount of
state duty ranges from approximately However, before hiring a foreign Kazakhstan offers various exemptions
US$950 to US$3500 depending on specialist to work in Kazakhstan under from the requirement to obtain work
the sector and the category of the ICT, the local host entity must carry out permits for foreign workers. Exemptions
employee. a search for suitable candidates on the apply, for instance, to
Kazakh labour market and obtain a work • Business immigrants who come
Intra-corporate transfer permit only if no suitable candidates are to Kazakhstan to engage in
An intra-corporate transfer (ICT) is found. For each manager or specialist entrepreneurial activities
a temporary transfer of a foreign work permit received under ICT, the
individual from a legal entity established employer must fulfil one of a number
in the territory of a WTO state other of special conditions (e. g., creation of
than Kazakhstan to a branch, subsidiary
or representative office in Kazakhstan.
For the purpose of obtaining a work
permit under ICT, foreign individuals are
classified into:
• Specialists
• Managers
• Executives
Under the ratio requirement for ICT, the
number of foreign employees must not
exceed 50% of the total number of
mana­gers and specialists. No ratio
requirement applies in relation to ex-
ecutives. A foreign individual engaged
under ICT remains employed by the
home company but must comply with
the requirements of the host employer
in terms of work schedule and health
and safety requirements. The foreign in-
dividual must meet relevant qualification
requirements and have at least one year
of work experience with the entity based
in a WTO member state. Local authori-
ties issue a work permit under ICT for

Doing business in Kazakhstan 23

• CEOs of local branches or • Employees of companies registered in Sanctions for non-compliance
representative offices of foreign one of Kazakhstan’s 10 free economic with immigration legislation
companies and CEOs and deputy zones (FEZs) to implement projects Kazakh law imposes severe sanctions
CEOs of local wholly foreign-owned worth more than KZT 2.917 million on inviting parties and foreign citizens
companies (in 2021) or companies contracted for non-compliance with immigration
by an FEZ resident, for the period of legislation. Administrative sanctions
• CEOs of companies that have
construction and installation work imposed on a company may be as high
entered into agreements with the
in the FEZ and during the first year as US$6,900 (per foreign individual per
Government of Kazakhstan to invest
after the commissioning date of violation). In the worst-case scenario,
more than US$50 million in the
the project facility, in accordance the individual may be subjected to
country, and CEOs of local companies
with the list of employee categories administrative detention for up to 15
running investment projects in key
and numbers adopted by a special days or administrative deportation from
industries under agreements with
committee of competent authorities the country and the company may be
local competent authorities
• Individuals working in a national man- banned from hiring foreigners for up to
• Nationals of member countries of the 1 year, i. e., no work permit will be issued
aging holding company in positions
Eurasian Economic Union regardless and invitations from the company will
not lower than heads of departments,
of their position or the duration of not be accepted for visa applications.
holding a higher education and
their employment in Kazakhstan
possessing the required supporting In addition, a foreign individual must
• Foreign nationals engaged by documents, and individuals hired by a personally attend the administrative
participants or bodies of the Astana national managing holding company court in connection with an immigration
International Finance Centre (AIFC) as members of the board of directors offence. Such foreign individuals are not
• Individuals working in the Astana • Employees sent on business trips for allowed to enter Kazakhstan for 5 years
Hub international technology park a period or periods totalling no more after administrative deportation from
or hired by park participants in the than 120 calendar days in the course Kazakhstan.
positions of managers and specialists of a calendar year. Residence permits
with a higher education
Kazakhstan issues residence permits.
• Managers and professionals with a There is no quota system for immigration
higher education working either with into Kazakhstan under residence permits.
local companies that have entered into
contracts to implement investment
projects in priority areas or with
companies in the architectural, town-
planning and construction industries
contracted by such an investor, for
the period until the end of the first
year after the commissioning date
of the project facility, or as skilled
workers in accordance with the list of
occupations and employee numbers
approved as part of investment
contracts

24 Doing business in Kazakhstan

Family members Incentives for investors 2. 
Priority investment projects
The spouse of a holder of a Kazakh work involving the creation of new
With the aim of creating a favourable production facilities with investments
permit does not automatically receive
investment climate, Kazakhstan provides of no less than US$13,858,177
the same type of work permit. If he or
various benefits for investors depending or the expansion and upgrading
she wishes to take up employment, a
on their area of activity. of existing production facilities
work permit application must be filed
independently. with investments of no less than
Investment contract
US$34,645,443
Secondment In order to enjoy certain investment
incentives, the investor must enter 3. 
Special investment projects
The secondment of foreign personnel is implemented by legal entities
into an investment contract with the
currently a major issue on the Kazakh registered as participants of special
Investment Committee of the Ministry
job market. economic zones, or by owners of a
of Foreign Affairs of the Republic of
The Tax Code provides a safe harbour Kazakhstan (the “Committee”). The free warehouse, or by legal entities
whereby a foreign entity providing form of investment contract is approved that have entered into an agreement
secondees from outside Kazakhstan may by a Government Resolution. on the industrial assembly of motor
avoid being taxed in Kazakhstan. Certain vehicles.
It is important to note that the
conditions must be met for this to apply. All such investment projects must fall
investment contract must be concluded
Under secondment, the local host with a Kazakh legal entity, which may within the list of priority areas of activity
company acts as a tax agent in relation be a subsidiary of a foreign company. approved by the Kazakh government.
to the income of the seconded personnel The term of the investment contract Below we outline types of incentives
and is responsible for shadow payroll is determined by the effective period provided to investors depending on the
tax calculation and reporting, including of the investment incentives to be type of investment project:
personal income tax and social tax provided. 1. Regular investment projects
liabilities. However, it is important The Entrepreneurial Code of Kazakhstan • exemption from customs duties
to note that, besides tax legislation, specifies three types of projects that
the secondment must also comply may be implemented under investment • exemption from import VAT
with relevant Kazakhstan labour law contracts: • in-kind grants (free land lease,
requirements.
1. 
Regular investment projects title to land plots and equipment)
involving the creation of new or up to a value not exceeding 30%
EEY can assist with of total investment
expansion and upgrading of existing
(i) the structuring of a secondment
production facilities, including 2. Priority investment projects
arrangement that meets the applicable
facilities created, expanded and/
legislative requirements; • exemption from customs duties
or upgraded through public-private
(ii) drafting secondment agreements
partnerships, including concession • in-kind grants (free land lease,
and other mandatory documents;
projects. title to land plots and equipment)
(iii) application for required permits,
registration, etc. in Kazakhstan up to a value not exceeding 30%
of total investment

Doing business in Kazakhstan 25

 • tax incentives, and specifically: concluded for one and the same mineral Special economic zones
processing project or production facility. Special economic zones (SEZ) are
• 100% CIT relief for up to 10
years for new production Furthermore, the state grants specialized territories of Kazakhstan
facilities and 3 years for the investment incentives based on with defined boundaries and a special
upgrading of existing production the principle of reciprocity, i. e., the regulatory regime designed to support
facilities subsurface user may be required to certain priority activities. The list of
fulfil a number of social and investment priority activities is set by an Order
• zero rate land tax for up to of the Minister for Investment and
obligations, such as:
10 years Development. The Order specifies
• the creation and preservation of priority activities for 13 (thirteen)
• zero rate property tax for up to
jobs for citizens of the Republic of different SEZs in Kazakhstan:
8 years
Kazakhstan in the extractive and/or
• investment subsidies if the processing industries 1. A
 stana, New City (Nur-Sultan) —
investments are no less than construction of industrial facilities
• the creation, expansion and/or and infrastructure
US$34,645,442 (compensation
upgrading of processing facilities
of up to 30% of expenditure 2. 
National Industrial Petrochemical
on construction works and • obligations relating to the volume and Technopark (Atyrau region) —
procurement of equipment during level of processing of solid minerals manufacture of petrochemical
the implementation stage). products and construction of
• obligations relating to the volume
of products sold as raw materials to industrial facilities
3. Special investment projects
entities operating on the domestic 3. 
Morport Aktau (Mangystau
• exemption from customs duties market region) — metallurgy, construction
• exemption from import VAT • the financing of programs of Kazakh of industrial facilities
educational institutions for the train- 4. Innovative Technologies Park
Agreement on the processing of solid
ing of specialists in environmental (Almaty) — IT services
minerals
protection and applied sciences
The Subsurface Use Code currently 5. O
 ntustik (South Kazakhstan
provides investment incentives for • the financing of the construction and/ region) — production of textile and
subsurface users that implement a or reconstruction of social and/or other materials
priority investment project involving cultural facilities
the processing of solid minerals in 6. 
Saryarka (Karaganda region) —
The termination of an agreement on the
Kazakhstan and have concluded relevant metallurgy, construction of
processing of solid minerals also entails
agreements with the Committee. industrial facilities
the termination of investment incentives
To enjoy investment incentives, granted. 7. 
Khorgos Eastern Gates
subsurface users must invest no less (Almaty region) — production of
than US$48,503,620 and apply to the food, textiles, non-metallic minerals
Committee to conclude an agreement and other materials
on the processing of solid minerals 8. 
Pavlodar (Pavlodar) — manufacture
through a negotiation and appraisal of chemical and petrochemical
process. It should be noted that only materials and construction of
one processing agreement may be industrial facilities

26 Doing business in Kazakhstan

9. T
 araz Chemical Park (Taraz) — development of export-oriented • 100% relief on land tax/land use
manufacture of chemicals and manufacturing fees
non-metallic minerals • 100% property tax relief
13. 
Qyzyljar (Petropavlovsk) —
10. 
Astana-Technopolis (Nur-Sultan) — production of food, electronics, • 100% CIT relief
production of food, pharmaceuticals, mechanical engineering and • 0% VAT on supplies of goods to the
machinery and other products and medical services SEZ
construction and commissioning of
Companies registered as participants of • VAT exemption for supplies of
infrastructure facilities
an SEZ enjoy the following benefits: goods in the territory of the SEZ
11. 
Turkistan (Turkistan) — • 100% social tax relief (only for the
• the SEZ territory is classed as a free
construction of infrastructure, Innovative Technologies Park)
customs zone
industrial and social facilities
• free land lease • simplified procedures for engaging
12. 
ICBC Khorgos (Almaty region) — foreign labour.
development of cross-border • tax incentives (subject to certain
trade and economic cooperation, criteria), and specifically:

Doing business in Kazakhstan 27

Astana Hub International
Technology Park
The Astana Hub International
Technology Park was conceived
as part of the Digital Kazakhstan
national program. The Astana Hub is
a designated and equipped area that
provides a favourable environment
for start-ups, including co-working,
exchange of experience, assistance in
attracting investors and expert advice.
In order to be registered as a participant
in the Astana Hub, Kazakh or foreign
legal entities must submit an electronic
application together with supporting
documents, including a business
plan. The applicant must be involved
in information and communication
technology (ICT) activities.
• It is not a subsurface user or SEZ marketing, engineering and
It should be noted that, until 1 January participant data security services and work
2024, Astana Hub participants are not connected with the creation of data
• It is not a payer of excise tax.
required to be located in the territory of processing centres (unless payable
the Astana Hub. Astana Hub participants may enjoy the to non-residents registered in tax
following benefits: haven jurisdictions)
In order to be registered as an Astana
Hub participant, an applicant must meet • tax incentives (subject to certain • 5% (instead of 15%) withholding tax
the following requirements: criteria), and specifically: on capital gains and dividends on
shares and interests in Astana Hub
• It is a legal entity • 100% CIT relief until 1 January 2029
participants
• It does not have branches or • PIT exemption for both local and
• VAT exemption for imports of
separate corporate units (other than foreign employees of Astana Hub
certain goods and exemption
representative offices) participants until 1 January 2029
from reverse charge VAT for
• It does not implement priority or • exemption from social tax — services acquired by Astana hub
strategic investment projects under expected to be applicable only to participants
an investment contract income of foreign employees of
• VAT exemption until 1 January
Astana Hub participants
• 50% or more of its shares are not 2029 for goods and services
directly or indirectly owned by the • withholding tax exemption for produced and supplied by Astana
government, a national company or non-residents on royalties and Hub participants.
subsidiaries of such a company other income paid by Astana
Hub participants for consulting,

28 Doing business in Kazakhstan

AIFC Foreign partnerships and companies As well as work permit exemptions for
The AIFC was established to provide a may be registered in the AIFC in the foreign workers, the AIFC also provides:
favourable environment for investors. following legal forms:
• Commercial and civil dispute
So far, the AIFC has succeeded in its • Recognised Company resolution through the AIFC Court or
main mission of becoming a hub for the International Arbitration Centre;
foreign and local investors and various • Recognised General Partnership
financial, market and ancillary service • An exchange platform — the Astana
• Recognised Limited Partnership
providers by establishing common law as International Exchange (AIX) — for
the governing law within the AIFC and a • Recognised Limited Liability corporations (listing), state bodies
legal framework similar to those of well- Partnership (bond issue) and retail and large
known international financial centres, investors interested in various
Certain activities, such as financial
such as the Dubai International Financial financial instruments.
services, market activities and ancillary
Centre. services (legal, audit, accounting, The AIX has quickly drawn attention
There are two options for establishing a consulting, credit rating), are subject to from other countries in view of its
legal presence within the AIFC: licensing in the AIFC. simplified arrangements for the
provision of financial services.
i. registration of a new legal entity or AIFC participants may enjoy the
following benefits (subject to certain The Astana Financial Services Authority
ii. recognition of existing legal entities as criteria being met): (AFSA) offers an arrangement whereby
AIFC participants. firms may provide financial services
• CIT exemption until 1 January 2066
New AIFC legal entities may be on the AIX as a Recognised Non-AIFC
for certain financial services specified
registered in forms provided for in Member (RNAM) (i. e., a legal entity
in AIFC law that are provided in the
common law, such as: located in a jurisdiction other than
territory of AIFС
the AIFC may apply to the AFSA to
• Limited Partnership • PIT exemption until 1 January 2066 be recognised as a RNAM). The main
• Limited Liability Partnership for expatriate employees of AIFC advantage of RNAM status is that it
participants enables foreign businesses to avoid a
• General Partnership lengthy application process when they
• СIT and PIT exemption until
• Private Company only seek access to the AIX as a trading
1 January 2066 for dividends and
member.
• Public Company capital gains on securities officially
listed on a stock exchange and shares
• Investment Company in licensed AIFC participants
• Special Purpose Company • VAT exemptions for certain financial
• Non-Profit Incorporated Organization services specified in AIFC law that are
provided in the territory of AIFС
• Protected Cell Company
• Exemption from property tax
• Restricted Scope Company
• Exemption from land tax
• Foundation
• Simplified visa regime for foreign
citizens coming to Kazakhstan to
work for AIFC participants.

Doing business in Kazakhstan 29

4Overview of
tax rules
in Kazakhstan

30 Doing business in Kazakhstan

In the sections that follow we Personal income tax • The individual is a Kazakh citizen or
has permission to live in Kazakhstan
outline the most significant (“PIT”) on a permanent basis
taxes in Kazakhstan. Payers • The individual has a spouse or close
There are a number of Residents are taxed on their worldwide relatives who reside in Kazakhstan
income. Non-residents are taxed on
other less significant taxes, Kazakh-source income only, regardless
• The individual and/or his or her
spouse and/or members of his or
such as assets tax, land of where it is paid. Income is deemed to her family own, or otherwise have at
be from a Kazakh source if it is derived
tax, payments for the from work performed in Kazakhstan.
their disposal, immovable property
in Kazakhstan that is permanently
use of various resources Kazakh-source income also includes available for residence.
interest income from residents and
such as radio frequencies, non-residents that have a permanent Double tax treaties may lay down
environmental taxes and establishment in Kazakhstan and different rules for determining tax
dividends from resident legal entities. residency.
a number of taxes on
For tax purposes, individuals are Taxable income
“subsurface users”, i. e., oil, considered residents if they are present The tax treatment of various types of
gas and mining companies. in the country for not less than 183 days income is described below.
in any consecutive 12-month period
It is important to carry out ending in the current tax year. Employment income
a thorough review of any There is a separate investment Employment income consists of all
proposed business activity to residency program offered by the compensation received by an employee,
AIFC whereby individuals may qualify whether in cash or in kind (including
determine the actual taxes as AIFC investment residents if they employee shares), subject to minor
that apply to it. meet the program requirements and exceptions, regardless of where the
are present in the country for not less income is paid.
than 90 calendar days (including the Under Kazakh law, any income paid
days of arrival and departure) in any for work performed in Kazakhstan
consecutive 12-month period ending in (regardless of whether it is paid from
the current tax period. inside or outside Kazakhstan) is deemed
Kazakh citizens or holders of residence Kazakh-source income subject to
permits are always considered residents statutory payroll taxation in Kazakhstan
of Kazakhstan if their centre of vital by the tax agent (i. e., a Kazakh entity
interests is located in Kazakhstan. An or a branch or representative office of
individual is deemed to have his or her a foreign entity which is responsible for
centre of vital interests in Kazakhstan calculating, withholding and remitting
if all the following conditions are payroll-based taxes/social payments).
simultaneously met: In order to comply with local require-
ments, host companies must run a
shadow payroll to enable tax reporting

Doing business in Kazakhstan 31

of income paid abroad for work done in Exempt income Capital gains
Kazakhstan. Under the shadow payroll
Certain items are exempt from tax, The Kazakh Tax Code defines a capital
mechanism, foreign income is reported
including the following: gain as the difference between the
for Kazakh tax purposes only while net
sale price (disposal value) and the
pay is received from the home-country • Business trip per diems within set
acquisition price (base cost), supported
employer. limits and reimbursement for certain
by documents.
business trip expenses
Companies that engage freelancers
Income derived from the disposal of
(not registered as individual • Accommodation and meal expenses
shares acquired through the exercise
entrepreneurs) are obliged to act as tax within set limits for shift workers
of a stock option equals the positive
agents (as defined above) and withhold while they are at work
difference between the sale price and
PIT, pension contributions and social
• The excess of the market value of the acquisition price. The acquisition
medical insurance contributions from
shares covered by a stock option at price includes the exercise price of the
income paid to them.
the time of exercise over the exercise option and the option premium.
Self-employment and business income price of the option
In the case of sales of property located
Income of Kazakh citizens engaged in • Alimony in blacklisted low-tax jurisdictions, the
self-employment activities (individual taxable amount is determined as the full
• Medical expenses within set limits
entrepreneurs) is subject to income sale price (i. e., the cost of acquisition is
tax. Tax is levied on an individual’s • Dividends and interest on securities non-deductible).
annual business income, which if, at the time of the accrual of such
Capital gains are subject to tax at the
consists of gross income less expenses dividends or interest, the securities
rates shown in the “Rates” section of
incurred in earning that income. To be are on the official list of a stock
this guide.
able to deduct expenses, individual exchange operating in Kazakhstan
entrepreneurs must be registered Since capital transactions of individuals
• Dividends and capital gains on shares
with the tax authorities and provide are not currently adequately addressed
held for over three years if certain
supporting documentation for the in Kazakh tax legislation, it is not
other conditions are met
expenses concerned. The tax rates for possible for capital losses to be deducted
self-employment income are the same • Capital gains derived from securities from capital gains for tax purposes or
as those for employment income as that are listed on a stock exchange for capital losses to be carried backward
shown in the “Rates” section, except for operating in Kazakhstan at the date or forward to other tax periods.
individual entrepreneurs who apply a of sale
Consequently, income recognised
special taxation regime.
• Interest income on deposits paid to for tax purposes may significantly
Investment income tax resident individuals by licensed exceed income recognised in financial
organizations in Kazakhstan statements prepared by a financial
Investment income is normally included institution.
in taxable income. The tax rates are • Income from Kazakh state securities
shown in the “Rates” section. • 90% of the taxable income of an Controlled Foreign Company (CFC)
Some types of investment income are employee if that income is less than Tax resident individuals who directly,
exempt from tax (see the “Exempt 25 MCI (KZT 66,275/approximately indirectly or constructively control
income” section). US$173) per month non-resident legal entities and/or other
types of organizations subject to certain

32 Doing business in Kazakhstan

conditions are liable to 10% PIT on the Rates
CFC’s retained earnings and are subject The following tax rates apply for resident and non-resident individuals depending on
to separate tax reporting obligations. the type of income:
See the “Controlled Foreign Company
(CFC) rules” section for more details. Type of income Tax rate

Employment income of residents and non-residents taxed by the local 10%

Deductions
employer/host company
The taxable amount of a tax resident
Income of residents who receive income under a service agreement 10%
individual’s income may be reduced by
the minimum monthly wage, which has Income of lawyers and private notaries 10%
been set at KZT 42,500 (approximately
Capital gains, interest and winnings of residents 10%
US$100) for 2021. If an employee’s
taxable income for a particular month Dividends received by residents from Kazakh companies 5%
is below the minimum monthly wage,
Capital gains, dividends, interest and royalties paid to non-residents 15%
the unused part of the deduction may
by Kazakh legal entities
be carried over to later months within
the year. This does not apply where an Any other Kazakh-source income paid to non-residents 20%
individual changes workplace during a that is not received from a tax agent (local legal entity)
tax period, i. e., the individual may not
offset an excess arising at the previous Income received in foreign currency is converted into tenge at the exchange rate
workplace against income earned at the current on the last business day preceding the date of payment.
new workplace.
Other deductions include the following:
• Compulsory pension fund
contributions
• Compulsory employee social medical
insurance contributions
• Voluntary pension fund contributions
made by the individual for his or her
own benefit or by a tax agent under
Kazakh pension law
• Medical expenses supported by
documents within set limits
• Payments on mortgages with specific
banks

Doing business in Kazakhstan 33

Tax registration of foreign nationals Social tax Monthly social tax liability is reduced
in Kazakhstan by the monthly amount of compulsory
The most common cases in which a Social tax is payable by employers. It is social insurance contributions (see
foreign national must be registered as a an additional direct tax imposed on the “Social insurance contributions”
taxpayer in Kazakhstan are as follows: employers that is not reserved for the section).
payment of social benefits to employees.
• When opening accounts with local Social tax must be remitted to the state
banks The tax base for social tax is the amount budget on a monthly basis by the 25th
of income paid by the employer to its of the month following the tax period.
• On receiving Kazakh-source income employees. Exclusions include:
not taxed at source in Kazakhstan Mandatory pension fund contributions
• Payments made by way of grants
• On acquiring Kazakh tax resident An employer must withhold and pay
status. • Compulsory pension fund pension fund contributions on a monthly
contributions basis at the rate of 10% on the gross
Tax registration must take place at salaries of employees (local citizens and
the foreigner’s location of residence. • Compulsory employee social medical
insurance contributions foreigners holding a residence permit).
A range of documents must be
submitted. By law, tax registration Employers must calculate social tax at In 2021, pension fund contributions
should take three business days; a flat rate of 9.5% of gross income, less are not charged on monthly income
in practice, it may take up to a week.. exempt amounts. The minimum tax in excess of 50 times the minimum
base for social tax per employee is the monthly wage (KZT 2,125,000/
minimum monthly wage. approximately US$5,550). Pension fund
contributions are deductible for PIT and
social tax purposes.

34 Doing business in Kazakhstan

The Kazakh Law on Pension Provision contributions at their own expense contributions to the Social Medical
also requires employers to pay at 3.5% of the gross salaries of the Insurance Fund from income paid to
additional professional pension employees concerned, whether or employees (Kazakh citizens, repatriated
fund contributions at their own not they have a Kazakhstan residence ethnic Kazakhs, citizens of the Eurasian
expense for employees working in permit. Economic Union and foreign citizens
certain occupations in 17 industry holding a Kazakhstan residence
sectors, including mining, oil and gas, Mandatory social medical insurance permit). These employee contributions
pharmaceutical and consumer goods Employers must make employer are deductible for PIT and social tax
manufacturing. The contributions are contributions to the Social Medical purposes.
payable at the rate of 5% on the gross Insurance Fund on a monthly basis
at the rate of 2% (3% from 2022) of Contributions must be withheld monthly
salaries of such employees.
income paid to employees (applicable at the rate of 2% of the employee’s
Tax agents who pay income to to Kazakh citizens, repatriated ethnic income.
individuals under civil contracts must, Kazakhs, citizens of the Eurasian In 2021 income subject to employer
in addition to 10% PIT, withhold and pay Economic Union and foreign citizens and employee contributions to the
10% pension fund contributions on the holding a residence permit). Social Medical Insurance Fund is capped
gross amount of that incomex.
In addition to making employer at 10 times the minimum monthly
Social insurance contributions contributions, starting from 2020 wage (KZT 425,000/approximately
Employers must pay social insurance employers must withhold employee US$1,110) per month.
contributions, which form part of social
tax, at the rate of 3.5% of income paid
to employees (Kazakh citizens and
foreigners holding a residence permit).
In 2021, social insurance contributions
are not charged on monthly income in
excess of 7 times the minimum monthly
wage (KZT 297,500/approximately
US$780). The minimum monthly tax
base for social insurance contributions
per employee is the minimum monthly
wage. Social insurance contributions are
expected to be charged at a flat rate of
5% starting from 2025.
Under the Eurasian Economic Union
Agreement of 29 May 2014 between
Armenia, Belarus, Kazakhstan,
Kyrgyzstan and the Russian Federation,
employers that employ citizens of
Eurasian Economic Union member
states under employment contracts
are required to pay social insurance

Doing business in Kazakhstan 35

Tax filing at which Kazakh tax residency status Kazakh tax returns must be filed by the
arises), the foreign individual must following tax resident individuals:
Tax filing by a tax agent
report earnings attributable to working
1. Individual entrepreneurs
As mentioned above, any employment days in Kazakhstan, even if it is only a
income, including benefits in kind, paid few days. For this purpose, the individual 2. Individuals engaged in private
for work performed in Kazakhstan concerned would be required to obtain practice, such as notaries, lawyers
(irrespective of the place of payment) an Individual Identification Number in and enforcement officers
must be taxed and reported by the local Kazakhstan and file a personal income
3. Individuals who receive property
tax agent. tax return in which he or she may claim
income
a treaty exemption (if there is a double
A tax agent must withhold PIT,
tax treaty with Kazakhstan). If that 4. Tax resident individuals who receive
pension fund contributions and
threshold is exceeded, i. e., if the foreign income not taxed at source in
employee medical social insurance
individual spends 183 or more calendar Kazakhstan, including income from
contributions on a monthly basis no
days in Kazakhstan, the local customer outside Kazakhstan
later than the date on which income is
will become responsible for taxing the
paid. PIT, pension fund contributions, 5. Tax residents who are Kazakh
foreign employee’s salary and must run
professional pension fund contributions citizens, repatriated Kazakhs or
a shadow payroll (i. e., whereby the local
and employer and employee medical individuals holding a residence
company processes salary paid outside
insurance contributions must be paid no permit where they have the following
Kazakhstan through local payroll for
later than 25th of the month following types of property:
Kazakh tax purposes). In this case, the
the month in which employment income
local customer would need to obtain all • real estate, if the real estate
was paid. Social tax and social insurance
required supporting documents. Should itself or rights therein or
contributions must be paid by the 25th
it fail to obtain those documents, it transactions involving the real
of the month following the month in
would be obliged to apply PIT to 80% of estate are subject to state or
which employment income accrued.
the service fee charged by the foreign similar registration/reporting
The tax agent must file a PIT and social service provider whose employees come requirements under the laws
tax declaration (Form No. 200.00) on to Kazakhstan. of a foreign state
a quarterly basis by the 15th of the
Tax filing by individuals • securities whose issuers are
second month following the reporting
registered outside Kazakhstan
quarter. The form also includes pension Where there is no tax agent in
fund contributions, professional pension Kazakhstan, or where specifically • equity interests in legal entities
fund contributions, mandatory medical provided in tax law, resident and non- registered outside Kazakhstan.
insurance contributions and social resident individuals are responsible for
insurance contributions. calculating PIT obligations and filing a Administrative sanctions for
Kazakh tax return. The filing deadline individuals
There is also a special set of rules
for a Kazakh tax return is 31 March of Failure to submit a PIT return on time:
regulating the taxation of foreign
the year following the reporting year,
nationals in situations where a foreign • First time — a warning
and any income tax liability must be
service provider sends an employee to
settled within 10 calendar days of the • Repeat violation within a year —
a Kazakh customer for a short period
filing deadline. a fine of 15 MCI (KZT 43,755/
of time. Essentially, for the first 183
calendar days (i. e., up to the point approximately US$100)

36 Doing business in Kazakhstan

Concealment of taxable items: • A fine of up to 3,000 MCI Failure to remit, withhold or pay
(Approx. US$20,600), or mandatory pension fund contributions in
• First time — a fine of 200% of tax
full and on time:
payable on each concealed taxable • Correctional labour to the same
item amount, or • First time — a warning
• Repeat violation within a year — • Community service for up to • Repeat violation — up to 50% of the
a fine of 300% of tax payable on each 800 hours, or amount of contributions not remitted,
concealed item withheld or paid on time.
• Restriction of liberty for up to
Concealment of information about 3 years, or Failure to remit or pay social insurance
property outside Kazakhstan and funds contributions and mandatory medical
• Imprisonment for up to 3 years
in foreign bank accounts: insurance contributions in full and on
Administrative sanctions for payroll time:
• First time — a fine of 100 MCI violations
(KZT 291,700/approximately • First time — a warning
Understatement of taxes in tax returns —
US$685) • Repeat violation — up to 50% of the
up to 50% of the understated amount of
• Repeat violation within a year — PIT and social tax amount of contributions not paid or
a fine of 200 MCI (KZT 583,400/ remitted on time.
Non-withholding or incomplete
approximately US$1,370) Concealment of taxable items:
withholding of taxes — up to 50% of the
Failure to pay tax and other mandatory PIT not withheld • First time — a fine of 200% of tax
payments owing to a failure to submit Failure to submit PIT returns on time: payable for each concealed taxable
a tax return or the submission of item
a tax return with knowingly false • First time — a warning
• Repeat violation within a year —
information if this caused tax to be • Repeat violation within a year — a fine of 300% of tax payable for each
underpaid by more than 20,000 MCI a fine of 70 MCI (KZT 204,190/ concealed item
(KZT 58,340,000/approximately US$480)
US$137,200):

Doing business in Kazakhstan 37

Corporate income tax For certain activities (sea freight Deductions include all business-related
shipping, bareboat charter and time and profit-oriented expenses plus
(CIT) charter services, trading of goods via a number of other minor items. In
CIT is imposed on the worldwide income the Internet, screening of national films addition to normal operating expenses,
of resident entities and Kazakh-source in cinemas, activities under priority examples of deductible expenses include
income of non-resident entities. The investment projects or in special interest (up to the thin capitalization
basic principles are consistent with economic zones, etc.), CIT may be limit or the amount actually paid for
those applied in most developed reduced by 100% (see the “Incentives certain borrowings), foreign exchange
economies. However, the required for investors” section for details). losses, certain entertainment expenses
standards of supporting documentation up to a limit of 1% of taxable payroll
Taxable income and charitable expenses (up to 4%
are particularly high in Kazakhstan.
Taxable income is calculated as of taxable income). This list is not
Payers aggregate annual income after exhaustive. Losses on entrepreneurial
Residents are taxed on their worldwide certain adjustments minus statutory activities and from the sale of Group
income, non-residents on income from deductions. Aggregate annual income I fixed assets (such as buildings) may
Kazakh sources. Non-residents doing includes practically all forms of income, be carried forward over the following
business in Kazakhstan through a per- including capital gains. 10 calendar years inclusively and
manent establishment (PE) are taxed on Certain types of income are excluded offset against taxable income for those
the PE’s profits, which are calculated in from taxable income, including dividends years. Capital losses from the sale of
essentially the same way as for resi- and capital gains on shares held for over securities and other non-depreciable
dents. Non-residents that derive Kazakh- three years if certain other conditions assets may generally be offset against
source income otherwise than through are met. corresponding capital gains (with certain
a PE are taxed by withholding (see the exceptions).
“Withholding tax” section below).

38 Doing business in Kazakhstan

Tax depreciation Tax legislation provides incentives in Tax rates and compliance
To qualify as a fixed asset for tax the form of tax depreciation allowances The standard rate of CIT is currently
purposes, an item must be defined as for fixed assets. For example, the value 20% of taxable income. In addition, net
such in the entity’s IFRS accounts (with of production buildings and facilities, income (after the deduction of CIT)
certain exceptions). machinery and equipment that are of a non-resident’s PE (branch) in
brought into operation for the first Kazakhstan is subject to branch profit
For tax depreciation purposes, fixed time in Kazakhstan and are to be used tax at the rate of 15%. This is usually
assets are split into four groups. Assets in business activities for at least three reduced by tax treaties.
may be depreciated at any rate (stated years may be depreciated before the
in the entity’s tax register) up to the commencement of operation when The tax period is a calendar year. The
maximum rates indicated in the table construction expenses are incurred or CIT declaration deadline is 31 March
below. in equal amounts during the first three of the year following the reporting
years of operation. Capital costs for period. As a rule, all taxpayers (with
The following items are not classed as
the modernization and reconstruction certain exceptions) are subject to
amortizable fixed assets:
of such fixed assets may be deducted the CIT advance payment procedure,
• Land when they occur. These incentives do which requires them to estimate their
not apply to participants in special tax liability for the year and pay tax in
• Intangible assets with an indefinite
economic zones or producers of alcohol, monthly instalments no later than the
useful life
tobacco or agricultural products, or to 25th of the current month.
• Construction in progress, etc. assets used in subsurface development
Expenses actually incurred for the use, activities or priority investment projects. EY offers the following services in the
repair, maintenance and liquidation of However, subsurface users may apply area of CIT:
fixed assets are defined as “subsequent double depreciation rates to assets
brought into operation for the first time • 
Helping companies with all aspects
costs” and are generally deductible in
provided they will be used in business of tax compliance
the tax period when they are actually
incurred (unless capital in nature). activities for at least three years. • 
Tax accounting and risk advisory
services
• 
Drafting and review of mandatory
Maximum
Group Type of fixed asset tax accounting policies
depreciation rate

I Buildings and structures (except for oil and gas wells and 10% • 
A comprehensive tax litigation
transmission facilities) service, including, where permitted,
representation of taxpayers in court
II Machinery and equipment (except for machinery and 25%
equipment for oil and gas production, computers and data
processing equipment)

III Computers, software and data processing equipment 40%

IV Fixed assets not included in other groups, including oil and gas 15%
wells, transmission facilities, and machinery and equipment
for oil and gas production

Doing business in Kazakhstan 39

Controlled Foreign Company (CFC) Under amendments to the Kazakh Tax Withholding tax (WHT)
rules Code effective from 2021, an entity is
Kazakh tax law has controlled foreign not regarded as a CFC if it is registered (other than PIT)
company (CFC) rules that affect the in a country that has a tax treaty with WHT applies to most types of Kazakh-
Kazakh taxation of groups ultimately Kazakhstan and in which the nominal source income paid to non-residents
owned by Kazakh residents. Under the income tax rate is greater than 15%. that are not registered for tax purposes
rules, a Kazakh resident must report any The list of such countries is to be in Kazakhstan and even to some who
CFC (as defined below) to the Kazakh approved by the relevant authorized are if due care is not taken. The rules
tax authorities and an appropriate part body no later than December 31 of the are complex and inconsistent, and
of the CFC’s profit for the reporting year following the reporting period. there are some instances in which WHT
period must be included in the resident’s Also excluded from the definition of a could apply to payments that involve
aggregate annual income for Kazakh CFC are foreign entities that have a total no presence in Kazakhstan. It is vital
income tax purposes (CIT or PIT income of less than about USD 1 million, to have a thorough understanding of
accordingly). The CFC rules prescribe are in a loss-making position or are how WHT may affect your business.
certain deductions, exemptions and owned by AIFC participants. There are also significant administrative
tools for the elimination of double requirements that must be met in
taxation. There are also new reliefs, including order to enjoy benefits afforded by tax
an exemption for CFC profits in which treaties.
Under the Kazakh Tax Code, an entity active income accounts for at least 80%
(a legal entity or another form of and the reduction of CFC profits by Payers
business activity, such as a trust) is amounts of Kazakh-sourced income. Tax agents withhold tax from a non-
treated as a controlled foreign company resident’s gross Kazakh-source income.
if (i) 25% or more of interests or shares Some of the above reliefs are available
Any tax-registered entity that pays
in the entity is directly, indirectly or retrospectively (e. g., from 2018 or
Kazakh-source income is potentially
constructively owned by a Kazakh 2020).
a tax agent.
resident, or if a Kazakh resident has While the documentation requirements
direct, indirect or constructive control Taxable income
for claiming CFC tax relief have been
over the entity; (ii) the effective tax rate tightened, there are also beneficial Taxable income includes (but is not
of the entity is less than 10% according changes, such as the exclusion of limited to):
to financial statements for the current certain types of “paper income” when
and two previous periods, or if the entity • Income of non-residents from the
calculating the financial profit of a CFC.
(or a legal entity responsible for keeping sale of goods or performance of work
accounts of its income and expenditure or services in Kazakhstan
or managing its assets) is registered in a • Income from management, financial
blacklisted jurisdiction. (with some exceptions), consulting,
engineering, legal (except for
representation in court and notary
services) and auditing services
performed outside Kazakhstan
• Any income of tax-haven entities,
regardless of where the underlying
operations take place

40 Doing business in Kazakhstan

• Capital gains on sales of shares or a refund (which is a complex and time- from WHT on remuneration for services:
interests in Kazakh entities or foreign consuming process with an uncertain (i) income from the provision of services
legal entities that derive most of their outcome). must not be exempt and must not be
value from Kazakhstan deductible from or otherwise adjust the
In addition, the Multilateral Instrument
tax base of the entity concerned and (ii)
• Capital gains on sales of Kazakh (MLI) entered into force in Kazakhstan
the nominal tax rate in the jurisdiction of
property that is subject to from 1 October 2020 and should affect
its incorporation must be at least 15%.
registration. all of its 55 DTTs. However, some of
For entities in tax treaty partner countries
those treaties will not be subject to MLI
Certain types of income are exempt not covered by the MLI, additional
as certain countries did not include
from withholding tax, including divi- requirements are introduced regarding
DTTs with Kazakhstan in their MLI
dends and capital gains on shares held beneficial ownership of income.
accession documents (e. g., Germany and
for over three years if certain other
Switzerland), while others have not yet All this means that, whereas previously,
conditions are met.
signed/ratified the MLI. the application of treaty benefits to
Tax rates and compliance transactions with foreign entities was
Kazakhstan acceded to all the minimum
a relatively straightforward matter, the
Most double tax treaties (DTTs) standards of the MLI. In terms of
adoption of the MLI has made it essential
concluded by Kazakhstan provide either limitation of benefits, Kazakhstan
to consider additional requirements
for exemption from Kazakh WHT or adopted the simplified limitation of
relating to supporting documents.
for reduced WHT rates of 5% to 10% benefits (SLoB) provision, which may
subject to certain conditions being met. substantially limit tax benefits for holding WHT is remitted by tax agents. The
However, these benefits are also subject and financing structures involving general time limits for remittance are:
to documentation rules laid down in the intermediary companies. However, since
• For amounts accrued and paid, no later
Tax Code. The rules are very specific as only a few countries (Russia, Slovakia
than 25 calendar days following the
to the documentation required, and it is and India) have decided to apply SLoB
month in which payment was made
generally recommended that a tax agent as well, most of Kazakhstan’s DTTs will
should be in possession of the relevant be subject to the principal purpose test • For amounts accrued but not yet paid,
documentation at the time payment is (PPT). if they are deducted for CIT purposes,
made (or by the end of the tax year or no later than 10 calendar days
At the same time, amendments to the
31 March of the following year at the following the filing deadline for CIT
Kazakh Tax Code effective from 2021 lay
latest) if treaty relief is to be applied. returns
down additional requirements for foreign
Otherwise, tax must be withheld in full entities based in treaty partner countries • For prepayments, no later than 25
and the payer must subsequently claim covered by the MLI in terms of exemption calendar days after the end of the
month in which income accrued to the
non-resident.
Type of income Rate of WHT
Interest, dividends, capital gains and royalties 15% Under the Tax Code, tax agents must
submit a WHT return by the following
Insurance premiums under insurance risk agreements 15%
deadlines: (i) for Q1-Q3: no later than
Income from international transportation services and insurance 5% the 15th of the second month following
premiums under risk reinsurance agreements
the quarter in which a WHT obligation
Income of an entity registered in a tax haven 20% arose, (ii) for Q4: no later than
Other income, including income from the provision of services 20% 31 March of the following year.

Doing business in Kazakhstan 41

Value added tax Even if an entity is not required to • A VAT declaration is not submitted
register for VAT purposes, it may usually within six months of the due date
European Union-style VAT applies in do so voluntarily by applying to the established by the Tax Code
Kazakhstan. The VAT rate has fallen appropriate tax committee.
progressively from 20% in the late • The VAT payer fails to submit a
1990s to 12% currently. Deregistration written explanation of the reasons for
absence at its premises during a tax
A VAT payer may apply for VAT inspection
Payers and registration
deregistration if the following conditions
All taxpayers registered for VAT are simultaneously met: • The sole founder or head of a legal
purposes are required to charge VAT on entity or an individual entrepreneur is
their taxable supplies and calculate and • Taxable turnover for the calendar inactive, has unserved or unexpunged
report their VAT obligations. year preceding the year in which convictions, etc.
the application is submitted did not
Taxpayers are required to register exceed 30,000 MCI (approximately • The VAT payer is declared inactive
for Kazakh VAT purposes if their US$208,000) • The registration/re-registration of
total turnover in a calendar year
• Taxable turnover from the beginning the VAT payer is declared invalid by
exceeds 30,000 MCI (approximately
of the current calendar year in which a court.
US$208,000).
the application is submitted did not
The deadline for VAT registration is VATable turnover
exceed 30,000 MCI (approximately
10 business days after the end of the US$208,000). For a VAT payer, taxable turnover is the
month in which the turnover threshold is total value of supplies (sale, exchange
exceeded. The tax authorities will deregister a VAT or gift) of goods, work and services and
payer without notification if (inter alia): purchases of work and services from
non-registered non-residents. A limited

42 Doing business in Kazakhstan

range of non-taxable and exempt Exempt supplies VAT calculation and offset
supplies are excluded from this rule. Turnover and imports exempt from VAT carry-forward
Definitions: include: A taxpayer’s VAT liability is calculated
• For Kazakh VAT, the term “goods” as output VAT (i. e., VAT charged by the
• Turnover relating to residential
applies to practically any form of taxpayer) minus input VAT (i. e., VAT
buildings
property or property rights paid by the taxpayer to its suppliers,
• Certain financial services reverse-charge VAT and import VAT)
• Taxable supplies of work or services in a given reporting period.
are any supplies of work or services, • Transfers of assets under finance
both chargeable and free of charge, leases (insofar as interest is The amount by which input VAT exceeds
as well as anything that is done for concerned) output VAT may generally be carried
consideration and is not a supply of forward against future VAT liability. In
• Certain services rendered by non-
goods. practice, obtaining a refund (if eligible)
profit organizations
is a laborious process, although there
A small number of transactions, such • Certain services in the areas of are special refund procedures for certain
as transfers to a legal entity’s charter culture, science and education situations (such as continuous exports).
capital, are treated as non-taxable.
• Goods and services related to medical Non-recoverable input VAT
Goods and services are VATable if, and veterinary activities Input VAT on certain items cannot be
under the place of supply rules, they are
• Imports of certain assets included in offset. These include:
deemed to be supplied in Kazakhstan.
The place of supply rules are broadly a government-approved list • Goods, work and services not related
similar to European Union rules; in • Goods imported by individuals to taxable turnover
particular, they treat some supplies that not for entrepreneurial purposes • Cars purchased as fixed assets
are made outside of Kazakhstan, such (certain limits apply)
as consulting services, as made within • Goods, work and services when a
Kazakhstan, and therefore taxable. • Turnover relating to international VAT invoice is issued that is not in
transportation services compliance with the requirements of
Zero rating the Tax Code
• Imports of goods from an EAEU
Turnover taxed at 0% VAT includes: member state within the same legal • Goods and services purchased
• Export sales of goods entity (intra-entity transactions). out of petty cash in an amount
• International transportation services Offsetting of VAT exceeding 1,000 MCI (approximately
US$7,000), irrespective of the
• Sales of oil and lubricants by airports VAT paid on goods and services frequency of payment
when fuelling aircraft of a foreign purchased by a VAT payer (i. e., input
air carrier engaged in international VAT), including reverse-charge VAT • Goods, work and services purchased
transportation already paid and VAT paid at customs, from suppliers declared by courts as
may generally be offset (credited) when inactive entities
• Sales of certain goods into the
determining the taxpayer’s VAT liability • Goods, work and services where
territory of a special economic zone
to the budget. However, no offset is the courts regard them as having
which are wholly used for activities
granted for VAT incurred on supplies been purchased by private business
that meet the objectives of the
that are exempt or deemed to be made entities without actual intent to carry
special economic zone
outside Kazakhstan. on entrepreneurial activities.
• Sale of refined gold

Doing business in Kazakhstan 43

Recovery of excess VAT through Reverse charge VAT A VAT return for imports of goods into
the control account Under the place of supply rules, certain Kazakhstan from other EAEU member
With effect from 1 January 2019, services are deemed to be supplied states must be filed with the tax
certain VAT payers that are participants where the purchaser of the services authorities and the relevant tax must be
in the tax authorities’ official online belongs (e. g., consulting, auditing, paid to the budget by the 20th of the
system, which is used for the receipt and engineering, design, marketing, month following the tax period (month).
processing of electronic VAT invoices, accounting, advocacy, information
Electronic invoicing
may open a control account on a processing, etc.). Where such services
voluntary basis. The control account is a are rendered by a non-resident From 1 January 2019, taxpayers are
bank account with a Kazakh commercial not registered for VAT purposes in obliged to issue electronic VAT invoices
bank for VAT transactions (e. g., Kazakhstan, the Kazakh purchaser for their transactions (with certain
payment of VAT to the state budget or of the services is required to assess exceptions).
to suppliers). and pay VAT to the budget on its An electronic VAT invoice can only
own (similarly to the reverse charge be issued using the official online
Taxpayers that may recover VAT via a
mechanism). system provided by the state revenue
control account include:
It is the obligation of the Kazakh committee for the receipt and
• Taxpayers that use goods acquired/ processing of electronic VAT invoices.
purchaser of services to pay the reverse
received or leased assets in the Electronic VAT invoices have a
charge VAT, which it should be able to
production of other goods. The list of prescribed format and must be signed
offset against output VAT subject to the
goods/leased assets is approved by a using an electronic signature. Electronic
general rules on VAT offsetting.
designated body invoices must normally be issued within
• Taxpayers that export goods EAEU 15 calendar days from the date of a
The Tax Code lays down certain taxable transaction.
• Taxpayers that sell goods into the
procedures and compliance Taxpayers not registered as VAT payers
territory of a special economic zone
requirements for exports and imports are also required to issue electronic VAT
which are wholly used for activities
of goods from/to Kazakhstan to/from invoices in cases where: (i) goods are
that meet the objectives of the
EAEU countries (Belarus, Kazakhstan, sold via the “virtual warehouse” module
special economic zone.
Russia, Armenia and Kyrgyzstan). Strict in the online system and (ii) the value
VAT rate and compliance documentation and timing requirements of a transaction exceeds 1000 MCI
apply (failure to observe these may (approximately US$7,000).
The VAT rate is 12%. The tax period
result, for example, in the 0% VAT rate
for VAT is a calendar quarter. The filing
for exports to EAEU countries being Virtual warehouse
deadline for VAT returns is the 15th
denied). With effect from 1 January 2019,
day of the second month following the
reporting period. The VAT payment Import VAT on goods is payable by the “virtual warehouse” module
deadline is the 25th day of the second the importer at the rate of 12% in was introduced in the official online
month following the reporting period. Kazakhstan (certain exemptions apply). system and is obligatory for the
reporting of goods included in a

44 Doing business in Kazakhstan

special list (e. g., motor vehicles,
certain household devices, sugar,
etc.). The “virtual warehouse” allows
for the systematization of inventory
accounting, automatic calculation of
ending inventory and monitoring of
the movement of goods from entry
into Kazakhstan until sale to the final
consumer.

Electronic waybills
Electronic waybills must be generated
when there is a movement or supply of
certain goods. Starting from 1 January
2020, electronic waybills must be
generated for the production and supply
of biofuel. Requirements to generate
electronic waybills for other goods will
be introduced during 2021. The list of
goods for which electronic waybills must
be generated will be established by the
authorities.

EY offers help with identifying

VAT risks and calculating VAT
compliance costs, as well as with
cross-border VAT planning.

Doing business in Kazakhstan 45

Subsurface use taxes New tax obligations and other provisions Tax audits
that are disadvantageous to taxpayers Many taxpayers are audited, and it is
Please refer to EY’s publications dealing may not be introduced retroactively. vital to manage the tax audit process.
with the taxation of oil and gas and
These changes should have a positive Tax audits may take the following forms:
mining companies.
effect as they bring more structure to • Comprehensive audit
the process of amending the Tax Code.
Tax administration • Thematic (targeted) audit
Tax returns
Kazakhstan has complex tax • Cross-check audit
Tax returns (declarations and
administration rules. Substantial fines calculations) are prepared by the • Time study.
and penalties may be imposed even for taxpayer or the tax agent or by their
minor infringements. Tax audits may be divided into two
representatives. Tax returns may be types: those initiated based on
Timing and frequency of Tax Code prepared on paper or electronically in risk assessment procedures, and
amendments the Kazakh or Russian languages. unscheduled tax audits. The former type
A recent legislative amendment Tax accounting policies may be initiated against taxpayers that
addressed concern over the frequency have been assigned a high risk profile.
Tax accounting policies consist of a
with which changes are made to the Tax Thus, all organizations that have been
document adopted by a taxpayer/tax
Code. notified as having a high risk profile
agent that regulates tax accounting
should check the “tax audit list” for
Administrative changes that benefit in accordance with the Tax Code.
the first and second half-year periods,
taxpayers may be adopted more often All taxpayers/tax agents must have tax
which is published on the website of
than once a year, but not later than accounting policies.
the Prosecutor General’s Office of the
1 December of the current year.
Republic of Kazakhstan.

46 Doing business in Kazakhstan

Tax audits may cover any period Tax assessments Desk (in-house) inspection report
within the statute of limitations. Upon completion of a tax audit, the After receiving a desk (in-house)
From 1 January 2020, the statute of tax authorities usually issue a tax audit inspection report, the taxpayer has
limitations is generally three years, report (if no tax violations are found, 30 (thirty) business days either to:
except in the case of subsurface users a statement to that effect is made in (a) remedy violations set forth in the
and taxpayers subject to tax monitoring, the report). Based on the findings of report; or (b) file an explanatory letter
for which it is five years. Tax audits the report, the tax authorities issue a with the tax authority that issued the
can be intrusive and time-consuming, notification of assessments of taxes and report.
and may sometimes even result in other compulsory payments payable to
criminal proceedings, as discussed in the the budget, as well as any penalties and It should be noted that once the
“Penalties and interest” section below. interest. The tax authorities also issue taxpayer files that explanatory letter,
a statement of administrative offences there is no specific timeline within
In the case of certain types of taxpayers
committed, if any, indicating the amount which the tax authority must review it.
(those that have investment contracts,
of administrative penalties due. After reviewing the explanatory letter,
are subject to tax monitoring or have a
the tax authority either voids the desk
total tax liability in excess of 20,000 MCI Contesting tax audit or desk (in-house) inspection report or issues a
(approximately US$142,000 in 2021)), (in-house) control reports decision declaring the taxpayer’s failure
the tax authorities issue a preliminary
to comply with the notice to remedy
tax audit report setting out the results of Tax audit report
violations.
a tax audit. The taxpayer has the right to
After receiving a report on a tax audit,
submit objections to the preliminary tax That decision may be contested by
the taxpayer has 30 (thirty) business
audit findings before the final tax audit appealing to either (a) a higher tax
days to file an appeal against the report.
report is issued. authority (i. e., a local tax office), or
The appeal must be filed with the
(b) the Ministry of Finance, within 5
Standard audit file Ministry of Finance of Kazakhstan.
(five) business days. If, after reviewing
The standard audit file was introduced In some cases, the Ministry of Finance the appeal, the tax authorities issue
from 1 January 2019. It is a means for may, after receiving the appeal, carry a decision with which the taxpayer
taxpayers to submit accounting data to out additional tax control measures with disagrees, the tax authority must initiate
the tax authorities online on a voluntary a view to gathering additional evidence. a targeted audit to review the underlying
basis and enables the taxpayer’s data If, after considering the appeal, the issue in greater detail. It should be noted
to be analysed via the tax authorities’ Ministry of Finance issues a decision that the tax authorities do not always
information systems. The submission which does not yield the desired initiate targeted audits on time.
of a standard audit file enables (i) a tax outcome, the taxpayer may appeal
audit based on risk management against it to the courts of Kazakhstan. Horizontal monitoring
procedures to be conducted within 5 Horizontal monitoring is a regime
calendar days of the delivery of the tax It is essential to point out that an appeal of co-operative compliance which
audit order, and (ii) an unscheduled to the court may be filed even without was introduced in Kazakhstan’s
tax audit to be conducted within 10 the pre-appeal process described above. tax legislation on 1 January 2019.
calendar days after the delivery of the The time allowed to file an appeal with It involves the voluntary exchange of
tax audit order. a court of first instance is 3 (three) information and documents between
months from the date on which the state authorities and a taxpayer
taxpayer learned of the Ministry of (special requirements must be met).
Finance’s decision on its appeal. Horizontal monitoring is implemented

Doing business in Kazakhstan 47

from 1 January of the year following any irregularities will be ironed out by • violations identified as a result of in-
the signing of the horizontal monitoring 31 December 2023, after which the house inspection
agreement and runs for three years with number of taxpayers participating in the
• multiple instances of thresholds set
the option to extend. Taxpayers subject horizontal monitoring will increase.
by the Tax Code for the right to apply
to horizontal monitoring are granted the
Risk management system special tax regimes almost being
following benefits:
The risk management system is based reached
• the right to receive an advance
clarification from the tax authorities on risk assessment and includes • criteria that can reduce the level of
regarding the tax treatment of a measures developed and applied by the risk
planned transaction tax authorities to identify and prevent
risk, which is in turn defined as the • criteria approved by the authorized
• no tax audits will be conducted for probability of damage being caused to body jointly with the authorized body
tax periods during which the taxpayer the state as a result of taxes not being for entrepreneurship
was under horizontal monitoring paid in full. • criteria used to verify the difference
(subject to certain exceptions) between input and output VAT.
The tax authorities group taxpayers
• no administrative penalties will be into low-, medium- and high-risk Penalties and interest
imposed for a tax offence in the categories by analysing tax reporting
following cases: The Administrative Offences Code
data, information provided by state
imposes administrative penalties for
• if the taxpayer agrees with the authorities and local executive
non-compliance with tax regulations,
notification issued as a result of bodies and documents and/or other
including the following:
horizontal monitoring procedures information relating to a taxpayer’s
and does not file a court appeal business activities. Information on the • under-declaration of taxes — 20% to
against the results of horizontal exact criteria is confidential, except for 80% of the under-declared amount
monitoring the following criteria:
• understatement of an advance CIT
• if the offence was discovered as a • tax burden payment by more than 20% — 20% of
result of a tax audit for a period in the understated tax
• average monthly salary per employee
which horizontal monitoring was • failure to withhold taxes — 20% to 50%
applied • amounts of expenses and income
of the non-withheld tax
stated in tax returns
• the right to apply the simplified • concealment of taxable items — 200%
procedure for refund of excess VAT • transactions with taxpayers that
of taxes payable on the concealed
for the taxpayers under horizontal have dealings with entities that have
amount.
monitoring — in the amount of been deregistered for VAT purposes
no more than 90% of excess VAT (including liquidated, inactive and Interest is charged on late tax payments
amount that was accumulated over insolvent entities) at a rate equal to 1.25 times the
the reporting tax period. National Bank’s base rate (currently 9%)
• tax losses reflected in tax returns in
for each day of the delay.
The tax authorities have launched a multiple tax periods
pilot project, running from 14 July Criminal liability may also arise for tax
• frequent amendment of tax returns
2020 to 31 December 2023, aimed offences in Kazakhstan. An organization
already filed
at refining the processes involved in is generally deemed to have committed
horizontal monitoring. It is hoped that the crime of tax evasion when underpaid

48 Doing business in Kazakhstan

tax exceeds 50,000 MCI (approximately Ministry of Finance). The tax authorities Administrative Procedure Code
US$354,000 in 2021). Tax evasion usually provide their opinion on specific On 1 July 2020, the President of the
includes failing to submit a declaration, tax queries in the form of a letter which Republic of Kazakhstan signed the new
misstating income or expenditure data is of an advisory nature and is not Administrative Procedure Code, which
or concealing taxable items or the actual binding. enters into force from 1 July 2021.
location of the taxpayer. Such violations
Rulings The purpose of the Code is:
trigger investigations by the Economic
Investigation Service of the Financial The Tax Code also authorizes the • to ensure the protection of the rights
Monitoring Committee and may even Ministry of Finance to issue “advance and freedoms of persons (individuals
result in the prosecution of individuals rulings” in relation to planned and legal entities) against unlawful
who are thought to be responsible. The transactions at the request of the actions of state authorities
Criminal Code provides for individuals following categories of taxpayers when
who have committed a tax offence to be submitted in the prescribed manner • to provide a set procedure for
exempted from criminal liability if they accompanied by relevant documents: contesting the outcome of an appeal.
voluntarily pay taxes and other amounts The Code replaces the Law on
• Taxpayers that are subject to
due to the budget and acknowledge that Administrative Procedures and the Law
horizontal monitoring
they are at fault. on the Procedure for the Consideration
• Taxpayers that have investment of Appeals of Individuals and Legal
Clarification letters and rulings contracts for priority projects Entities.
Clarifications The Ministry of Finance may refuse to One of the new features of the Code is
Taxpayers have the right to request issue an advance ruling. that it provides, inter alia, for damages
clarifications regarding tax obligations, Late payment interest is not chargeable to be claimed for losses caused by the
and the tax authorities are obliged to on tax assessments made as a result defendant (i. e., a state authority) as a
provide them. A taxpayer may apply to of a tax audit if the taxpayer fulfilled result of the issue of an administrative
the tax authorities where it is registered tax obligations in accordance with an order or an administrative action
or to a higher body if necessary (certain advance ruling, unless new facts come (omission). Suits must be filed with
categories of taxpayers may apply to the to light. a specialized district court or an
equivalent administrative court.

Doing business in Kazakhstan 49

5
Overview of
other laws that
affect business
administration

50 Doing business in Kazakhstan

Transfer pricing There are a number of compliance Employment regulations
requirements that apply to taxpayers,
Kazakhstan’s transfer pricing (“TP”) including subsurface users, depending The Kazakh Labour Code, which came
legislation has wide applicability to on the type of taxpayer and its revenue: into force in 2016, applies to employees
businesses. The TP rules apply to all and employers located in Kazakhstan,
cross-border transactions even if the 1. TP monitoring reporting (the deadline including branches and representative
parties are unrelated. The TP rules is 15 May of the year following the offices of foreign legal entities
also apply to certain types of domestic reporting year) registered under Kazakh law.
transactions if they are related to 2. Notification of participation in a Employment relations between
cross-border transactions, e. g., to multinational group (by 1 September an employee and an employer
domestic sales by subsurface users of of the year following the reporting are regulated by an employment
hydrocarbons and minerals that are year) agreement. An employment agreement
subsequently exported.
3. Three-tier transfer pricing reporting, must be concluded with each employee
The TP law prescribes the following including: and must reflect the employee’s rights
methods for determining а market price: and obligations as well as the employer’s
• Country-by-country reporting rights and obligations under the Labour
• Comparable uncontrolled price (within 12 months following the Code. As a rule, an employee’s rights
method reporting year or upon request) under an employment agreement may
• Cost plus method • Master file (within 12 months upon not be inferior to those established by
request) the Labour Code.
• Resale price method
• Local file (within 12 months Under the Labour Code, an employer is
• Profit split method
following the reporting year) responsible for the proper execution of
• Net margin method. an employment agreement, which may
4. General TP documentation (upon be concluded for a fixed or indefinite
Except for transactions involving request). term. An employment agreement may
agricultural products, there is no “safe
establish a probation period, which
harbour” for deviation from the market
generally should not exceed 3 months.
price, although the TP law recognises EY’s transfer pricing services include
that there can be a range of market assistance with all types of TP However, the probation period may be
prices. In determining market prices compliance requirements, strategic extended to up to 6 months for heads
under the comparable uncontrolled reviews to identify TP risks, preparation and deputy heads of organizations,
price method, adjustments to prices are of TP policies and procedures, chief accountants and deputy chief
allowed in at least some cases, except assistance during TP audits and accountants and heads of branches and
where one of the parties to a transaction controversy, ad hoc advisory and all representative offices.
is registered in a tax haven. other TP services.

Doing business in Kazakhstan 51

Kazakh labour law generally limits the The Labour Code provides for • a legal entity (branch, representative
working week to 40 hours. Under the secondment arrangements, i. e., where office and/or other subdivision
Labour Code, total overtime must not an employee of a legal entity (the therefore) in which shares
exceed 120 hours per year. secondee) performs work for another (participating interests) are directly
legal entity (or branches, representative or indirectly owned by an entity that
The monthly salary of an employee
offices and/or other subdivisions directly or indirectly owns shares
must not be lower than the minimum
of such an entity) or for branches, (participating interests) in the
monthly salary established for the
representative offices and/or other employer entity (secondment to a
relevant financial year by Kazakh budget
subdivisions of the same legal entity: sister company).
legislation. The minimum monthly salary
for 2021 is KZT 42,500 (approximately (i) within a certain field, skill area or It is prohibited to arrange secondment
US$101). Salary must be denominated position (function) specified in their for the following purposes:
and paid in tenge only. labour agreement, or
1) to replace employees of the receiving
The minimum amount of paid vacation (ii) within another field, skill area or party who refused to perform work in
under the Labour Code is 24 calendar position (function), subject to the cases and in accordance with the
days. Additional vacation days must certain restrictions imposed by law. rules established by Kazakh labour
be provided for employees working in law
The Labour Code limits secondment
dangerous or harmful conditions.
only to cases where the host entity is: 2) to perform work where the receiving
Maternity leave is from 126 to 163 party has temporarily suspended
• a legal entity (branch, representative
calendar days (70 days before the birth activities (introduced downtime),
office and/or other subdivision
of a child and from 56 to 93 days after the receiving party is implementing
thereof) that is a founder, participant
the birth). Additional unpaid childcare bankruptcy procedures, or the
or shareholder of the employer or
leave may be provided to one of the receiving party has introduced a part-
indirectly owns shares (participating
parents until the child is 3 years old. time working schedule in order to
interests) in the employer company
preserve jobs where there is a threat
Kazakh law requires an employer to (secondment to a parent company)
of redundancies.
insure its employees against work-
• a legal entity (branch, representative
related injury within the first ten days of
office and/or other subdivision
the month following the month in which
thereof) in which the employer entity
the employer began work.
directly or indirectly owns shares
(participating interests) (secondment
to a subsidiary)

52 Doing business in Kazakhstan

Import and export Goods imported from third countries and Kazakhstan vary from 3% to 20% of the
customs cleared in an EAEU member customs value or may be set as a specific
formalities and customs state or produced/sufficiently processed amount in US$/euro per unit of measure.
duties in an EAEU member state may be moved
Customs clearance fees are regulated
without customs control/declaration
Customs regulation in Kazakhstan by the domestic laws of EAEU member
within the EAEU.
Kazakhstan forms part of the unified states. In Kazakhstan, the customs
customs territory of the EAEU along Customs duties and classification of clearance fee is KZT 20,000 (US$47)
with Armenia, Belarus, Kyrgyzstan goods per customs declaration.
and Russia. The EAEU, which came EAEU member states apply the Common Some customs procedures allow for the
into being on 1 January 2015, allows EAEU member states apply the Common granting of full or partial exemption from
the free movement of goods, services, Customs Tariff to goods imported from customs duties and taxes, for example
capital and labour within its borders. third countries. This comprises the to members of special economic zones,
EAEU member states apply unified classification of goods and the applicable owners of free warehouses holding
customs legislation and tariff and non- rates of import duty. Import duty rates special investment contracts, and holders
tariff regulations. There are various are expressed as a percentage of the of investment contracts. There are also
types of customs clearance procedures customs value of goods, varying from certain non-tariff regulations, such as
with distinct rules for the payment of 0% to 80%, or as a specific amount in those limiting or prohibiting the import or
customs duties and taxes, including US$/euro per unit of measure. export of certain goods.
release for internal consumption,
Each EAEU member state sets its own
temporary importation, reimport,
export duty rates for exported goods.
customs (bonded) warehouse, free
Export duties should be calculated using
customs zone (for special economic
the rates of the EAEU member state
zones and free warehouses) and other
in which goods are placed under the
procedures.
export procedure. Export duty rates in

Doing business in Kazakhstan 53

30 November 2015 Kazakhstan and the WTO Licensing
Import duties
Licences for certain activities
Kazakhstan becomes
On 30 November 2015 Kazakhstan Kazakh licensing legislation categorizes
a WTO member became the 162nd member of the permits/licences based on the risk level
WTO. According to its schedule of of activities to be carried out:
concessions, Kazakhstan undertook to
reduce import duties by 2–5% on nearly • High-risk activities require licences
3,500 items, and to 0% on some items, referred to as “first-category

3500
within five years after accession to the permits”
WTO. • Medium-risk activities require permits
As part of recent amendments to EAEU referred to as “second-category
items enjoy decreased legislation, Kazakhstan approved a full permits”
import duties list of goods (almost 3,500 items) to • Low-risk activities require the
which reduced rates of import duty may relevant government authority to
be applied. Under EAEU legislation, be notified of the commencement/
goods included in this list that have been completion of activities.
imported under the release for domestic
consumption customs procedure There is an exhaustive list of activities
at reduced rates have the status of that require licences, permits or
conditionally released goods and cannot notifications. The list is contained in the
be exported to other EAEU member Law on Permits and Notifications and
states. includes 79 licences, 226 permits and
54 notifications.
Export duties
The range of business and professional
Kazakhstan reserved the right to activities that require permits/licences is
continue levying export duties on certain extensive. It is important for investors to
goods that are currently subject to export determine in advance whether a licence,
duty in Kazakhstan (petroleum and permit or notification is needed. Kazakh
related products, remnants and scrap of law prescribes various types of liability
ferrous and non-ferrous metals, elements and substantial penalties for failure to
of locomotive rolling stock, wool and comply with permit/licence regulations.
hides of domestic animals, et al.).
A licensing authority is required to issue
On acceding to the WTO, Kazakhstan a permit/licence within 15 business
undertook to begin calculating the export days of the submission of an application
duty rate for crude oil using a formula together with all required supporting
based on the monthly average market documents (except for certain permits/
price of crude oil. licences for which different rules apply),

54 Doing business in Kazakhstan

provided that the applicant meets the Construction licences Import/export licences
relevant requirements. If the applicant These are divided into three categories The government establishes a list of
does not meet the requirements or depending on the complexity of facilities goods for which importation/exportation
fails to provide supporting documents, to be assembled and/or constructed. is subject to licensing. A licence is issued
the licensing authority may issue a To obtain a licence for assembly and/or for each item of goods and must be
substantiated refusal. In this case, the construction works, the applicant must granted within 30 business days of an
applicant may adjust the application and meet all the qualifying requirements application being received. The following
supporting documents and re-apply. approved by the Kazakh government. types of licences are issued::
Since the law does not limit the number To obtain a first- or second-category • A general licence, which is issued to
of submissions, this process may last for licence, the applicant must have 10 a foreign trade participant based on
a considerable time. or 5 years of experience in assembly, a decision of an EAEU member state
Withdrawal or suspension of a permit/ engineering and construction and allows a certain item of goods
licence may be imposed for an respectively. No experience is required to be exported or imported in the
administrative offence committed in for a third-category licence. quantity indicated in the licence
carrying out activities authorized by the Please note that foreign companies • An exclusive licence, which grants a
permit/licence. Withdrawal is imposed entering the Kazakh market may apply foreign trade participant an exclusive
by a judge or an authorized body. The for first- or second-category licences right to export or import certain
period of suspension of a permit/licence if they have the necessary experience. goods
may not be less than one or more than However, they must apply via duly • A one-time licence, which allows a
six months. registered branches in Kazakhstan. foreign trade participant to export or
Below we present a summary of A foreign subsidiary in the form of import a specified quantity of goods
the commonest types of licences in a newly established LLP would be under a foreign trade agreement.
Kazakhstan. regarded as a separate legal entity, and
Holders of import/export licences are
therefore no foreign experience would
required to submit a report on the
be recognised. Such an entity may apply
use of the licence to the appropriate
only for a third-category licence.
authorities.
Permit and licence applications and
notifications may be submitted online
via the website www.elicense.kz.

Doing business in Kazakhstan 55

Banking regulations as a whole. The NBK has the right to Moody’s also mentioned that the NBK’s
introduce a special regulatory regime actions helped to ease the subsequent
Banking system in order to ensure financial stability negative impact on the economy and
and protect the interests of consumers increased the confidence of outside
National Bank of Kazakhstan (NBK)
of financial products for a maximum players in Kazakhstan’s banking system
Kazakhstan has a two-tier banking period of 5 years. In 2019, the NBK in the context of the devaluation of the
system. The first tier is the NBK, which conducted an Asset Quality Review Kazakh tenge and the worldwide decline
is the country’s central bank. The main (AQR) of 14 major banks located in in the financial solvency of businesses.
regulators of banking activities are the Kazakhstan, the principal aims of which
NBK and the Agency for the Regulation were to help strengthen and develop Agency
and Supervision of the Financial Market Kazakhstan’s banking system, increase The Agency is a special government
and Financial Institutions (Agency). its ability to withstand crisis phenomena authority which is directly subordinate
The NBK, on the one hand, provides and improve the transparency of the and accountable to the President of
traditional banking services to its main financial system. Although the AQR did Kazakhstan and is responsible for
client, i. e., the state as represented not identify a capital deficit at an overall regulating banks and the financial
by its central authorities. On the other level, a number of banks were requested market. The Agency has also acted
hand, it acts as a financial authority to inject additional capital. The AQR to protect users of online banking by
(exercising currency control, issuing was conducted at the right time, as passing an order requiring banks, as
regulatory acts, granting licences, etc.) the health of the banking system was of 1 January 2021, to create special
and is responsible for the proper examined right before the ensuing departments to deal with cyber
functioning of the financial system COVID-19 crisis. S&P Global Ratings and incidents.

56 Doing business in Kazakhstan

Second Tier Banks Currency regulations non-resident status is stipulated in
international treaties concluded by
The second tier includes all other banks On 2 June 2018, the President of Kazakhstan prior to the entry into
except for the Development Bank of Kazakhstan signed the Law on Currency force of the Currency Control Law)
Kazakhstan, which has a special legal Regulation and Currency Control
status. One of the features of the (No. 167-VI — the “Currency Control • Kazakhstan non-residents, i. e.
Kazakh banking system is that only Law”). The law came into force on (i) foreign citizens and stateless
private banks operate on the banking 1 July 2019 (except for provisions persons (other than those who
services market. The Development relating to branches of foreign financial have permanent residency status in
Bank of Kazakhstan and the Housing organizations, which came into force in Kazakhstan); (ii) foreign legal entities
Construction Savings Bank, both with December 2020). and organizations not recognised
state shareholdings, have special as legal entities under the laws of
status and perform specific functions The Currency Control Law imposes foreign states and Kazakhstan-based
in the financial sector to serve national certain formal requirements but does branches/representative offices
interests. As a rule, banking operations not impede most international business of such entities that do not create
in Kazakhstan must be licensed by the operations. a permanent establishment of a
NBK. Foreign banks have been operating It distinguishes between the following non-resident in accordance with the
in Kazakhstan since 1993. As of parties to currency transactions: Kazakh Tax Code; (iii) branches/
16 December 2020, foreign banks are representative offices of foreign
allowed to open branches in Kazakhstan • Kazakhstan residents, i. e., (i) Kazakh non-financial organizations that
provided that specific financial and citizens (other than those who have have been accorded non-resident
regulatory conditions set by Kazakh law permanent residency abroad); (ii) status under Kazakh currency
are met, including the provisions of the foreigners and stateless persons law by agreements concluded on
Tax Code. who have permanent residence behalf of Kazakhstan with foreign
status in Kazakhstan; (iii) legal organizations which entered into
Islamic Banking entities registered in Kazakhstan, force before 1 July 2019 (a list of
Kazakhstan-based branches/ such branches/representative offices
Islamic banks are also allowed to
representative offices of such is to be established by the Kazakh
operate in Kazakhstan subject to
entities and diplomatic, trade and government); (iv) international
restrictions laid down in Kazakh law.
other official missions of Kazakhstan organizations, unless otherwise
Since the government recognises the
located abroad; (iv) branches of specified by the international treaty
potential behind the development of
foreign financial organizations which governing their establishment; (v)
Islamic finance in Kazakhstan, specific
have the right under Kazakh law diplomatic and other official missions
provisions for Islamic finance are laid
to engage in banking or insurance of foreign states.
down at legislative level (including in
activities in Kazakhstan (from
the Tax Code). Islamic banking is subject Individuals (residents and non-residents)
December 2020); (v) branches of
to licensing by the NBK and must in may take foreign currency cash in and
foreign non-financial organizations
general be Shariah compliant. Islamic out of the country without restrictions
which are treated as permanent
banks cannot participate in the Kazakh subject to the customs legislation of
establishments of those organizations
deposit insurance system, and deposits the Eurasian Economic Union and/or
in Kazakhstan (except for branches
of an Islamic bank cannot be insured by Kazakhstan.
and representative offices whose
the Kazakh deposit insurance system.

Doing business in Kazakhstan 57

The Currency Control Law states that Supervision of the Financial Market • the transfer of promissory notes
transactions between Kazakhstan and Financial Institutions or under denominated in foreign currency in
residents and non-residents may Law No. 262-VI of the Republic of fulfilment of monetary obligations
take place in any currency. However, Kazakhstan of 3 July 2019
• payments for goods sold in duty-free
transactions between residents must
• payment for banking services relating shops and for goods and services
only be in KZT, except for:
to foreign currency transactions provided to passengers in international
• transactions in which one of the parties traffic
• transactions involving the acquisition,
is the NBK, the Ministry of Finance
sale, payment of interest on and/or • transactions between branches
or an overseas diplomatic office of
redemption of securities denominated (representative offices) of foreign
Kazakhstan
in foreign currency entities
• transactions in which one of the parties
• transactions between commission • transactions involving payment for
is a resident who has the right to
agents and their clients when services expenses of an individual in connection
conduct foreign currency transactions
are rendered by commission agents with a business trip outside the
• transactions involving foreign currency involving the conclusion and execution Republic of Kazakhstan, including
that are classed as banking operations of export or import contracts with non- hospitality expenses, and transactions
and other operations which banks residents, including the repayment of involving the repayment of unused
and authorized organizations have foreign currency to the principal advances issued in connection with a
the right to carry out in accordance business trip outside Kazakhstan
• the purchase and/or sale of refined
with a licence issued by the NBK or
gold bullion using national currency
the Agency for the Regulation and

58 Doing business in Kazakhstan

• gratuitous transfers of money or The range of currency transactions Currency regimes
currency valuables by individuals to covered by the NBK’s monitoring
other individuals or to legal entities system has increased, with simplified Registration of foreign currency
whose statutory activities involve procedures introduced for the collection contracts involving capital movement
charity of transaction information. In order According to the Rules on the
to monitor currency transactions, the Monitoring of Currency Transactions
• bank deposits by individuals in favour
NBK (or authorized banks in certain approved by Resolution No. 64 of
of other individuals
cases) assigns registration numbers the Board of the National Bank of 10
• transactions between professional to currency contracts under which April 2019 (“the Rules”), the NBK
participants in the securities market currency transactions take place, is responsible for monitoring and
acting on behalf of their customers currency contracts involving the registering currency transactions and
and individuals or legal entities movement of capital, accounts held currency contracts.
involving the transfer of money and by residents (excluding banks and
Registration is required for currency
financial instruments from accounts branches/representative offices of
contracts involving capital movement
(to accounts) for the recording and foreign entities) with foreign banks and
(financial loans, equity participation,
storage of money and financial export or import currency contracts in
transactions involving securities, equity
instruments owned by customers respect of which payments are made
interests and financial instruments,
by way of the performance and through such accounts.
acquisition of real estate, acquisition of
termination of contracts for the
Authorized banks that process foreign exclusive rights to intellectual property,
provision of brokerage services
currency payments or transfers are transfers of funds in the context of trust
• transactions involving the payment of required to notify the NBK of the management activities, and gratuitous
taxes and other mandatory payments transactions if the amount is equal to transfers of funds) where one of the
to the budget in cases provided for by or exceeds a threshold set by the NBK. parties is a resident and the contracts
the Tax Code The NBK is entitled to request a copy reach certain thresholds.
of the currency contract and other
• operations of the recipient of mineral According to the Rules, a capital
information on the currency contract
resources on behalf of the Republic movement currency contract is subject
from the currency control agents or the
of Kazakhstan connected with the to registration where it involves:
resident sender. Please note that various
transportation, storage and sale of
ancillary regulations are currently in the 1) the receipt of property/money in
mineral resources that are transferred
process of being drafted. the Republic of Kazakhstan and/
to the state in accordance with the Tax
or an obligation of a resident to
Code by way of the in-kind fulfilment of
return property/money to a non-
a tax obligation by a subsurface user
resident to a value exceeding
• payments by individuals for goods, the equivalent of US$500,000
works and services in transactions (five hundred thousand)
concluded and executed in the territory (approx. KZT210,000,000)
of a special economic zone whose
borders wholly or partially coincide
with sections of the customs border of
the Eurasian Economic Union.

Doing business in Kazakhstan 59

2) the transfer of property/money from Repatriation Late registration of currency contracts
the Republic of Kazakhstan and/ A Kazakh resident must ensure that concluded after 1 July 2019 will
or an obligation of a non-resident currency proceeds under export or incur a warning in the first instance.
to return property (money) to import contracts are repatriated to A repeat violation within a year will
a resident to a value exceeding Kazakhstan (i. e., credited to a bank incur an administrative fine of MCI
the equivalent of US$500,000 account with a local bank) within the 100 (Administrative Offences Code,
(five hundred thousand) established time limit. Article 244). In 2020 that amounts to
(approx. KZT 210,000,000). KZT 277,800 (approximately US$662).
According to the rules for carrying out
A resident (other than an authorized export-import currency control approved The repatriation requirement is
bank and a branch/representative office by National Bank Resolution No. 42 of considered to be partially or fully
of a foreign entity) that is a party to a 30 March 2019, as from 1 July 2019 satisfied where:
currency contract must apply to the NBK an export or import currency contract • national and/or foreign currency
before obligations under the contract is subject to registration if the amount is credited to accounts held by a
are fulfilled by any parties. of the contract exceeds the equivalent resident with foreign banks that
Non-residents may receive and transfer of US$50,000 (KZT 21,000,500) or were opened to fulfil the resident’s
foreign currency from/to their branches if the contract amount is not specified obligations under the terms of a
(representative offices) in Kazakhstan. (framework agreements). financial loan received from a non-
If an export or import currency contract resident or to support the activities
The registration requirement does not
is denominated in a currency other than of branches/representative offices
apply to capital movement currency
US$ and the exchange rate against opened by the resident abroad
contracts whose parties include the NBK
or the Ministry of Finance or to currency US$ is not specified in the contract, the • foreign currency received by
operations carried out by participants US$ equivalent of the contract amount residents from exhibitions and
in the Astana International Financial should be determined using the market sporting, cultural and other similar
Centre within the territory of the Centre. exchange rate at the date of signing of events held outside the Republic of
the contract (or failing that, at the date Kazakhstan is used to cover costs
Notification13 of entry into force of the contract). incurred during those events
The notification regime requires The registration of currency contracts • foreign currency earnings are
information to be provided to the where the contract amount is not credited to foreign bank accounts
NBK on foreign currency transactions specified or exceeds US$50,000 of resident transportation
exceeding the threshold of US$50,000 (KZT 21,000,500) and where a companies in order to pay port
(KZT21,000,000) and on the opening contract is amended after 1 July 2019 dues and other charges outside
of bank accounts with a foreign bank must take place before obligations begin Kazakhstan and cover expenses
(for legal entities), as well as information to be fulfilled by one of the parties, but associated with the handling of
on the purchase and sale of foreign not later than 30 calendar days from those companies’ transport facilities
currency on behalf of a client, regardless the date on which the currency contract and passengers outside Kazakhstan
of the amount. became subject to registration. and the maintenance of branches/

13  Notification by a resident is not required for payments and/or money transfers made by participants of the Astana International Financial Centre within the territory
of the Centre or through bank accounts held by participants of the Centre with foreign banks.

60 Doing business in Kazakhstan

 representative offices of those Submission of information (reports) That list includes branches/
companies outside Kazakhstan by branches (representative offices) representative offices engaged in the
of foreign non-financial organizations following activities:
• an obligation of a non-resident
According to the Rules on the
is terminated by crediting a 1. production of crude oil and natural
Submission of Information by Branches
counterclaim under an export or and associated gas
(Representative Offices) of Foreign
import currency contract
Non-Financial Organizations, approved 2. construction services
• an obligation of a non-resident is by National Bank Resolution No. 41
3. services related to mining
terminated by the replacement of the of 30 March 2019, as from 1 July
original obligation between a resident 2019 branches/representative offices 4. architectural, engineering and other
and the non-resident with another of foreign non-financial organizations technical services
obligation between the same parties operating in the Republic of Kazakhstan
5. research and development work.
with a different subject-matter or for more than one year must submit
method of performance information (reports) on their activities Late submission of a report incurs a
to the National Bank. warning in the first instance. A repeat
• an insurance payment is received
violation within a year will incur
upon the occurrence of an insured Based on information received, local
an administrative fine of 10 MCI.
event under an agreement on branches of the National Bank make a
In 2020, that amounts to KZT 27,780
insurance of the risk of non- list of branches/representative offices
(approximately US$66).
performance by a non-resident. that provide information on transactions
with residents and non-residents.

Doing business in Kazakhstan 61

In addition, if a branch or representative instruction to its bank to sell the foreign 2009 on the Countering of Money
office of a foreign non-financial currency (i. e., convert it to Kazakhstan Laundering and Terrorist Financing (the
organization submits an incomplete and/ tenge) if that foreign currency is not “Anti-Money Laundering Law”). Under
or inaccurate report on transactions utilized within 10 (ten) business days. that law, certain types of transactions
with residents and non-residents, it will are subject to financial monitoring
This restriction does not apply to
receive a warning the first time. A repeat depending on the amounts involved.
authorized banks and authorized
violation committed within a year will This includes gratuitous payments
organizations. Individuals may buy and
incur an administrative fine of 10 MCI, and/or transfers made by individuals
sell currency through foreign currency
which currently amounts to KZT 27,780 and legal entities in favour of other
exchange offices.
for 2020 (approximately US$66). individuals or legal entities amounting
Special currency regime14 to KZT 7,000,000 (approximately
Sale and purchase of foreign currency US$16,667) or more, transactions
The Currency Control Law authorizes
All legal entities may buy and sell foreign to the value of KZT 10,000,000
the Government of Kazakhstan, at the
currency on the domestic currency (approximately US$ 23,810) or more
recommendation of the National Bank
market only through authorized banks. entered into by legal entities that have
and relevant government bodies, to
A resident legal entity may purchase introduce a special currency regime in existed for less than three months,
non-cash foreign currency up to the the event of a threat to the economic and other operations and transactions
equivalent of USD 50,000 (inclusively) security and domestic currency market specified in the Anti-Money Laundering
at one bank on any given day for of Kazakhstan. Law.
“purposes not connected with the Monitoring is conducted by the Financial
A special currency regime may include,
discharge of obligations expressed in Monitoring Committee of the Kazakh
among other things, a requirement
a foreign currency”. Such purposes Ministry of Finance.
for a sum equal to a percentage of
include: (i) the transfer of foreign
the amount of a currency transaction In addition, the Anti-Money Laundering
currency to a foreign bank account
to be deposited with an authorized Law contains the term “suspicious
held by that resident legal entity;
bank without interest being earned, a transaction”, meaning a transaction
(ii) gratuitous bank transfers; and
requirement to obtain a special permit or attempted transaction with respect
(iii) the transfer of foreign currency to
from the NBK to carry out currency to which there are grounds to suspect
bank accounts held by the entity with
transactions, the mandatory sale of that money and/or property used in
Kazakh banks.
foreign currency received by Kazakhstan the transaction is derived from criminal
For amounts exceeding the equivalent residents, restrictions on the use of activity or that the transaction itself is
of USD 50,000, a resident legal entity foreign banks and limits on settlements undertaken for the purpose of money
must indicate the purpose of purchasing in foreign currency. laundering or the financing of terrorism
the foreign currency and provide a copy or other criminal activity. The Kazakh
of the underlying contract or invoice Financial monitoring
government sets the list of criteria
(any payment document) supporting It is important to consider the possible for characterizing transactions as
the declared purpose of purchasing implications of the financial monitoring suspicious, such as inconsistency of a
the foreign currency. A resident legal system established by Law No. 191-IV of transaction with the nature of a legal
entity must also provide an advance the Republic of Kazakhstan of 28 August entity’s business as specified in its

14  A special currency regime is introduced by an act of the Government of the Republic of Kazakhstan based on a joint recommendation of the National Bank of
Kazakhstan and relevant authorized bodies.

62 Doing business in Kazakhstan

constituent documents, transactions Subsurface use regulations licences for exploration and production
with non-profit organizations, As from 29 June 2018, subsurface use of solid mineral resources within the
transactions relating to charitable in Kazakhstan is regulated by the new same block are considered in the order
activities, et al. Furthermore, any Subsurface Use Code. The Subsurface in which they are received, and each
transaction may potentially be Use Code establishes different application is considered only after the
considered suspicious if an authorized regulatory regimes for subsurface preceding application has been rejected.
person of a financial monitoring agent companies depending on the types of Under the Subsurface Use Code, the
decides to treat it as such based on his/ mineral resources being explored and acquisition of subsurface use rights
her experience and knowledge. produced. from subsurface use companies (e. g.,
Anti-monopoly regulations Subsurface use rights for the exploration farmouts) or of shares/participating
Anti-monopoly law requires prior and production of hydrocarbons are interests in subsurface use companies
permission from or notification of granted on the basis of contracts is subject to approval by the competent
the anti-monopoly authority for concluded by the competent government authority. Furthermore,
mergers and other types of economic government authority with winners where such acquisition relates to
concentrations where the deal exceeds of auctions, which are determined by a subsurface use area of strategic
10,000,000 MCI (approximately the amounts of subscription bonuses importance, the state has the right of
US$66,143,000); otherwise, the deal proposed by the participants in the first refusal over the rights or shares/
may be invalidated or terminated. Anti- auctions. From 1 September 2020 such interests being sold. Before subsurface
monopoly law prohibits anti-competitive auctions are held online. sites can be acquired, therefore, it is
horizontal agreements (cartels) necessary to obtain approval from the
The Subsurface Use Code also envisages competent government authority and a
and vertical agreements, concerted the right of the competent government
practices, abuse of a dominant market waiver from the state confirming that it
authority to conclude contracts will not exercise its right of first refusal
position and unfair competition. All for exploration and production of
types of monopolistic activity (i. e., anti- over the sites.
hydrocarbons and uranium through
competitive agreements, concerted direct negotiations with national
practices, abuse of a dominant position) companies of Kazakhstan.
may lead to administrative fines of up
to 5% of income with confiscation of Subsurface use rights for exploration
monopolistic income for a period of up and production of solid mineral
to a year, or criminal sanctions if actions resources are granted on the basis
result in major damage or the receipt of of licences issued by the competent
substantial income. Unfair competition government authorities. Such licences
incurs an administrative fine of up to are issued on a first come, first served
1,500 MCI (approximately US$9,922). basis, meaning that all applications for

Doing business in Kazakhstan 63

6 EY
in Kazakhstan

64 Doing business in Kazakhstan

In 1992, EY was the first international professional services organization to open an office
in Kazakhstan. It is part of our EMEIA practice, encompassing Europe, the Middle East, India
and Africa. In Kazakhstan, EY has three offices: in Nur-Sultan, Almaty and Atyrau.

About EY
EY is a global leader in assurance, tax,
transaction and advisory services.
Encouraging investment
EY is committed to enhancing the
business and investment environment
US$36,4
Its combined global revenues in Kazakhstan. We organize a variety billion
for the financial year 2019 were of professional events and knowledge-
EY global revenues for
US$36.4 billion. With a total headcount sharing sessions in order to promote
of over 284,000 people, EY operates international leading practices and the financial year 2019
in more than 150 countries around the industry expertise, as well as to advise
world. the investment community on the most
recent or anticipated changes to the
In 1992, EY was the first international
regulatory environment. EY is involved
assurance and advisory services

700 employees
in the work of the Foreign Investors’
organization to open an office in
Council, chaired by the President of the
Kazakhstan, reaching out to a wide
Republic of Kazakhstan, and co-chairs
range of clients from various industry
its working group on Investment Policy. work for EY Kazakhstan across
sectors, including multinational
EY is also actively involved in a number
corporations as well as public three offices in Nur-Sultan,
of business, professional and industry
and private companies. Today, EY Almaty, Atyrau
associations in Kazakhstan.
Kazakhstan has 700 employees
working in three offices in Nur-Sultan,
Almaty and Atyrau. EY Kazakhstan
provides over 85 services across all Supporting our clients
industries, including assurance, tax in the dynamic landscape
and law (financial, tax accounting
and HR outsourcing solutions, people
advisory services, immigration support,
At EY, we know that businesses in
emerging markets need innovative 85 services
thinking and practical advice in order provided by EY Kazakhstan
etc.), transaction and business
to succeed. We support our clients
advisory services and digital as well across all industries
by facilitating their sustainable
as professional education and training
development strategy and helping them
delivered by the EY Academy of
create new growth opportunities in
Business.
today’s dynamic economic environment.

Doing business in Kazakhstan 65

Our major services EY Kazakhstan at social media
• Assurance Business events, insights and thought leadership, legislative updates and more.
• Tax & Law
• Facebook @EYKazakhstan
• Transactions
• Instagram @EYKazakhstan
• Advisory
• Careers @EYCareersKazakhstan
• Academy of Business
• EY Academy of Business @EYAcademyKazakhstan

Office locations
Nur-Sultan
16 Dostyk street, Talan Towers Offices,
Nur-Sultan, Z05H9K3
Republic of Kazakhstan
Tel.: +7 7172 58 0400
Fax: +7 7172 58 0410

Almaty
Esentai Tower
Al-Farabi Ave., 77/7, Almaty,
050060, Republic of Kazakhstan
Tel: +7 727 258 5960
Fax: +7 727 258 5961

Atyrau
Satpayev str., 19
Atyrau, 060000
Republic of Kazakhstan
Tel.: +7 7122 55 21 00
Fax: +7 7122 55 21 01

66 Doing business in Kazakhstan

Contact information
For more information on how EY can help you find your bearings in Kazakhstan’s tax and legal
terrain, please contact one of the following EY leaders:

Tax & Law Services

Erlan Dosymbekov Roman Yurtayev

Managing Partner for Kazakhstan Associate Partner, Tax Services,
and Central Asia Business Tax Advisory
Tel: +7 727 258 5960 Tel: +7 727 258 5960
[email protected] [email protected]

Dinara Tanasheva Saltanat Dauletova

Partner, Tax & Law Services Leader for Associate Partner, International Tax
Kazakhstan and Central Asia and Transaction Services,
and Central Asia Financial Sector
Tel: +7 727 258 5960 Tel: +7 727 258 5960
[email protected] [email protected]

Doniyorbek Zulunov Anuar Mukanov

Partner, Tax Services, Associate Partner,
International Tax and Transaction Services Transfer Pricing Services
Tel: +7 727 258 5960 Tel: +7 727 258 5960
[email protected] [email protected]

Vladimir Fesenko Amangeldy Mussayev

Partner, People Advisory Services Partner, Global Compliance and
Tel: +7 727 258 5960 Reporting
[email protected] Tel: +7 727 258 5960
[email protected]

Doing business in Kazakhstan 67

7
Appendix

68 Doing business in Kazakhstan

Double tax treaties
The following table lists the WHT rates under Kazakhstan’s double tax treaties.

No. Country Dividends, % Interest, % Royalties, % No. Country Dividends, % Interest, % Royalties, %
1. Armenia 10 10 10 35. Poland 10/15 (c) 10 10
2. Austria 5/15 (a) 10 10 36. Qatar 5/10 (a) 10 10
3. Azerbaijan 10 10 10 37. Romania 10 10 10
4. Belarus 15 10 15 38. Russian Federation 10 10 10
5. Belgium 5/15 (a) 10 10 39. Saudi Arabia 5 10 10
6. Bulgaria 10 10 10 40. Serbia 10/15 (b) 10 10
7. Canada 5/15 (a) 10 10 41. Singapore 5/10 (b) 10 10
8. China 10 10 10 42. Slovak Republic 10/15 (e) 10 10
9. Croatia 5/10 (b) 10 10 43. Slovenia 5/15 (b) 10 10
10. Cyprus 5/15 (a) 10 10 44. Spain 5/15 (a) 10 10
11. Czech Republic 10 10 10 45. Sweden 5/15 (a) 10 10
12. Estonia 5/15 (b) 10 15 46. Switzerland 5/15 (a) 10 10
13. Finland 5/15 (a) 10 10 47. Tajikistan 10/15 (e) 10 10
14. France 5/15 (a) 10 10 48. Turkey 10 10 10
15. Georgia 15 10 10 49. Turkmenistan 10 10 10
16. Germany 5/15 (b) 10 10 50. Ukraine 5/15 (b) 10 10
17. Hungary 5/15 (b) 10 10 51. United Arab 5/15 (a) 10 10
18. India 10 10 10 Emirates
52. United Kingdom 5/15 (a) 10 10
19. Iran 5/15 (c) 10 10
53. United States 5/15 (a) 10 10
20. Ireland 5/15 (b) 10 10
54. Uzbekistan 10 10 10
21. Italy 5/15 (a) 10 10
55. Vietnam 5/15 (f) 10 10
22. Japan 5/15 (a) 10 10
56. Non-treaty countries 15 (g) 15 (g) 15 (g)
23. Korea (South) 5/15 (a) 10 10
24. Kyrgyzstan 10 10 10 (a) The lower rate applies to dividends paid to companies owning at least 10% of
25. Latvia 5/15 (b) 10 10 the payer. The 15% rate applies to other dividends.

26. Lithuania 5/15 (b) 10 10 (b) T

 he lower rate applies to dividends paid to companies owning at least 25% of
the payer. The 15% rate applies to other dividends.
27. Luxembourg 5/15 (d) 10 10
(c) The lower rate applies to dividends paid to companies owning at least 20% of
28. Macedonia 5/15 (b) 10 10 the payer. The 15% rate applies to other dividends.
29. Malaysia 10 10 10 (d) T
 he lower rate applies to dividends paid to companies owning at least 15% of
the payer. The 15% rate applies to other dividends.
30. Moldova 10/15 (b) 10 10
(e) The lower rate applies to dividends paid to companies owning at least 30% of
31. Mongolia 10 10 10 the payer. The 15% rate applies to other dividends.
32. Netherlands 5/15 (a) 10 10 (f) T
 he lower rate applies to dividends paid to companies owning at least 70% of
the payer. The 15% rate applies to other dividends.
33. Norway 5/15 (a) 10 10
(g) F
 or payments to entities registered in tax havens (as per the list of countries
34. Pakistan 12.5/15 (a) 12.5 15 with preferential tax regimes) the rate is 20%

Doing business in Kazakhstan 69

List of countries with preferential tax regimes
Approved by Order No. 142 of the 26. Republic of Maldives 6) Montserrat Island
Minister of Finance of the Republic of 27. Republic of the Marshall Islands 7) Turks and Caicos Islands
Kazakhstan of 8 February 2018
28. Principality of Monaco 8) Isle of Man
1. Principality of Andorra
29. Republic of Malta 9) Channel Islands (Guernsey,
2. State of Antigua and Barbuda
30. Mariana Islands Jersey, Sark and Alderney)
3. Commonwealth of the Bahamas
31. Kingdom of Morocco (only as 10) South Georgia Island
4. State of Barbados
regards the city of Tangier) 11) South Sandwich Islands
5. State of Bahrain
32. Union of Myanmar 12) Chagos Islands
6. State of Belize
33. Republic of Nauru 46. United States of America (only as
7. State of Brunei Darussalam regards the following areas):
34. Kingdom of the Netherlands
8. Republic of Vanuatu (only as regards Aruba and the 1) US Virgin Islands
9. Co-operative Republic of Guyana dependent territories of the 2) Guam
10. Republic of Guatemala Antilles)
3) Commonwealth of Puerto Rico
11. State of Grenada 35. Federal Republic of Nigeria
4) Wyoming State
12. Republic of Djibouti 36. New Zealand (only as regards the
5) Delaware State
Cook Islands and Niue)
13. Dominican Republic 47. Republic of Suriname
37. Republic of Palau
14. Commonwealth of Dominica 48. United Republic of Tanzania
38. Republic of Panama
15. Kingdom of Spain (only as regard 49. Kingdom of Tonga
the Canary Islands) 39. Independent State of Samoa
50. Republic of Trinidad and Tobago
16. People’s Republic of China (only as 40. Republic of San Marino
51. Sovereign Democratic Republic
regards the Macao and Hong Kong 41. Republic of Seychelles
of Fiji
special administrative regions) 42. State of Saint Vincent and the
52. Republic of the Philippines
17. Republic of Colombia Grenadines
53. Republic of France (only as regards
18. Federal Islamic Republic of Comoros 43. Federation of Saint Kitts and Nevis
the following areas):
19. Republic of Costa Rica 44. State of Saint Lucia
1) Kerguelen Islands
20. Malaysia (only as regards the 45. United Kingdom of Great Britain
2) French Polynesia
Labuan enclave) and Northern Ireland (only as
regards the following areas): 3) French Guiana
21. Republic of Liberia
1) Anguilla Islands 54. Republic of Montenegro
22. Lebanese Republic
2) Bermuda Islands 55. Democratic Republic of Sri Lanka
23. Republic of Mauritius
3) British Virgin Islands 56. Jamaica
24. Islamic Republic of Mauritania
25. Portugal (only with regard to the 4) Gibraltar
Madeira Islands) 5) Cayman Islands

70 Doing business in Kazakhstan

Key macroeconomic indicators of Kazakhstan
2012 2013 2014 2015 2016 2017 2018 2019
GDP growth, % 4.8 6.0 4.2 1.2 1.1 4.1 4.1 3.8
GDP per capita, US$ 12,387 13,891 12,807 10,510 7,715 9,248 9,813 9,409
Inflation rate, % 6.0 4.8 7.4 13.6 8.5 7.1 5.3 4.6
Gold and foreign currency reserves (US$ billion) 28.3 24.7 29.2 27.9 29.7 31.0 30.9 29.5
KZT/US$ annual average exchange rate 149,11 152.13 179.19 221.73 342.16 326.00 344.71 416.7
Any other Kazakh-source income paid to non- 20% 20% 20% 20% 20% 20% 20% 20%
residents that is not received from a tax agent
(local legal entity)

Sources: Statistics Agency of Kazakhstan, National Bank of Kazakhstan

Doing business in Kazakhstan 71

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