KazakhstanTax Obligations Detailed

As of February 5, 2025, employers in Kazakhstan face several tax obligations related to their employees' payroll.

Social Tax

• Rate: 11% of the employee's gross income. This includes all earnings and benefits, regardless of whether they are paid in cash or in kind. There's no upper limit for the social tax calculation.
• Responsibility: Paid entirely by the employer.

Social Security Contributions

• Rate: 5% of the employee's gross monthly salary.
• Threshold: Up to 7 times the minimum monthly wage (MMW). As of 2025, the MMW is KZT 85,000, making the threshold KZT 595,000.
• Responsibility: Paid by the employer.
• Creditable: Fully creditable against Social Tax, reducing the overall tax burden.

Obligatory Pension Fund Contributions (OPFC)

• Rate: 2.5% of the employee's gross income.
• Responsibility: Paid by the employer for all employees. Kazakh nationals also contribute 10% of their gross income, capped at 50 times the MMW (KZT 4,250,000 as of 2025). This 10% employee contribution is withheld by the employer and remitted to the pension fund.
• Threshold: No threshold for the employer's 2.5% contribution.

Individual Income Tax (IIT)

• Rate: 10% of the employee's gross income.
• Responsibility: Withheld by the employer from the employee's salary and remitted to the tax authorities.

Social Health Insurance Contributions

• Employee Contribution: 2% of their gross income. Withheld by the employer.
• Employer Contribution: 3% of the employee's gross income.

Other Considerations

• Minimum Calculation Index (MCI): The MCI, set at KZT 3,932 for 2025, is often used to express various tax thresholds and deductions.
• Tax Deductions from Payroll: Certain tax deductions might apply under specific circumstances, reducing the overall tax burden. Consult official sources or tax professionals to determine eligibility.
• Unified Payroll Tax: Although not a separate tax, several sources mention a "unified payroll tax," which is calculated as the sum of social tax, social security contributions, employer pension contributions, and social health insurance contributions. As of January 2025, the unified payroll tax rate is 23.8%.
• Reporting and Payment Deadlines: Payroll taxes and contributions are typically due monthly, with deadlines and reporting frequencies specified by tax legislation. Stay informed about the specific deadlines to avoid penalties.

It's important to note that this information is current as of February 5, 2025, and tax laws and regulations are subject to change. Consulting with a qualified tax advisor is highly recommended to ensure compliance with the most up-to-date requirements.

In Kazakhstan, both employers and employees have specific tax obligations and deductions related to employment income.

Employer Obligations

• Social Tax: Employers pay 11% of the employee's gross income. This covers all benefits, regardless of whether they are paid in cash or in kind, and there's no upper limit on the income subject to this tax.
• Social Security Contributions: Employers also contribute 5% of the employee's gross monthly salary up to a maximum of seven times the minimum monthly wage (7 x KZT 85,000 = KZT 595,000 as of January 1, 2025). This contribution is creditable against the social tax, effectively reducing the overall social tax burden.

Employee Deductions

• Individual Income Tax (IIT): Employees pay a flat rate of 10% of their gross income. This is withheld at the source by the employer.
• Mandatory Pension Contributions: Kazakh citizens contribute 10% of their gross monthly salary to the Unified Accumulative Pension Fund. The maximum income subject to this contribution is 50 times the minimum monthly wage (50 x KZT 85,000 = KZT 4,250,000 as of January 1, 2025).
• Social Health Insurance: As of 2025, Information about the exact percentage employees contribute to Social Health Insurance is not specified in the provided sources.
• Deductions from IIT: Several deductions can reduce the taxable income for IIT purposes:
  • Standard Deduction: KZT 55,048 per month (14 times the Monthly Calculation Index (MCI) of KZT 3,932 as of January 1, 2025).
  • Pension Contributions: Both mandatory and voluntary pension contributions are deductible.
  • Medical Expenses: Deductible up to a specific annual limit (Information about the annual limit for 2025 was not found in the sources).
  • Insurance Premiums: Premiums for certain types of insurance are deductible.
  • Mortgage Interest: Interest payments on mortgages from specific institutions can be deducted.

Important Considerations

• The information provided is based on the latest available data as of February 5, 2025. Tax laws and regulations can change, so it's essential to stay updated on any revisions.
• The new Tax Code slated for implementation in 2026 may introduce further changes to these calculations. It's crucial to monitor updates from official sources as the implementation date approaches.

In Kazakhstan, the standard VAT rate is 12%, applicable to most goods and services unless specifically exempt or zero-rated.

VAT Rates

• Standard Rate: 12% (for most goods and services).
• Zero Rate (0%): Applies to exports, international transport services, and specific goods like oil and lubricants sold by airports to foreign air carriers.
• Exempt: Certain goods and services are exempt, including land and residential real estate, financial services, medical and educational services, and cultural and sporting events.

Registration

• Threshold: Businesses must register for VAT if their annual turnover exceeds 78 million tenge (approximately USD 149,874 as of January 2025). The government has proposed reducing this threshold to 15 million tenge (approximately USD 28,822 as of January 2025). This change is expected to take effect as part of the new Tax code.
• Voluntary Registration: Businesses below the threshold can register voluntarily.
• Non-Resident Suppliers of Electronic Services: Non-resident businesses supplying electronic services to individuals in Kazakhstan must undergo a simplified registration process. This involves sending a confirmation letter with specific details to the tax authorities. It does not require a physical presence in Kazakhstan.

Filing and Payment

• Returns: VAT returns are filed quarterly.
• Deadline: Returns are due by the 15th of the second month following the reporting quarter.
• Payment Deadline: VAT payments are due by the 25th of the second month following the reporting quarter.
• Electronic Invoicing: All VAT registered businesses are generally required to issue electronic invoices (e-invoices) within fifteen days of the supply of goods or services. However, there are exceptions for certain goods or when selling to individuals and micro-entrepreneurs.

VAT Refund for Foreigners (Tax-Free Shopping)

• A pilot project allowing foreign visitors to claim a VAT refund on purchases is currently in effect until December 31, 2025, and is expected to be extended until 2026.
• The project operates in designated retail locations and international airports in Astana, Almaty, Shymkent, and Turkestan.
• Refunds are processed through a designated operator.

Recent and Upcoming Developments

A new Tax Code is currently under discussion in Parliament and is expected to go into effect in early 2026. Changes included in this code include a possible increase in the VAT rate, which may be offset by reductions in other tax areas.

It's important to note that this information is current as of February 5, 2025, and may be subject to change due to ongoing legislative processes. Consulting with a tax advisor is recommended for specific business circumstances.

Kazakhstan offers various tax incentives to attract investment and stimulate economic growth.

Tax Incentives for Businesses

• Investment Priority Projects: Qualifying projects can benefit from a 100% reduction in corporate income tax, exemption from land tax, and a zero rate for property tax. Further details on eligibility and application procedures can be obtained from the relevant authorities. As of February 5, 2025, the World Bank is advocating for phasing out some inefficient tax incentives while proposing reforms for a more progressive income tax system and improvements in VAT compliance.

• Special Economic Zones (SEZs): Currently, there are 13 SEZs in Kazakhstan offering exemptions from corporate income tax, land tax, and property tax. Businesses operating within SEZs may also qualify for VAT exemptions on certain goods. Additionally, companies in the Information Technology Park SEZ can receive a 100% exemption from social tax for their employees under specific conditions.

• Investment Contracts: The Kazakh government offers investment contracts with incentives like exemptions from customs duties, corporate income tax (up to 10 years), land tax (up to 10 years), and property tax (up to 8 years). These contracts also guarantee tax legislation stability for the duration of the agreement. Investment subsidies and reimbursement for up to 30% of investments in fixed assets are also possible. Specific eligibility criteria and application procedures are available from the relevant authorities.

• Astana International Financial Centre (AIFC): Registered AIFC participants enjoy various tax benefits, including exemptions from corporate income tax, VAT, and individual income tax for foreign employees. Dividends, capital gains from share sales, and income from sources outside Kazakhstan may also be exempt. Specific eligibility requirements can be found on the AIFC website.

• Accelerated Depreciation: Businesses may be able to take accelerated tax deductions for capital expenditures on qualifying assets, allowing them to reduce their taxable income in the early years of an investment. The specific assets and depreciation methods eligible for this incentive are subject to regulations.

Tax Incentives for Individuals

• AIFC Employee Benefits: Foreign employees working for AIFC participants can benefit from personal income tax exemptions.

• Standard Deductions and Allowances: Kazakhstan residents can claim standard deductions for personal income tax, mandatory pension contributions, social medical insurance contributions, voluntary pension contributions, and medical expenses. These are subject to limitations outlined in the tax code.

• Foreign Tax Credit: Residents can claim a credit for foreign income taxes paid on foreign-source income, reducing their Kazakh tax liability. Documentation confirming the foreign tax payment is required.

General Tax Information

• Tax Year: The tax year in Kazakhstan follows the calendar year (January 1 to December 31).

This information is current as of February 5, 2025, and may be subject to change. Always consult with a tax professional or refer to official government sources for the most up-to-date information and specific details regarding eligibility and application procedures.