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Kazakhstan: Proposed Corporate Income Tax Exemption, and Other Recent Changes

Tuesday, 15 July 2014   (0 Comments)
Posted by: Author: Mukhtar Bekzhigitov
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Author: Mukhtar Bekzhigitov

Corporate Income Tax

At the recent opening of the 47th annual session of the Asian Development Bank, the President of the Republic of Kazakhstan, Nursultan Nazarbayev, announced a proposed 10-year exemption from corporate income tax for investors in Kazakhstan.

He stated: "We intend to ensure the most favourable investment climate. To this end, in the current year  we will enact a new law to improve investment legislation. We plan to exempt investors from corporate  income tax for 10 years, introduce investment subsidies, ensure stability in legislation and predictability for tariffs, and simplify import of foreign labour.”

International Taxation

Clarifying amendments to the Tax Code (article 208) have been introduced with regard to treating  management and general administrative expenses of a non-resident legal entity as tax-deductible.

Under these amendments, a non-resident legal entity operating in the Republic of Kazakhstan through a permanent establishment (PE) is entitled to treat as deductible only the amounts of Head Office management and general administrative expenses that are documented and directly associated with PE activities in the Republic of Kazakhstan.

Article 208.1 of the Tax Code specifies the types of expenses incurred by a non-resident legal entity that cannot be included in the allocated expenses of such an entity, as well as the list of management and general administrative expenses that are treated as deductible.

Value Added Tax

Due to the introduction of electronic billing in the Republic of Kazakhstan, regulations were introduced  to provide tax payers with the option to issue electronic bills. Thus, the Tax Code establishes a concept of an "E-Billing Information System”, as well as other relevant amendments. This will apply  from 1 July 2014

Administrative Violations

Some tax-related articles of the Administrative Violations Code have been changed to provide for a  "warning notice” instead of a penalty as a corrective action for first-time violators.

"Officials” have been excluded from being subjects of administrative liability.

Other changes in the Administrative Violations Code provide for a new simplified procedure of imposing administrative sanctions, under which documents for payment of administrative penalties are issued without an administrative violation report if a violator admits a violation and agrees to pay a penalty. For such violators, no administrative papers are prepared, but a certain document (notice or writ) will be issued to a violator for him/her to pay a penalty within ten working days.

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