Employee income (irrespective of one’s residency status) subject to taxation in Kazakhstan is any kind of income received by an employee from an employer in cash or in kind (e.g. accommodation provided by an employer, benefits, compensation, personal use of company provided car, reimbursable business trip expenses in excess of statutory limits).
However, certain types of income (i.e. income from employment, benefits in kind paid to non-residents in connection with their stay in Kazakhstan) of non-resident individuals who are employed by non-resident legal entities with no permanent establishment (PE) in Kazakhstan should not be subject to Kazakhstan individual income tax unless such individuals become Kazakhstan tax residents.
If properly structured, services on provision of personnel (i.e. secondment) will not lead to PE in Kazakhstan. Under secondment arrangement, an entity to which personnel is seconded is generally treated as a tax agent and expected to withhold and pay all applicable Kazakhstan payroll taxes and obligatory contributions, if any, from remuneration of personnel.
No taxable income is recognised at either the grant date or date of exercise for equity compensation, as the difference between the actual cost and fair market value is specifically excluded from taxation.
The taxable income of an individual entrepreneur shall be determined in a manner similar to that of corporations (see Income determination in the Corporate tax summary).
Capital gains are subject to income tax at the rate of 10%. However, capital gains associated with the disposal of the following securities may be exempt from taxation in Kazakhstan:
- Government securities.
- Agency bonds.
- Securities listed at the day of disposal on the stock exchange operating in Kazakhstan (if sold by the method of advertised bidding on such stock exchange).
- If all of the following conditions are met:
- On the date of sale, taxpayer owns shares for more than three years.
- Company whose shares are sold is not regarded as a subsurface user.
- More than 50% of company whose shares are sold is not owned by subsurface user(s).
Dividend income received from a Kazakhstan source is taxable at 10% is applicable to all foreign-sourced dividend income.
Dividend income received from a resident legal entity for a calendar year is exempt from 10% taxation in Kazakhstan within 30 000 MCI upon distribution.
Subparagraph 8 of paragraph 1 of Article 341 of the Tax Code: dividends received from a resident legal entity for a calendar year within 30,000 times the MCI established by the Law on Republican budget and the relevant financial year effective as of January 1, when distributing:
- net income or part of it payable on shares, including shares that are the underlying assets of depositary receipts;
- net income or part thereof distributed by a resident legal entity among its founders, participants;
- income from the distribution of property in the event of liquidation of a resident legal entity or in the event of a decrease in the authorised capital, as well as in case of redemption by a legal entity from the founder, participant of a participation interest or part thereof in this resident legal entity and in case of redemption by such legal entity-issuer of shares issued by by this issuer.
From the income of each individual (citizen of the Republic of Kazakhstan) subject to taxation, dividends received from a resident legal entity for a calendar year within 30,000 MCI are excluded (adjustment of income), regardless of the period of ownership of shares and regardless of whether the CIT was reduced by the legal entity, paying dividends.
The amount of dividends, which is more than 30,000 MCI, paid to an individual, is subject to IIT at the source of payment at a rate of 10%.
In accordance with the provisions of the Kazakhstan tax legislation, interest income received from foreign banks is taxable in Kazakhstan irrespective of the level of interest rate, whereas, interest income from Kazakhstan banks (operating under the licence of the authorised Kazakhstan state body on regulation and supervision of financial markets and financial institutions) is exempt from taxation in Kazakhstan.
Interest on debt securities, government securities, and agency bonds is also exempt from taxation in Kazakhstan.
When calculating taxable income associated with renting out or leasing a property, the taxpayer can exclude maintenance and repair costs or reimbursement of such costs associated with leasing of this property.
The following types of income shall be exempted from taxation/adjusted tax basis:
- Alimony received on children and dependents.
- Interest paid to individuals on their bank deposits, debt securities, state issue securities, and agent’s bonds.
- Dividends and interest on debt securities that are listed on the date of assessment of such dividends and interest on the official list of a stock exchange functioning on the territory of the Republic of Kazakhstan.
- Income of military servicemen and officers of law enforcing authorities.
- Winnings in lotteries, within 50% of the minimum amount of wages.
- Payments in connection with the performance of public work and professional training and payment made at the expense of funds of grants is capped at the minimum monthly wage (approximately USD 75).
- Payments for medical services in case of provision with relevant documentation is capped at 94 times the MCI (1 MCI = KZT 3,450 from 1 January 2023).