Taxation of international executives
Are there social security/social insurance taxes1 in Kazakhstan? If so, what are the rates for employers and employees?
Employers in Kazakhstan, including Kazakh companies and representative offices and branches of foreign legal entities, are required to pay social tax for their employees. The social tax is borne entirely by the employer and is not withheld from employees’ salaries.
Social tax is levied on all income, irrespective of whether it is received in cash or in-kind. In addition, representative offices and branch offices of foreign legal entities must pay social tax for their head office’s employees who receive any remuneration for work in Kazakhstan.
There is no maximum threshold for the social tax base. Obligatory contributions to pension funds in Kazakhstan and a few other minor allowances, such as compensation for unused vacation, are exempt from social tax. These allowances include the following:
Social tax applies to all employees, including foreign personnel, at a flat rate of 9.5 percent.
Social tax payments are due by the 25th day of the month following the month of income payment. An income tax and social tax report is due quarterly by the 15th day of the second month following the calendar quarter.
Employers in Kazakhstan must make contributions to the State Social Insurance Fund. Contributions are required for local employees as well as for expatriate personnel with a Kazakhstan permanent residence permit. A foreign individual without a permanent residence permit is not subject to this contribution requirement.
Employers must make contributions individually for each employee. Contributions are based on an employee’s monthly gross salary, up to a maximum monthly income KZT297,500 in 2019. For 2019, contributions are computed at the rate of 3.5 percent of applicable gross salary.
Social insurance contributions are fully creditable against an employer’s social tax liabilities and therefore do not represent an additional tax burden on the employer.
Obligatory social medical contributions
Employers must make monthly employer obligatory social medical insurance (hereinafter, “OSMI”) contributions to the Social Medical Insurance Fund at their own expense calculated based on 1.5 percent rate.
The calculation base of the Employers’ OSMI contributions includes gross salaries and other benefits that individuals earn under a labor contract or service agreement excluding type of income that is not subject to OSMI contributions. Contributions are based on an employee’s monthly gross salary, up to a maximum monthly income KZT425,000 in 2019.
All employers, including branches and representative offices should pay OSMI contributions for all their employees. Employers' contribution will be made from the employers’ funds (not employee’s).
Are there any gift, wealth, estate, and/or inheritance taxes in Kazakhstan?
Are there real estate taxes in Kazakhstan?
Individuals owning residential properties, garages, and other buildings and constructions in Kazakhstan are subject to property tax. The tax is assessed on the value of real estate as appraised by the authorized governmental body as of 1 January each year.
The following table indicates property tax rates applicable to individuals in 2018.
|Property value (KZT)||Tax (KZT)|
|Up to 2,000,000||0.05%|
|From 2,000,001 to 4,000,000||1,000 + 0.08% of property value exceeding 1,000,000|
|From 4,000,001 to 6,000,000||2,600 + 0.10% of property value exceeding 2,000,000|
|From 6,000,001 to 8,000,000||4,600 + 0.15% of property value exceeding 3,000,000|
|From 8,000,001 to 10,000,000||7,600 + 0.20% of property value exceeding 4,000,000|
|From 10,000,001 to 12,000,000||11,600 + 0.25% of property value exceeding 5,000,000|
|From 12,000,001 to 14,000,000||16,600 + 0.30% of property value exceeding 6,000,000|
|From 14,000,001 to 16,000,000||22,600 + 0.35% of property value exceeding 14,000,000|
|From 16,000,001 to 18,000,000||29,600 + 0.40% of property value exceeding 16,000,000
|From 18,000,001 to 20,000,000||37,600 + 0.45% of property value exceeding 18,000,000
|From 20,000,001 to 75,000,000||46,600 + 0.50% of property value exceeding 20,000,000|
|From 75,000,000 to 100,000,000||321,600 + 0.75% of property value exceeding 75,000,000|
|From 100,000,000 to 150,000,000||471,600 + 0,65% of property value exceeding 100,000,000|
|From 150,000,000 to 350,000,000||796,600 + 0,70% of property value exceeding 150,000,000|
|From 350,000,000 to 450,000,000||2,196,600 + 0,75% of property value exceeding 350,000,000|
|Over 450,000,000||2,496,600 + 2% of property value exceeding 450,000,000
Are there sales and/or value-added taxes in Kazakhstan?
An individual who is registered as an individual entrepreneur and has taxable revenues in excess of KZT75,750,000 in any period of 12 consecutive months should register as a VAT payer and pay VAT. VAT registration is optional for all other persons.
The standard VAT rate in 2019 is 12 percent and applies to revenues derived from the sale of goods or services within Kazakhstan and to the import of goods into Kazakhstan. Tax law provides special rules for determining when and where various types of transactions are deemed to occur.
Certain activities are exempt from VAT. The list of exempt activities includes, among others, the lease or sale of residential buildings (except for buildings or portions thereof used for hotel services) and the lease or sale of land and land use rights (except for land used for parking passenger vehicles).
Registered VAT payers must charge VAT on their taxable output and may claim a credit for input VAT they pay to suppliers who are registered VAT payers in Kazakhstan.
Kazakhstan VAT payers are required to charge VAT to themselves on taxable transactions they conduct in Kazakhstan with non-residents that are not VAT payers in Kazakhstan. Taxpayers may claim a credit for this self-charged VAT.
The VAT base for imported goods includes the declared customs value of the goods and any excise duties, customs duties, and customs clearance fees payable upon customs clearance of the goods. Importers must pay import VAT before goods are cleared through customs. VAT exemptions at the time of import are available for certain types of equipment, pharmaceuticals, raw materials and spare parts.
VAT declarations and payments are due quarterly. The amount due to the state is the difference between the total amount of output VAT that a taxpayer charges during the tax period and the total amount of input and/or import VAT that the taxpayer pays during the tax period.
Certain activities are subject to VAT at a rate of 0 percent. The list of such activities includes, among others, exports of goods from Kazakhstan, sales of refined precious metals to the National Bank of Kazakhstan, international transportation services, sales of goods on the territory of special economic zones, sales of certain self-produced goods to petroleum or mining business whose subsoil use contract grants them exemption from import VAT, and sales of certain self-produced goods to companies that entered into infrastructure investment contracts with the government of Kazakhstan, if the sales take place during the construction of new facilities.
Are there unemployment taxes in Kazakhstan?
Are there additional taxes in Kazakhstan that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, etc.
Various local taxes, including land tax and vehicle tax, may apply to individuals.
Foreign Financial Assets
Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/territory’s fiscal or banking authorities?
The expatriates and local citizens that are recognized as Kazakh tax residents are required to file a PIT declaration annually, pay the related tax on income they earn outside of Kazakhstan (if any), and report bank accounts, property (immovable property, security papers and partnership share in foreign legal entity) they have outside of Kazakhstan, if any. This requirement does not relates to the employer’s responsibility.
Therefore, information about the individuals’ securities should be reported in the individual’s tax return and submitted to the Kazakhstan tax authority. This information relates only to informative character and do not lead to additional tax burden. The Kazakhstan tax return filing due date is 31 March of the year following the reporting period.
If the individual receives the dividend income from the securities and/or gain from the securities sale, this income will be subject to personal income tax in Kazakhstan (at 5 percent on the dividend income from Kazakhstan sources and 10 percent on the dividend income from abroad and on the gain from the securities’ sale). The individual (who is regarded as a tax resident in Kazakhstan for the reporting period) should specify this income in their annual tax return.
7According to Law № 105-V of the Republic of Kazakhstan on Pension Security in the Republic of Kazakhstan, dated 23 June 2013 (hereinafter, the “Pension Law”) and the Tax Code.
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