BUSINESS IN KZ
WHAT YOU SHOULD KNOW BEFORE STARTING BUSINESS IN KAZAKHSTAN?
Kazakhstan, being the young developing country, has always been the attractive emerging market for the investments and businesses. It is easy to register and start a business activity in Kazakhstan. However the ever changing Kazakh legislation makes it challenging for the businesses to develop and grow in such changing environment.
It is especially vital and difficult to control the changes in the Kazakh tax legislation. If you look at Russian or Kazakh legal practice then you can see the that inaccurate use or incorrect interpretation of the tax norms could result in significant legal consequences, jeopardizing a further business development.
Our specialists will assist you in understanding and solving these issues, which will help you to concentrate all your efforts and resources on the development of the main business activity.
The underlying taxes of the Republic of Kazakhstan are as following:
There is also taxation of subsoil users which contain of the following taxes and special charges:
a) Special charges of subsoil users:
- Subscription bonus,
- Commercial discovery bonus,
- Payment on reimbursement of past costs;
b) Mineral Extraction Tax;
c) Excess profit tax.
|№||Type of tax||Tax rate||Notes on tax rates|
|Corporate Income tax
|Personal Income Tax
|Value Added Tax
|Special tax regime
Nowadays, international collaboration of local businesses with foreign partners has already become an essential component of the country’s economy. Such collaboration results in creation of the new legal entities with foreign participation, rendering different kinds of services, i.e. consulting, management, financial, manpower services, etc. Therefore,a state policy on international taxation has a direct impact on the country’s investment attractiveness index.
Still, the complexity of Kazakh international tax legislation and inconsistent practice on application of the tax legislative norms create the base for the tax complications and problems in the local Kazakh companies in their cooperation with the foreign partners.
Two principles are applied in taxation of incomes earned by foreign legal entities and foreign individuals from their activity in Kazakhstan: residency and territoriality (apportionment). The principle of residency implies that all incomes of Kazakh resident, earned in all countries, are to be taxed by Kazakh income tax. The principle of territoriality (apportionment) implies that all incomes earned on the territory of Kazakhstan as well are taxed by Kazakh income tax.
Other countries can apply these principles as well. Simultaneous application of these principles by two countries towards one tax object leads to the international double taxation. Kazakhstan endeavors to resolve these issues, has been concluding the international double tax treaties (conventions) with other committed foreign countries for avoidance of double tax casesand income and capital gains tax evasions. As of January 1, 2010, Kazakhstan has concluded the treaties with 49 countries, and has ratified 39 treaties.
Despite the separate treaty being concluded with each country, there is a general guidance provided on the application of the international Double Tax Treaty.
Choosing of the country below you can study in details the rates stipulated in conventions concluded between RK and the country concerned.
Kazakhstan has an additional signed Double Tax Treaties with Spain, Armenia, Luxemburg, Slovakia, Finland and United Arabic Emirates, but not ratified yet.
In case there is no country you are interested in then it means that Kazakhstan has not concluded an agreement with the country concerned.
The Tax calendar is a guide on the main tax obligations for companies and individuals. It provides the information on terms and dates of tax reporting and tax payments. Tax returns can be submitted online, using the government program or by completing a paper form (in Kazakh or Russian languages).
Regulation of labour relations
According to the Labor code the contract where the rights, duties and guarantees of the employee are stipulated should be signed with each employee.
According to the Kazakhstani legislation, the employer is obliged to insure his civil liability for personal injury or danger to the lives of workers while performing their job duties within 10 working days from the date of state registration of the employer (the legal entity).Attraction of foreign labor In accordance with the Rules of the definition of quotas, and permission for employers to hire foreign workers before they enter into an employment contract with a foreign national, the employer must obtain the akimat’s work permit for him.Action of Rules does not extend on:
- heads of branches and representative offices of the foreign organizations;
- employers attracting foreign labor as the first heads of the legal bodies of RK whose authorized capital share of foreign legal and physical entities is at least 50 %, members of Board of Joint stock companies of RK where at least 50 % of shares owned by the state or foreign legal or physical entities;
- persons being in short-term business trip provided that total duration of such business trips within a year does not exceed 60 calendar days.
The government annually establishes a quota on issuance of work permits to foreigners (now the quota is 0,75 % to economically active population). Employers should request quotas on work permits for the next year till the 1st of September of current year, it is desirable to make it beforehand.
Work permits are issued under certain conditions:
- training and hiring of citizens of Kazakhstan (for the purpose of creation of new workplaces) which should replace the foreign personnel subsequently;
- replacement of the foreign personnel by citizens of Kazakhstan with corresponding qualification;
- creation of additional workplaces for citizens of Kazakhstan and etc.
The work permit in most cases is issued for a period of one year. The issued permission is not subject to transfer to other employers, operates only in the territory of a corresponding administrative and territorial unit. The employer can direct the foreign workers who have received the permissions to business trip to the enterprises, organizations which are in the territory of other areas of the country, for no more than 120 calendar days within a year.