On 30 December 2019 the Republic of Kazakhstan has ratified the Convention on avoidance of double taxation with Cyprus and the Protocol thereto[1] (hereinafter – the ‘Convention’).

The Convention comes into effect upon receipt of the last written notification confirming that all necessary interstate procedures were finalised. If these procedures are finalised this year, the residents of the states will be entitled to apply the Convention provisions in respect of income received (capital owned) effective 1 January 2021.

Below you will find a brief overview of the main provisions of the Convention.

Dividends, interest, royalty

The Convention provides for opportunity to reduce income tax rates in respect of: 

Permanent establishment

Activity of the resident of Cyprus/Kazakhstan related to exploration/exploitation of the sea bed, subsoil and natural resources including installation and exploitation of pipes and other installations under and above sea surface in Kazakhstan/Cyprus for the period exceeding 30 calendar days in any 12-months period is recognised as performance of activity through a permanent establishment.

Sale of real estate

Income received by the resident of Cyprus/Kazakhstan from the sale of real estate located in Kazakhstan/Cyprus is, in general, taxed in Kazakhstan/Cyprus.

‘Real estate’ definition is determined in accordance with the law of the state where the property is located.

Sale of shares

Income of the resident of Cyprus/Kazakhstan from the sale of shares or participant shares in a Kazakh/Cyprian company is subject to taxation in Kazakhstan/Cyprus, if more than 50% of such shares or participant shares is comprised of real estate located in Kazakhstan/Cyprus. 

Information exchange

Kazakhstan and Cyprus authorities are entitled to exchange information required for enforcement of the Convention’s provisions.