With the introduction of the new Tax Code of the Republic of Kazakhstan, the approach to applying international tax treaties has become more formalized. For a tax agent, it is no longer sufficient to rely solely on the existence of a Double Taxation Avoidance Agreement (DTA) and a certificate of residence of the non-resident.<\/p>\n\n\n\n
The key practical change is that the application of a DTA is now treated as an evidentiary procedure. A tax agent must not only obtain a certificate of residence, but also demonstrate that the payment indeed falls within the scope of the international treaty, that the non-resident is not acting on behalf of another person, that there are no barriers to applying the treaty benefit related to the existence of a permanent establishment, and, in certain cases, that the corporate structure of the income recipient has also been disclosed. This logic follows from the general framework of Article 698, while the specific requirements are detailed in Articles 702, 705 and 706 of the Tax Code.<\/p>\n\n\n\n
If a Kazakhstani company applies a tax treaty to fully exempt a non-resident\u2019s income from taxation for services rendered, the basic document remains the document confirming the non-resident\u2019s residence, prepared in accordance with Article 702 of the Tax Code. However, for services and works this may no longer be sufficient. According to paragraph 4 of Article 705, if a non-resident legal entity provides services and\/or performs work in Kazakhstan within a period that does not lead to the creation of a permanent establishment, additional corporate documents must be provided together with the residence certificate. These include either notarized copies of the constituent documents or an extract from the commercial register, shareholders\u2019 register, or another similar document from the country of incorporation indicating the founders, participants and majority shareholders.<\/p>\n\n\n\n
If such documents are not issued in the non-resident\u2019s country or do not exist in the usual form, paragraph 4 of Article 705 allows substitute documents to be provided. This may include the document that served as the basis for the establishment of the non-resident entity, or a document reflecting the organizational structure of the consolidated group to which the non-resident belongs, indicating all group participants, their countries of incorporation, as well as their registration and tax identification numbers. In other words, the legislator explicitly requires the tax agent to see not only the certificate of residence, but also the ownership or group structure of the non-resident.<\/p>\n\n\n\n
At the same time, in accordance with paragraph 3 of Article 705, the document confirming residence must be submitted no later than March 31 of the year following the tax period in which the income was paid, or no later than five working days before the completion of a withholding tax audit\u2014whichever occurs earlier.<\/p>\n\n\n\n
This new provision is particularly sensitive for service agreements. The absence of the above documents increases the risk that, during a tax audit, the treaty-based exemption may be challenged as insufficiently substantiated.<\/p>\n\n\n\n
With respect to royalties, the new structure of Article 706 provides an important practical advantage. It does not prohibit the application of an exemption or reduced tax rate when the payment is made through an intermediary; rather, it expressly allows such a possibility provided certain conditions are met. In particular, the agreement must disclose both the intermediary and the ultimate recipient of the income, specify the amounts attributable to each final recipient, and include the registration details of the relevant parties. In addition, the document confirming the residence of the ultimate income recipient must be submitted within the deadline established by paragraph 3 of Article 705 and must comply with the requirements of Article 702 of the Tax Code.<\/p>\n\n\n\n
The practical value of this rule lies in the fact that the Code effectively legalizes a commonly used model in multi-party financial and treasury structures, where remuneration is paid through a payment agent, facility agent, settlement intermediary, or another intermediate party. Whereas previously the presence of an intermediary was often perceived as an almost automatic ground for denying treaty benefits, the law now clearly confirms that the benefit may apply if the payment chain is transparent and the ultimate income recipient is properly identified and documented.<\/p>\n\n\n\n
From a business perspective, this provides several advantages. First, it creates a more predictable legal framework for structured financing, including syndicated loans and intra-group remuneration payments. Second, tax agents now have a clear procedural basis: the application of a tax treaty can be justified not only by the general principles of international taxation but also by a direct provision of the Tax Code. Third, it reduces the risk of situations where withholding tax is applied \u201cjust in case\u201d due solely to the presence of an intermediary, followed by a complex and lengthy refund procedure.<\/p>\n\n\n\n
At the same time, it is important to understand that the law has not simplified the verification process as such, but has replaced the previous uncertainty with formalized requirements. In other words, applying a tax treaty through an intermediary is now possible, but only if the contractual structure and the supporting documentation are properly prepared from the outset. If the agreement does not disclose the amounts, the participants in the payment chain, the registration details, or if the residence certificate of the ultimate income recipient is missing, the relevant treaty benefit will not apply.<\/p>\n\n\n\n
Overall, the new Tax Code significantly raises the requirements for substantiating the right to treaty benefits and requires tax agents to prepare documentation more carefully even before making payments to non-residents. At the same time, the new rules not only strengthen oversight but also provide businesses with clearer and more formalized mechanisms for applying exemptions or reduced rates, including in more complex cross-border structures. For this reason, companies should already begin reviewing their internal documentation, contractual templates and tax evidence to ensure that they reflect the updated requirements and allow treaty benefits to be applied safely in practice.<\/p>\n\n\n\n
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