Under the Tax Code of the Republic of Kazakhstan, non-resident legal entities are required to pay tax in Kazakhstan if they receive income recognized as income from sources within the Republic of Kazakhstan.
The list of such income is defined in Article 644 of the Tax Code.
What income is considered to be from sources in kazakhstan
In particular, income from sources in Kazakhstan includes:
- income from works and services actually performed within the territory of the Republic of Kazakhstan (subparagraph 2, paragraph 1, Article 644);
- income from management, financial, consulting, engineering, marketing, audit and legal services rendered by a non-resident outside Kazakhstan (subparagraph 3, paragraph 1, Article 644).
Taxation in the absence of a permanent establishment
If the non-resident’s activities do not result in the formation of a permanent establishment in Kazakhstan, such income is subject to:
- corporate income tax withheld at source;
- taxation without deductions;
- taxation at a rate of 20%.
The obligation to withhold and remit the tax rests with the Kazakhstani customer company, which acts as a tax agent.
When tax does not apply
According to subparagraph 11 of paragraph 9 of Article 645 of the Tax Code, income from works and services fully performed outside the Republic of Kazakhstan is not subject to taxation, except for income specified in subparagraphs 3), 4) and 5) of paragraph 1 of Article 644.
These exceptions include management, financial, consulting, engineering, marketing, audit and legal services, as well as royalty income and other income expressly specified in the Tax Code, which is subject to taxation in Kazakhstan regardless of where the services are rendered.
In other words:
- if a non-resident provides services exclusively outside Kazakhstan;
- and such services do not fall within the special categories of income specified in the Tax Code,
the relevant income is not subject to tax in Kazakhstan.
Practical implications for businesses
For companies, this means the following:
- foreign service providers and their Kazakhstani counterparties must take into account the actual place where services are performed;
- if services are rendered within Kazakhstan, the customer is required to withhold tax at source;
- if services are provided entirely outside Kazakhstan and do not fall within the special income categories listed in Article 644 of the Tax Code, no tax arises in Kazakhstan;
- this approach ensures transparency of tax obligations, reduces the risk of double taxation and supports fair business practices.
Source: Uchet.kz
