Kazakhstan legal entities are taxable on aggregate annual income earned worldwide. Non-resident legal entities, carrying out business activities through a PE in Kazakhstan, are taxable on income attributed to the activities of that PE. All taxpayers must apply the accrual method for recognition of income.
For tax purposes, inventory is valued in accordance with International Financial Reporting Standards (IFRS) and Kazakhstan financial accounting legislation. As such, permitted inventory valuation methods include first in first out (FIFO), weighted average, and specific identification methods.
Capital gains are subject to ordinary CIT rates. An exemption is available for capital gains realised from the sale of shares and participation interests in Kazakhstan for legal entities or consortiums that are not engaged in subsurface activities and are held for more than three years.
Capital gains from sale of shares/participation interest in subsurface users may be exempt from taxation in Kazakhstan if such subsurface users are engaged in further processing activities, under specific conditions.
Effective from 1 January 2023, Kazakhstan individuals paying capital gain to non-residents could also be considered as tax agents for withholding tax (WHT) purposes.
Dividend income of a Kazakhstan resident company on inbound dividends is exempt from Kazakhstan taxation. Dividends from a Kazakhstan resident company to another Kazakhstan resident company are exempt from taxation, except for dividends paid by certain types of taxpayers.
Effective from 1 January 2023, dividends paid on securities that, on the date of dividends’ accrual, are included in the official list of the stock exchange of the Republic of Kazakhstan should not be subject to exclusion from the taxable income, unless there is an active bidding process. The criteria for an active bidding process are as follows:
- The value of transactions with these securities should be at least KZT 25 million per calendar month. Only executed transactions with securities are taken in account.
- The number of transactions with these securities should be at least 50 transactions per calendar month.
The stock exchange of the Republic of Kazakhstan ('KASE', 'AIFC') should report on the Internet sources of information about securities that meet the established criteria no later than the 15th day of the month following the reporting quarter.
Interest income should be included in the aggregate annual income of a taxpayer and taxed at the 20% CIT rate.
Royalty income should be included in the aggregate annual income of a taxpayer and taxed at the 20% CIT rate.
Foreign exchange gain
Foreign exchange gain should be determined in accordance with IFRS and Kazakhstan financial accounting legislation. The excess of foreign exchange gain over foreign exchange loss should be included in the aggregate annual income of a taxpayer.
Foreign income is subject to ordinary CIT.
There are no provisions for tax deferrals in Kazakhstan.
For additional information, please refer to Controlled foreign companies (CFCs) in the Group taxation section.