In this Issue:
Kazakhstan amends its Tax Code
In line with Baker & McKenzie’s practice of keeping clients informed of
important legal developments that might influence your business, we draw
your attention to the following recent changes in Kazakhstan’s tax law.
Kazakhstan Amends its Tax Code
On 28 November 2014, Kazakhstan adopted certain amendments to its tax
legislation (the “Tax Amendments”).1 Most of the Tax Amendments take
effect on 1 January 2015.
Below we summarize some of the most important Tax Amendments:
Under the Tax Amendments, taxpayers will be released from liability to pay
tax fines and default interest on any unpaid (underpaid) taxes which had
accrued before 1 January 2014 and which had not been paid to the tax
authorities by 1 October 2014.
The procedure of applying this exemption has to be determined by the
Committee on State Revenues of the Ministry of Finance. As of the date of
this legal alert, such procedure has not been adopted.
This exemption does not apply to certain categories of taxpayers, such as
subsoil users, major taxpayers (according to a Government list), and
taxpayers which initiated international arbitration proceedings against
Kazakhstan in connection with their tax liabilities.
Tax Registration of Foreign CEOs
Foreign CEOs of local companies and foreign heads of local branches and
representative offices of foreign companies will have to register for tax
purposes in Kazakhstan and obtain a Kazakhstani individual identification
number (IIN) by 1 January 2015. Following that, their legal entity, branch
or representative office should update its tax registration details
accordingly. The drafters of the Tax Amendments claim that this change is
aimed at simplifying the introduction of electronic VAT invoices in
Kazakhstan. But, in the absence of further detail, the relationship between
these two concepts is unclear.
What is clear, however, is that obtaining the local INN will not result in
additional tax implications for foreign managers, such as creating a tax
1 Law of the Republic of Kazakhstan No. 257-V “On Introducing Changes and Additions to
Certain Legislative Acts of the Republic of Kazakhstan regarding Taxation Matters” dated 28
2 Kazakhstan Amends Its Tax Code | December 2014
residence in Kazakhstan or an obligation to pay tax on income from non-
A failure to comply with the requirement may lead to a relatively small fine
on the foreign CEO/head. More importantly, entities, branches and
representative offices which do not ensure that their CEO/head is duly
registered will cease to be VAT payers from 1 January 2015 (which in
some situations may adversely affect their VAT position).
VAT - Clarification of Scope
Before the Tax Amendments were adopted, there was some uncertainty as
to whether local VAT applies to sales of certain services (e.g., financial
services) by foreign companies which have branches in Kazakhstan, but
where sales do not involve such branches in any respect. A technical
reading of the law suggested that worldwide sales of foreign companies
with local branches would be subject to local VAT.
To address this issue, the Tax Amendments clarify that local VAT will apply
only to sales by foreign companies to the extent that the local branch is
directly involved in such sales. This would be the case where the branch
would sign a contract with the customer (or would be indicated in the
contract as the service provider), issue by the branch an invoice or act of
acceptance to the customer (or where the act issued by the foreign parent
indicates the branch as the provider of the relevant services), or where the
local branch would receive the service fees.
VAT - Further Postponement of Cash Refunds
Before the Tax Amendments were adopted, the introduction of a cash
refund of the difference between “input VAT” (i.e., VAT paid to suppliers)
over “output VAT” (i.e., VAT charged to customers) to VAT payers was
planned for 2016. The Tax Amendments extend this deadline to 1 January
2017. Until then, VAT will continue (with certain limited exceptions) to be
available only for set-off but not for cash refund.
Before the Tax Amendments, Kazakhstani entities which were engaged in
financial leasing business were exempt from corporate income tax on
interest payments under financial lease agreements. The exemption
applied regardless of the types of leased assets.
The Tax Amendments limited the scope of the tax exemption to financial
leases of agricultural and biological assets which provide for transfer of title
to the leased assets to the lessee upon expiration of the lease.
This LEGAL ALERT is issued to inform clients and other interested parties
of time sensitive legal developments which may effect or otherwise be of
special interest to them. The comments above do not constitute legal
advice or opinion and should not be regarded as a substitute for detailed
legal advice in individual cases.
For further information please
Curtis Masters, Partner
+ 7 727 330 0500
Igor Kolupayev, Counsel
+7 727 330 05 00
Baker & McKenzie - CIS, Limited
Samal Towers, 8th floor
97, Zholdasbekov St.
Samal-2, 050051 Almaty
Republic of Kazakhstan
Tel: + 7 727 330 05 00
Fax: + 7 727 258 40 00