Foreign tax credit
In general, the Kazakhstan Tax Code allows taxpayers to credit the foreign income taxes paid against the income taxes payable in Kazakhstan, provided the documents confirming the payment of such taxes are available. However, a tax credit may not be granted in certain cases (e.g. for taxes paid in countries with privileged taxation).
Investment incentives are available to certain Kazakhstan legal entities that fit certain criteria and possess objects (e.g. certain fixed assets) for which investment incentives may be applied. Generally, the investment incentives allow companies to fully deduct, for CIT purposes, the cost of the investment objects and the cost associated with their reconstruction and modernisation either at once or within the first three years of their use.
Based on the Entrepreneurial Code, incentives are granted under an investment contract between the government and companies with focus on priority sectors of the economy, as determined by the government. A qualifying investment project is granted with (i) exemption from customs duties and import VAT exemptions, with some limitations, and (ii) state in-kind grants. Priority investment projects, alongside the above-mentioned benefits, get (iii) tax incentives and (iv) investment subsidies. Special investment projects in the form of investment preferences are granted with (v) exemption from custom duties and (vi) tax incentives.
The amendments to the Tax Code introduced an 'investment tax credit' that allows changing tax payment deadlines for certain categories of taxpayers and also allows them to reduce tax payments by 100% or pay tax due in instalments, provided certain criteria of the taxpayer is met. The investment tax credit can be provided for a period of up to three years.
From 2022, a stable tax regime for ten years may be provided under a new investment incentive envisaged by the Entrepreneurial Code ('Agreement on investment obligations') in return for certain obligations to be fulfilled by a taxpayer. Guarantee of taxation regime stability is provided for VAT, WHT, payroll tax, excise taxes, and payments for emissions to the environment.
Special economic zones (SEZs)
Currently, the following SEZs have been established in Kazakhstan:
- 'Astana, the New City' in Nur-Sultan (the expiry date is in 2027).
- 'Aktau Sea Port' in Aktau (the expiry date is on 1 January 2028).
- 'Ontustik' in Sairam district of South-Kazakhstan region (the expiry date is on 1 July 2030).
- 'National Industrial Petrochemical Park' in Atyrau region (the expiry date is on 31 December 2032).
- 'Park of Innovative Technologies' (the expiry date is 1 January 2028).
- ‘Saryarka’ in Karaganda region (the expiry date is 1 December 2036).
- ‘Horgos - the eastern gates’ in Almaty region (the expiry date is 2035).
- ‘Pavlodar’ in Pavlodar (the expiry date is 1 December 2036).
- ’Chemical Park Taraz’ in Taraz (the expiry date is 1 January 2037).
- ‘International Center for Cross-Border Cooperation Horgos' in Almaty region (the expiry date is 1 January 2041).
- 'Turkestan' in Turkestan region (the expiry date is 1 January 2043).
In order to enjoy the incentives available in SEZs, a legal entity must meet the following requirements:
- It must be registered by the tax authorities in the territories of SEZs.
- It has no structural subdivisions beyond the boundaries of the territories of the SEZs.
- It must perform activities qualified for priority types of activities within the territory of an SEZ (activities performed by a participant of the SEZ ‘Park of Innovation Technologies’ may be performed on an extraterritorial basis).
The general incentives available for legal entities in SEZs are:
- CIT: 100% reduction (subject to certain conditions).
- VAT: 0% rate (for goods fully consumed during the performance of activities corresponding to purposes of creation of the SEZ and included in the list of goods established by the government of Kazakhstan).
- Land tax and payment for the use of land plots: 0% rate.
- Property tax: 0% rate.
- Social tax: 100% reduction (subject to certain conditions for 'Park of Innovative Technologies').
Astana International Financial Centre (AIFC)
The AIFC aims to create favourable conditions for investment and finance and to develop the securities market, ensuring its integration with international capital markets. The AIFC also intends to develop insurance, banking, and Islamic finance markets in Kazakhstan. The AIFC seeks to become a financial hub for the Central Asian region, member states of the Eurasian Economic Union, the Caucasus, Western China, the Middle East, Mongolia, and Europe.
The AIFC provides a special legal regime based on the principles of English law, independent financial regulation in accordance with international standards, tax preferences for a period of 50 years, simplified visa and labour conditions, and has English as an official language. Judges of AIFC`s Court have exclusive jurisdiction over disputes between the AIFC’s participants.