Kazakhstan, Детальна інформація

Other significant developments in 1996 were the shift to a focus on investment, from inflationary stability, and the establishment of accounting reform measures. Another important focus was on substantially increasing minimum wages, as well as pensions and allowances. Social protection issues will likely dominate the foreseeable future.



The Shadow Economy in Kazakhstan

In Kazakhstan estimates on the shadow economy range from the conservative to the outrageous. However, corruption, fraud, theft, extortion, and tax evasion remain crucial problems for the government. There are many ways to combat the shadow economy, but it is first important to understand it. Information on the shadow economy in Kazakhstan is still spare, but some general principles apply. Reform in the tax structure and revenue collection process are necessary to alleviate some of the problems encountered with the presence of an extensive shadow economy.

Tax Policy, Tax Structure, Tax Administration



The taxation system in Kazakhstan is constantly changing as part of the development of a young sovereign state. The new tax code came into force on 1 July 1995, and was considered to be among the most comprehensive pieces of tax legislation in the former Soviet Union.

Income Tax for Legal and Physical Persons

Business Profits

The new tax code prescribes a tax base similar to that in western countries, upon which tax is levied at a rate of 30% (unless the income is derived from the utilization of land when a 10% rate applies). Expenses are generally deductible to the extent that they relate to the realization of taxable income. The most significant deductible expenses are:

interest up to the level of 150% of the rate set by the National Bank of Kazakhstan for Tenge-denominated loans and the World Bank for dollar-denominated loans;

doubtful debts;

research and development costs;

depreciation (see further below);

repairs (up to 10% of the amount still available for tax depreciation at the end of the year, with the excess being capitalized and depreciated in future years);

labor costs.



Gains and losses arising from foreign differences in the course of business activity are neither taxable nor deductible.

Fixed assets are depreciated using a ipoolingi basis. Assets are allocated to one of five pools and depreciated using a reducing balance method at prescribed rates for each pool. The rates vary between 7% and 20% per annum. Intangible assets may also be depreciated.

Tax losses incurred after 1 July 1995 are available for carryforward for up to five years, regardless of the type of business.

Taxpayers may choose either the cash or accruals method for tax accounting, but all income and expenses must be accounted for in Tenge using the official rate of exchange on the date of the transaction. An inflation adjustment is to be prescribed in the Instructions to limit the effects of inflation and any consequent devaluation of the Tenge that may occur.

Administration

Local companies are required to make monthly advance payments of income tax based on their financial profit for the previous month. Tax returns should be filed by 31 March of the following year; local enterprises should pay any remaining tax due and non-resident taxpayers must pay all tax due by 10 April of the following year. All tax payments must be made in Tenge.

There are substantial fines and penalties for the late payment of tax and any under declaration of income, regardless of the reason.

International matters

The definition of a permanent establishment under the new tax code is very wide and includes, for example, the provision of consultancy services. Branches of foreign companies are, in addition to income tax, subject to a branch profits tax at the rate of 15% of net income.

The following withholding taxes apply to payments to non-residents:

dividends and interest 15%

insurance premiums 5%

telecommunications and transport services 5%