Key Changes in the New Tax Code

The draft of the new Tax Code, shared for public discussion in 2024, includes several amendments that impact various sectors. Below are the most relevant changes for accounting, tax, and payroll professionals:

• Payroll Taxes: The social tax rate is fixed at 6%, ensuring predictability for employer contributions. However, the exclusion of most personal income tax deductions will increase employees’ taxable income, affecting payroll calculations.
• Corporate Income Tax (CIT): Differentiated CIT rates are introduced, with social sector organizations benefiting from a 10% rate, while banks and certain entities face a 25% rate. Other businesses will generally be subject to a 20% rate.
• VAT Administration: The “e-Tamga” system, a digital VAT payment platform, mandates electronic invoices for works and services, aiming to eliminate fictitious transactions and automate VAT refunds.
• Personal Taxation: The universal filing requirement expands to all citizens in 2025, mandating a one-time asset and liability declaration (Form 250.00) and an annual income and property declaration (Form 270.00). Deadlines are set for July 15 (hard copy) or September 15 (electronic) of the following year.
• International Taxation: Changes include amended definitions of tax residency, new triggers for permanent establishment, and adjustments to withholding tax rates, such as a 5% rate on dividends to nonresidents with significant capital holdings.

These changes reflect Kazakhstan’s commitment to modernizing its tax system, with a focus on digitalization and compliance.

Impact on Accounting and Tax Professionals

The new Tax Code presents both challenges and opportunities for accounting and tax professionals. The differentiated CIT rates necessitate revised tax planning strategies, as businesses may need to restructure to optimize tax liabilities. For instance, social sector organizations can leverage the 10% CIT rate to enhance sustainability, while banks must prepare for higher tax obligations. The “e-Tamga” system requires accounting departments to upgrade software and train staff to handle electronic VAT invoices, ensuring compliance with new reporting standards. Additionally, the removal of certain tax incentives, such as benefits for government securities income, will impact financial planning for corporations.

The universal filing requirement, effective for all citizens in 2025, adds complexity. While individuals are responsible for filing Forms 250.00 and 270.00, businesses may need to provide guidance to employees, particularly those unfamiliar with tax reporting. This could involve workshops or informational resources, increasing the workload for tax departments. Furthermore, the suspension of the tax statute of limitation during audits and expanded grounds for tax audits underscore the need for meticulous record-keeping and compliance.

Impact on Payroll Processing

Payroll professionals will face significant adjustments due to the new Tax Code. The fixation of the social tax rate at 6% provides clarity, as employers can plan contributions without anticipating rate changes. However, the exclusion of most personal income tax deductions is a critical change. Previously, deductions for expenses like medical costs or dependents may have reduced taxable income. Their removal means payroll systems must be recalibrated to withhold higher taxes, ensuring accurate deductions at source. This change could also affect employee net pay, potentially requiring communication to manage expectations.

Additionally, the universal filing requirement may indirectly impact payroll departments. Employees may seek clarification on their tax obligations, particularly regarding income and property declarations. Payroll teams should be prepared to direct employees to resources or coordinate with HR to provide support. The new Tax Code’s emphasis on digitalization, such as electronic invoicing for VAT, may also influence payroll processes if businesses integrate payroll and tax reporting systems for efficiency.

Preparation for the New Tax Code

To navigate the transition, professionals in accounting, tax, and payroll should take proactive steps:

1. Stay Informed: Monitor official announcements from the State Revenue Committee and consult reputable sources for updates on the Tax Code’s final provisions.
2. Update Systems: Invest in software upgrades to support electronic VAT invoicing and revised payroll tax calculations. Ensure compatibility with the “e-Tamga” system and other digital platforms.
3. Training and Education: Participate in training programs offered by professional associations or consultancies to understand the new tax provisions and their practical implications.
4. Engage Stakeholders: Collaborate with HR and management to communicate changes to employees, particularly regarding universal filing and increased tax withholdings.
5. Review Compliance: Conduct internal audits to ensure current practices align with the new Tax Code’s requirements, focusing on record-keeping and reporting accuracy.

Businesses can also leverage consulting services to assess the impact of the new Tax Code on their operations. Leinonen is happy to have a discussion with you to help you plan changes to your accounting and payroll functions.

Broader Context and Economic Implications

Kazakhstan’s new Tax Code is part of a broader effort to strengthen its economy, projected to grow by 5.1% in 2025. The code’s focus on digitalization, such as the “e-Tamga” system and potential VAT administration using the digital tenge, aligns with global trends toward transparent and efficient tax systems. However, the removal of certain tax benefits and increased tax rates for specific sectors may raise concerns among businesses, particularly in banking and gaming. The government’s decision to postpone the Tax Code’s implementation to 2026, as announced by President Kassym-Jomart Tokayev, reflects a commitment to public awareness and readiness.

The universal filing requirement, fully implemented in 2025, is a significant step toward combating tax evasion and increasing transparency. By requiring all citizens to declare assets and income, Kazakhstan aims to align with international standards, such as those set by the OECD’s Base Erosion and Profit Shifting (BEPS) framework, which Kazakhstan joined in 2017. This move may enhance Kazakhstan’s reputation as a reliable partner in global tax cooperation but will require significant effort from both individuals and businesses to comply.

Conclusion

The upcoming Tax Code in Kazakhstan, set to take effect in January 2026, represents a pivotal shift for the accounting, tax, and payroll industries. With changes like the fixed 6% social tax rate, exclusion of personal income tax deductions, and the “e-Tamga” VAT system, professionals must adapt to new compliance and reporting requirements. The universal filing requirement for all citizens in 2025 further underscores the need for proactive preparation. By staying informed, updating systems, and investing in training, accounting, tax, and payroll professionals can navigate these changes effectively, ensuring compliance and leveraging opportunities for efficiency.

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Definition of Royalties in Kazakhstan

Under Kazakhstan’s Tax Code, royalties are defined as payments made for the right to use or transfer:

• Copyrights, patents, trademarks, and industrial designs;
• Software and databases;
• Trade secrets, know-how, and other confidential business information;
• Motion pictures, audio recordings, and broadcasting rights;
• Any other intellectual property or licensing rights.

Royalty Tax Rates and Withholding Tax

Royalty tax in Kazakhstan primarily affects non-resident entities receiving payments from local businesses. The key aspects include:

1. Withholding Tax for Non-Residents:
   • The standard withholding tax rate on royalties paid to non-residents is 15%.
   • This rate may be reduced under Double Taxation Agreements (DTAs) if Kazakhstan has a tax treaty with the country where the non-resident entity is based. Some treaties lower the rate to 10% or even 5%.
2. Corporate Income Tax (CIT) for Residents:
   • If a resident company receives royalties, they are subject to Kazakhstan’s corporate income tax of 20%, applied on net taxable income.

Double Taxation Agreements (DTAs) and Their Impact

Kazakhstan has signed DTAs with many countries to avoid double taxation on income, including royalty payments. These agreements often specify reduced withholding tax rates. To benefit from a reduced rate, non-resident entities must:

• Provide a certificate of tax residency from their home country;
• Submit an application for DTA benefits to the Kazakhstani tax authorities.

VAT on Royalty Payments

In addition to withholding tax, royalty payments made to non-residents may also be subject to Value Added Tax (VAT) at a standard rate of 12%. If a Kazakhstani company pays royalties to a foreign entity, it is responsible for:

• Withholding 12% VAT on the gross royalty amount;
• Self-assessing and remitting the VAT to the tax authorities.

Tax Compliance and Reporting Requirements

Companies paying royalties in Kazakhstan must ensure compliance with local tax regulations, including:

• Properly calculating and withholding tax from royalty payments;
• Filing tax declarations and reports with the State Revenue Committee;
• Keeping documentation proving the nature of the royalty payments and the applicability of DTA benefits.

Potential Tax Optimization Strategies

Businesses operating in Kazakhstan can optimize their tax burden on royalties by:

• Structuring licensing agreements in a way that benefits from the most favorable DTA terms;
• Considering alternative forms of payments (e.g., service fees) where applicable;
• Ensuring all required tax residency documentation is in place to claim reduced withholding rates.

Royalty taxation in Kazakhstan is an important consideration for businesses dealing with intellectual property and licensing arrangements. With a standard 15% withholding tax on royalties for non-residents, plus potential VAT implications, companies must carefully plan their tax compliance strategies. Utilizing double taxation agreements, proper documentation, and tax planning can significantly reduce the tax burden and improve financial efficiency.

For businesses engaged in IP-related transactions in Kazakhstan, staying informed about regulatory updates and seeking professional tax advice is essential to ensure compliance and optimize tax liabilities.

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One of the main reasons to consider switching accounting service providers is the potential for improved quality of service. If your current provider has been underperforming—whether by missing deadlines, delivering inaccurate reports, or failing to communicate effectively—it may be time to find a partner who can better meet your business’s needs. A reliable accounting service provider ensures compliance with Kazakhstan’s regulations and delivers valuable insights for strategic decision-making.

Cost efficiency is another factor driving businesses to seek new providers. High fees that do not match the value delivered can strain resources that could be allocated elsewhere. By transitioning to a more competitively priced and efficient service, you can optimize your financial management and reinvest savings into growth opportunities.

Additionally, as businesses evolve, so do their accounting needs. A new provider may offer tailored solutions that align more closely with your current and future goals. Whether it’s specialized expertise, integration with your existing systems, or expanded services like payroll or tax consulting, a fresh partnership can better support your objectives.

Timing is critical, and the beginning of the year offers a fresh start for financial records. Transitioning now ensures that your new provider handles your records from the outset of the fiscal year, avoiding complications that can arise from mid-year changes.

Early-year transitions also align with strategic planning. This is when businesses set goals and budgets for the year, and a capable accounting service provider can offer valuable insights to inform your financial strategy. By making the switch now, you minimize disruptions, as the early months often involve fewer overlapping projects and deadlines. A well-planned transition ensures that your new provider integrates smoothly into your processes.

To make the change successful, it’s important to assess your specific needs and identify what you require from an accounting service provider. Researching and comparing providers is essential to find a partner with a strong track record, positive client reviews, and expertise in Kazakhstan’s regulatory environment. Clear communication with your current provider is crucial to set expectations and timelines for the handover process, ensuring a smooth transfer of responsibilities and records.

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As an employer hiring Kazakh nationals, knowing your employees’ rights and having an awareness of these public holidays is vital, and not just to stay in line with regulations.

In Kazakhstan, a positive community in the workplace is important. Appreciating and celebrating key national holidays can foster a spirit of inclusivity, togetherness, and appreciation of Kazakhstan’s history and culture within your company.

Weekends and Public Holidays: Legal Entitlements of Employees and Obligations of Employers

In Kazakhstan, employees can work weekends and holidays at their request. If an employee is to work on a weekend or public holiday at your request, you must obtain written consent from them. However, there are a few exceptional circumstances in which you can ask an employee to work a weekend or holiday without obtaining written consent.

These are:

• For the prevention of certain emergencies.
• For prevention and investigation of accidents related to work, loss of, or damage to property.
• For performing unforeseen and urgent work.

Further details on the specifics of these scenarios can be found in Article 86 of the Labour Code of the Republic of Kazakhstan.

When an employee agrees or chooses to work weekends or public holidays, they must be given either additional days off to compensate, or a contractually agreed additional payment (at least 1.5x their usual pay). Some company policies may offer additional benefits for working on public holidays, but this is not mandatory. More information on this can be found in Article 109 of the Labour Code of the Republic of Kazakhstan.

Other Important Points for Employers in Kazakhstan

• For rational use of working time during public holidays and on weekends, the Government of the Republic of Kazakhstan has the right to transfer weekends to other working days. This is covered in paragraph 5 of Article 84 of the Labour Code of the Republic of Kazakhstan.
• In Kazakhstan, you are not allowed to employ women with a certificate of pregnancy to work on weekends or during holidays.

Holiday pay and Vacation Time

How is Holiday pay Calculated in Kazakhstan?

The calculation of holiday pay is fairly easy; average daily salary is multiplied by the number of vacation days. To calculate an employee’s average daily salary, simply divide the wages they accrued during the previous working year (12 months) by the number of days they worked in the same period.

How Many Days off on Vacation are Employees Entitled to in Kazakhstan?

Employees in Kazakhstan are entitled to 24 calendar days off on annual leave (excluding holidays). If a vacation falls on a public holiday, they are added to the number of vacation days but are not subject to payment.

List of Public Holidays in Kazakhstan in 2025

• January 1 (Wednesday): New Year’s Day
• January 2 (Thursday): New Year Holiday
• January 7 (Tuesday): Orthodox Christmas Day
• March 8 (Saturday): International Women’s Day
• March 10 (Monday): Day off for International Women’s Day
• March 21 (Friday): Nauryz (Spring Equinox)
• March 22 (Saturday): Nauryz Holiday
• March 23 (Sunday): Nauryz Holiday
• March 24 (Monday): Additional day off for Nauryz Holiday
• May 1 (Thursday): Unity Day
• May 7 (Wednesday): Defender of the Fatherland Day
• May 9 (Friday): Victory Day
• June 6 (Friday): Kurban Ait (Eid al-Adha, tentative date)
• July 6 (Sunday): Day of the Capital
• July 7 (Monday): Additional day off for Day of the Capital
• August 30 (Saturday): Constitution Day
• September 1 (Monday): Additional day off for Constitution Day
• October 25 (Saturday): Republic Day
• December 16 (Tuesday): Independence Day

Are There any Unique Regulations for Specific Public Holidays for Companies in Kazakhstan?

Currently, there are no unique regulations for specific public holidays in Kazakhstan.

Manage Public Holidays in Kazakhstan With Leinonen

Understanding operations in a new country can be confusing. With 34 years in business and over 1500 satisfied customers spanning 11 countries, Leinonen can offer all the trusted advice you need.

To find out how we can help with all things accounting, tax and payroll for your Kazakhstan base base, get in touch today.

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The new Tax Code will introduce differentiated corporate income tax rates and include specific provisions for the taxation of banking sector dividends. This means companies across industries will need to adjust their financial forecasting and reporting to align with these new, potentially variable tax rates, impacting overall profitability assessments and payroll deductions for related employee bonuses and stock dividends.

For payroll, digitalization will play a key role, as the Tax Code mandates the optimization of tax regimes for entrepreneurs and the introduction of a VAT administration mechanism through the digital tenge. Payroll and accounting systems will need to incorporate digital compliance measures, potentially requiring companies to update software and train accounting teams to navigate the new tax processes efficiently.

The removal of some existing tax benefits also requires careful consideration, as companies may see increased tax liabilities that affect net income and influence budgeting for employee benefits and other expenses. By proactively adjusting payroll and accounting operations in anticipation of the 2026 changes, businesses can streamline their transition and ensure compliance with Kazakhstan’s evolving tax framework.

Implementing these features early will help companies manage the financial and operational impacts of the new Tax Code, while leveraging digital tools to remain compliant with Kazakhstan’s updated taxation policies.

The post Reworked Tax Code to come into effect starting 2026 appeared first on Leinonen Kazakhstan.

Current Tax Base and Calculation (Since January 1, 2023)

As of January 1, 2023, the taxation base for MET on uranium is determined using the weighted average market price of natural uranium concentrate (U3O8) from public sources over a reporting period. The tax rate is 6% of this price, multiplied by the quantity of uranium extracted.

New Taxation Rates Starting in 2025

From January 1, 2025, a new tax rate of 9% will be applied to uranium mining for that year only, marking a temporary increase from the current 6%.

Differentiated Approach from 2026 Onward

Effective January 1, 2026, the MET on uranium will follow a differentiated approach based on annual production volumes and the market price of uranium concentrate (U3O8). The tax rates will vary according to the scale of extraction, as detailed below:

• Up to 500 tons: 4%
• Up to 1,000 tons: 6%
• Up to 2,000 tons: 9%
• Up to 3,000 tons: 12%
• Up to 4,000 tons: 15%
• Over 4,000 tons: 18%

Price-Triggered Increases in MET

In addition to the differentiated rates, MET will rise further if the average uranium price exceeds certain thresholds:

• Above $70 per pound: +0.5%
• Above $80 per pound: +1.0%
• Above $90 per pound: +1.5%
• Above $100 per pound: +2.0%
• Above $110 per pound: +2.5%

Expected Impact

These new regulations are expected to significantly affect the joint ventures and subsidiaries of Kazatomprom starting in 2026, as they will be subject to higher, differentiated taxation rates. However, the amendments to the Tax Code will not affect the company’s tax expectations for 2024.

The full text of the legal act is available in Kazakh and Russian via the following link: online.zakon.kz.

Kazatomprom remains committed to adhering to the new regulations as they come into effect, with preparations already underway to manage the forthcoming changes in tax obligations.

The post Kazatomprom Announces Changes in Mineral Extraction Tax on Uranium appeared first on Leinonen Kazakhstan.

Kazakhstan ranked 25th in the World Bank´s Ease of Doing Business report in 2020. This is a comparatively great result, and doing business in Kazakhstan is generally not any more difficult or easier compared to other countries in the region. 

Kazakhstan has a vibrant economy which is characterized by the rich oil and mineral industry and the resulting exports of these products. Kazakhstan is a major player in the global oil industry, ranking as the 12th largest oil producer. In 2023, the country produced about 1.8 million barrels of oil per day. This output is smaller compared to the United States (approximately 11.3 million barrels per day) and Saudi Arabia (around 10.8 million barrels per day), but larger than Norway (about 1.7 million barrels per day) and the United Kingdom (around 1.1 million barrels per day). Kazakhstan’s proven oil reserves stand at approximately 30 billion barrels, placing it 12th globally. 

In addition to oil, Kazakhstan is rich in mineral resources. It is a leading producer of uranium, with over 40% of global production, and holds the second-largest uranium reserves worldwide. The country is also a significant producer of chromium, lead, zinc, manganese, and copper. 

The oil and gas sector in Kazakhstan involves around 170 companies, including major international firms like Chevron, ExxonMobil, and Royal Dutch Shell, which collaborate with local entities such as KazMunayGas, the state-owned oil and gas company. Key oil fields include Tengiz and Kashagan, which are among the largest in the world. There is also a plethora of mostly foreign companies that are doing various consulting and services jobs connected to the oil and mineral sectors. 

Being a landlocked country, there is also a large import sector and plenty of logistics businesses that operate in the country. Additionally, the country strives to diversify its economy by growing the financial, IT, and tourism sectors. 

Company Establishment

Foreign and local investors may use a variety of legal entities to conduct business in Kazakhstan. The most commonly used ones are Joint Stock Companies, Limited Liability Partnerships, Representative Offices and Branch Offices. 

Joint Stock Companies or JSCs issue shares to attract investments and capital to finance their activity. They may have one or more shareholders, and the shareholders are not liable for the JSC´s liabilities. The minimum capital for a JSC is approximately EUR 300,000 and it may have one or more shareholders. 

The LLP or Limited Liability Partnership is the most common form of legal entity chosen by small and medium sized businesses. LLPs differ from JSCs in the way that they do not issue shares, but instead the participants hold interests in the partnership. The charter capital for a LLP may be set at zero with some exceptions. In most cases if a foreign company would like to set up a subsidiary in the form of an LLP, they will find that the parent company may not act as the sole holder of interest in the LLP. Currently, the law requires that there be at least one other participant, which can be a legal entity or a physical person. If a physical person establishes an LLP in Kazakhstan, they may act as the sole participant.  The participants are generally not liable for the LLP´s liabilities outside of their capital contribution, but there are some exceptions. 

Foreign companies can also establish representative offices (RO) and branch offices (BO) in Kazakhstan. These entities are considered a part of the parent entity. The main difference between them is that a RO can only perform representative activities on behalf of the parent entity, such as marketing and advertising. A BO can perform all or part of the activities of the parent entity, including entering into commercial agreements and activity. Branch offices face an additional Branch Profit Tax of 15 % from their profits, so if the founders expect to make profit, then usually it makes more sense to establish an LLP. 

If you want to establish a company in Kazakhstan, Leinonen’s skilled staff can make the process as smooth as possible.

Accounting & Taxation

Accounting and payroll in Kazakhstan 

Managing accounting and payroll according to local laws is mandatory for any organization working under Kazakh law. Accounting and payroll in theory is not so different between various countries, but in practice there is always an ocean of details to consider. To make sure your organization is compliant, it is necessary to use an accountant who has plenty of experience in the Kazakhstani market. 

As in other CIS countries, the fiscal year in Kazakhstan is the same as the calendar year. Also similarly, the 1C accounting and ERP program dominates almost all of the market. Finding accountants with skills to use other programs can be difficult. Multinational organizations who wish to work within their own ERPs may find themselves having to do double accounting in the local and in their own software. 

What are the controlling institutions? 

The Ministry of Finance of the Republic of Kazakhstan is the controlling body for accounting legislation. Companies´ tax payments are controlled by the State Revenue Committee which works as part of the Ministry of Finance. The Ministry of Labor and Social Protection of the Population controls issues connected to labor law, labor protection and payroll. 

Tax rates in Kazakhstan 

Here are the most common tax rates in Kazakhstan: 

• Corporate Income Tax – 20 % 
• Value Added Tax – 12 % 
• Property Tax – 1,5 % 
• Personal Income Tax – 10 % 
• Social Tax – 9,5 % 
• Social Security Contribution – 3,5 % 
• Compulsory contribution to Social Medical Insurance Fund – 3 % 

These are the basic rates that companies should consider. There are several exceptions, caps to tax rates and other taxes that are not mentioned here. Some exceptions to VAT include: 

• Export of goods and international transportation services are subject to 0 % VAT. 
• Sale of some goods and services such as medicines, financial services, notary services, operations with financial securities and investment gold are exempt from VAT. 

Kazakhstan uses an e-invoice system for issuing VAT invoices which is mandatory for VAT payers. Depending on the type of goods sold, the seller may need to use a Virtual Warehouse module to register their goods, without which using the e-invoice system and consequently without which the sale of the goods is not possible. The legislation concerning VAT is stipulated by the Kazakhstani Finance Ministry and the Tax Code.  

Kazakhstan additionally has a wide range of various Withholding Taxes that are applied for cross-border transactions. Special attention should be paid to documenting cross-border transactions to avoid unnecessary withholding taxes. A good example is the import and sale of software and software licenses. If the Kazakhstani subsidiary of an international software company would like to sell software licenses that it purchases from its parent entity, the purchase transaction is subject to a Withholding Tax called Royalty Tax. This tax is generally 15 % depending on the home tax jurisdiction of the Ultimate Beneficiary Owner of the software license. The Kazakhstani authorities employ a list of countries that they consider Tax Havens, and based on this list the Withholding Taxes may vary. The tax legislation concerning sale of software and licenses has changed in 2023-2024, which is why we recommend to pay special attention to this topic in your business. 

Additionally, companies in Kazakhstan may operate in one of several Special Economic Zones or SEZs that will affect their tax rates. For example, companies operating in the Astana Hub SEZ for IT companies enjoy an exemption from Corporate Income Tax, plus other deductions in payroll taxes. 

If you are looking for a reliable partner in Kazakhstan to do your taxes, get in touch with Leinonen.

Some tips for business in Kazakhstan 

As in other countries in the CIS region, the local legislation in Kazakhstan is usually subject to rapid changes. These changes can affect companies´ accounting and payroll as well as the legal environment they operate in during short notice. This means that it´s very important to make sure the right professionals are supporting you with accounting and legal matters. Using accounting outsourcing in Kazakhstan is a good choice precisely for the reason that accounting companies have the resources to constantly monitor and stay ahead of changes in the local legislation. 

The tax rates for businesses in Kazakhstan especially in payroll, are quite low in comparison to international standards. Additionally companies can lower these rates further via tax planning or working in one of the Special Economic Zones. It’s important to note though, that although the tax rates may be low, the penalties for non-compliance or non-payment are very high. For this reason we recommend that businesses pay special attention to taxes payable in Kazakhstan. 

Employment

Employment matters in Kazakhstan are regulated by the local Labor Code. The code states that labour relations are regulated via employment agreements, which must be concluded in written form and conform to the local minimum requirements. 

Companies working in Kazakhstan generally have a freedom to employ without using employment agencies. In some dismissal cases, the local Employment Center has to be notified. Employment Centers are local subdivisions of the Ministry of Labor and Social Protection of the Population. Employers have to follow requirements such as providing a working place which complies with regulations as well as providing their employees workplace accident insurance. 

Employment agreement may be concluded as fixed-term for a term of no less than one year, or non-fixed term. Fixed term employment agreements are considered as changed to non-fixed term agreements after they are extended two times. Probation periods are generally used, and they may not exceed three months apart from some management positions. 

Employers are not free to dismiss employees without basis. Employment relations can be terminated in three ways: 

• Mutual agreement of the parties; 
• Termination by the employee´s initiative; 
• Termination by the employer´s initiative. 

In case of termination by the employer´s initiative, the labour code sets out a number of possible reasons for this. All of them are quite serious, such as working in an intoxicated state or revealing employer trade secrets. The labour code and courts are protective of employees in Kazakhstan, so employers need to be careful when managing their labour relations. 

Outsource your payroll management in Kazakhstan to Leinonen to ensure, that everything runs smoothly.

Being an Expat

An investor looking to start a company in Kazakhstan may want to consider moving there to manage their company. In this case they must first start their company so that they have the company’s registration certificate, and after that apply for a work permit. 

Kazakhstan is a nice place to live, with a rich history and beautiful nature, and the living costs are quite low. Finding an apartment may be tough if requirements are complex. We recommend using a real-estate agent when looking for an apartment, as most of the advertisements online are outdated. 

Foreign nationals who spend more than 183 days in a calendar year in Kazakhstan are obliged to pay taxes and contributions to the local social security system. Usually double taxation can be avoided but this should always be checked on a case-to-case basis. 

The post BUSINESS IN KAZAKHSTAN   appeared first on Leinonen Kazakhstan.

Corporate Tax Rate for Social Sector

The new Tax Code proposes a corporate income tax rate of no more than 10% for organizations in the social sector. This change aims to enable these entities to distribute dividends to their founders, promoting stronger growth and sustainability within the social sector.

Exemptions on Personal Income Tax

The updated tax rules propose that pension payments from the Unified Accumulative Pension Fund be exempt from personal income tax, except for payments to individuals exiting Kazakhstan and inherited funds. This measure is designed to provide financial relief to retirees and their beneficiaries.

VAT Payment System “e-Tamga”

A notable innovation in the proposed Tax Code is the introduction of the “e-Tamga” system. This new system for VAT payments will employ straightforward digital solutions, with all VAT transactions conducted via electronic VAT invoices. The main objectives of “e-Tamga” include:

• Enhancing Transparency: Reducing fictitious transactions and tax evasion.
• Automating VAT Refunds: Simplifying and expediting the VAT refund process.

Initially, “e-Tamga” will be introduced voluntarily in a pilot phase, allowing businesses to adjust and refine their processes before broader implementation.

Guidelines for Pilot Projects

The proposed Tax Code sets forth specific provisions for pilot projects in tax administration, including:

• Rights and Obligations: Clearly defined for participants and state revenue authorities.
• Duration: Limited to three years.
• Voluntary Participation: Ensuring no compulsory participation.
• Penalty Exemptions: No penalties for participants during the pilot phase.
• Public Notification: Requiring pilot projects to be announced via mass media.

These guidelines aim to effectively test new tax administration approaches without imposing undue burdens on participants.

Automated Desk Tax Review

This year, the format of desk tax reviews has shifted to an automated service model. Key features include:

• Automation: Minimizing human intervention and simplifying notification procedures.
• Risk-Based Notifications: Focusing on unfulfilled notifications for high-risk violations, with medium-risk notifications automatically marked as fulfilled unless exceptions apply.

Furthermore, the new Tax Code proposes renaming “elimination of violations” notifications to “potential discrepancies” notifications, reflecting a more lenient approach to reduce administrative burdens on taxpayers.

Vehicle Taxation

The new provisions suggest a differentiated approach to vehicle taxation based on the vehicle’s manufacture year. Older vehicles would receive reduced tax coefficients, potentially encouraging the use of newer, more efficient vehicles.

Excise Tax on Sugar-Sweetened Beverages

The government considered implementing an excise tax on sugar-sweetened beverages but decided against it. The anticipated 26.4% reduction in production and the need to balance economic interests led to this decision, reflecting a careful approach to fiscal policy.

The post Prime Minister’s New Tax Code Proposal Highlights appeared first on Leinonen Kazakhstan.

The updated declaration form eliminates the need to disclose:

1. Income subject to taxation at the source of payment, as this data is included in tax reports submitted by tax agents.
2. Details concerning the acquisition, disposal, or gratuitous receipt of property registered in Kazakhstan, as this information is accessible through state information systems.

Additionally, disclosure of the sources covering expenses for property acquisition is now mandated only for specific individuals outlined in the “Anti-Corruption Law.” These include:

• Individuals holding responsible government positions and their spouses.
• Persons authorized to execute state functions and their spouses.
• Officials and their spouses.
• Individuals equivalent to those authorized to perform state functions and their spouses.

The State Revenue Committee emphasizes that until these changes are officially integrated into form 270.00, taxpayers may continue to use the existing form for submitting their Declaration of Income and Assets. Notably, if a taxpayer has already submitted the current form and it has been marked as “accepted” and “recorded,” there is no requirement to resubmit the declaration using the revised form.

For any additional questions, please contact us.

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Employee Rights and Terms of Contracts

In Kazakhstan, employment can be established as a ‘contract’ or an ‘agreement’, but contracts are the most widely used. An employment contract usually covers a specified period of a year or two, and salary payments are made monthly or twice monthly. The standard working week is 40 hours spread across five or six days, and employees are entitled to 24 days minimum annual leave, plus paid sick leave and maternity leave.

Dismissal

Employee rights in Kazakhstan are extensive, and dismissal typically includes one to three months (or another mutually agreed amount) of severance pay.

Exceptions to this that may allow for termination without notice include:

• Liquidation
• Production reasons
• Health and safety violations
• Dismissal during probationary period
• Intoxication
• Violation of company rules
• Absence

On the other hand, there are some employees who cannot be fired, including:

• Pregnant women
• Mothers with a child under the age of 3
• Single mothers with a child under the age of 14
• Employees on sick leave or vacation

Work Permits in Kazakhstan

Obtaining work permits in Kazakhstan is bureaucratic and can be especially difficult if several permits are needed. This is due to limits on the number of permits allowed per company and county. Acquiring a work permit is easiest for CEOs, managing directors and deputy directors.

Foreign nationals applying for a work permit must also apply for a work visa at a local or foreign Kazakh embassy, and this will take around 10 working days to process. A foreign manager of a branch or representative office does not need a work permit, but does need a valid local tax number (INN).

There are two main types of work permit in Kazakhstan:

Paid work permits

• Cost the employer US$950-1729 depending on employer’s activity and applicant’s category (e.g. managing directors and deputy directors are category one).
• Searching for an employee in the local labour market is not mandatory, and there are no obligations to train Kazakh citizens or create new jobs for locals.

Work permits for intra-group secondees transferred from World Trade Organization (WTO) member countries

• Require a mandatory primary search for an employee in the local labour market.
• Employer is obliged to train Kazakh citizens or create new jobs for locals.

Employing Locally in Kazakhstan

Because applying for work permits in Kazakhstan can be a complex, time-consuming and costly process, it often makes sense to hire staff from the local market.

Where can you Find Local Employees in Kazakhstan?

Finding employees in Kazakhstan can be challenging. While potentially useful for roles with a well-defined hard skillset, the recruiting field is not well developed. Posting job ads on websites like hh.kz only costs a small amount and can get you a lot of visibility, but you will likely receive many applications from unqualified candidates. Contacting previous employers is highly recommended.

Often, skills and experience do not match ambition, but hiring someone with the right attitude and moulding them to excel in your field can be beneficial for both employee and employer. But due to the high likelihood of poor applications, the best way to find staff in Kazakhstan is often by making enquiries through your own contacts.

Work Culture in Kazakhstan

Work culture in Kazakhstan is influenced by Russia and Asia. Hierarchy typically plays an important role in the workplace. Strong leadership is important, and leaders are expected to take on most of the risk, responsibility and stress within a team.

Community spirit is important in Kazakhstan’s culture, so gestures like organising social events and celebrating staff birthdays are appreciated. Employees can easily change jobs for a small increase in salary, so helping your team enjoy a positive work culture is key to employee retention.

Where to set up Your Business

If you are planning on setting up a company in Kazakhstan, there are a few things to consider when deciding on your geographical base. These include convenience of travel connections, profitability, and ease of recruiting. Recruiting personnel is often easiest in Almaty, and while its airport is very congested, its 2024 expansion should allow more flights to enter.

How can Leinonen Help?

Thanks to its steadily growing economy, fast developing business culture and connections to central Asia, more and more companies are noticing the up-and-coming Kazakhstan market. But managing employment and payroll in Kazakhstan does not come without its challenges. Processes like applying for work permits, managing contracts and handling tax can be complicated, with ever-changing regulations for foreign businesses to navigate.

Leinonen’s accounting, payroll, tax and financial management services can take care of the intricacies, so you can focus on your company’s mission and growth stress-free. With 34 years in business and over 1500 satisfied customers spanning 11 countries, we have been a trusted name in accounting since 1989. Get in touch to find out what we can do for your growing business.

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