On January 1, 2017, amendments affecting individual income tax reporting came into force in the Republic of Kazakhstan.
Amendments to the Tax Code of the Republic of Kazakhstan (Tax Code) became effective January 1, expanding the list of items subject to individuals’ mandatory tax reporting in connection with their individual income tax (IIT) obligations.
Prior to January 1, 2017, the following persons were required to file IIT returns with the State Revenue Committee of the Ministry of Finance of Kazakhstan:
- Individual entrepreneurs
- Private notaries, private bailiffs, advocates, and professional mediators
- Individuals who received property income
- Individuals who received other income, including outside Kazakhstan
- Individuals holding money in bank accounts in foreign banks outside Kazakhstan
New Items for IIT Disclosure
As of January 1, 2017, in addition to the above persons, ITT returns must be filed by individuals who own the following property:
- Real estate (or rights in and/or transactions with the same) that is subject to state registration or other registration with a competent authority of a foreign state under the laws of such state
- Securities whose issuers are registered outside Kazakhstan
- Interests in the authorized capital of a legal entity incorporated outside Kazakhstan
Consequences of Failing to Report for IIT Purposes
Under Article 275 of the Administrative Offences Code of Kazakhstan (AOC), a taxpayer’s failure to file a tax return within the stipulated deadline is punishable by a fine of 250 times the Monthly Calculation Index (MCI) (i.e., KZT 567,250 or approximately USD 1,820).
Currency Control Laws of Kazakhstan
Pursuant to the Currency Regulation and Currency Control Law, an individual is not required to file a notification upon the opening or holding of an account with a foreign bank located outside Kazakhstan.
Agreements on the acquisition of title to real estate located outside the territory of Kazakhstan relate to capital movement transactions and require a notification to the National Bank of Kazakhstan (if the value of the property exceeds the equivalent of USD 100,000).
In addition, the acquisition of shares/interests in foreign companies might also be subject to registration with the National Bank of Kazakhstan (if the value of the corresponding shares or interests exceeds the equivalent of USD 100,000).
Pursuant to Article 244 of the AOC, violation of the deadline for submitting an application for a notification or registration certificate shall be punishable by a warning. A repeated violation by an individual of Article 244 of the AOC within one year after the first offence shall result in a fine in the amount of 50 times the MCI (KZT 113,450 or approximately USD 365).
Disclosure of Information
Significant changes have been made recently in the laws of Kazakhstan regarding disclosures by individuals and legal entities.
It is envisaged that effective January 1, 2020 all individuals who are nationals of Kazakhstan will be subject to universal income reporting.
In addition, Kazakhstan has recently joined the Convention on Mutual Administrative Assistance in Tax Matters of the Council of Europe and the Organization for Economic Cooperation and Development. The convention, in particular, provides for the exchange of tax information by participating countries. Kazakhstan is also a party to multiple bilateral agreements affecting the disclosure of tax information.