Taxation

Tax law of the Republic of Kazakhstan

As required by the Constitution of Kazakhstan, within the tax system of Kazakhstan, any taxes, levies, and other obligatory payments may be established only by the laws enacted by the Parliament of the Republic of Kazakhstan.

Parliament may not delegate its constitutional powers to establish the tax system, taxes or levies, and sanctions for tax violations to the government or any other authority. Under the Constitution, laws in general and tax laws in particular enter into effect after the President signs them.

Tax System. Tax legislation of the Republic of Kazakhstan consists of the Tax Code and Normative Legal Acts, and is regulated by International Agreements.

Tax legislation is based on the principles of the mandatory nature of payment of taxes and other mandatory payments to revenue, certainty and equity of taxation, unity of the tax system and publicity of tax legislation. The Tax Code of the Republic of Kazakhstan establishes Kazakhstan taxes, levies, and general tax principles.

Such taxes as corporate income tax, value added tax, personal income tax, and excise taxes account for the largest portion of budget revenues.

The tax period for a corporation and an individual is a calendar year.

Filing Deadlines. Corporations shall file corporate income tax returns by March 31 of the year following the tax period.

Individuals shall file individual income tax returns by March 31 of the year following the taxation year.

Often it is possible to have an extension to the filing deadline granted by the tax authorities for both corporations and individuals. However, all estimated outstanding taxes must be paid by the filing deadlines.

The process whereby charges are imposed on individuals or property by the legislative branch of the government and by many state governments to raise funds for public purposes.

The theory that underlies taxation is that charges are imposed to support the government in exchange for the general advantages and protection afforded by the government to the taxpayer and his or her property. The existence of government is a necessity that cannot continue without financial means to pay its expenses; therefore, the government has the right to compel all citizens and property within its limits to share its costs. The state governments both have the power to impose taxes upon their citizens.

The main legal act establishing and regulating taxation in Kazakhstan is the

Code of the Republic of Kazakhstan On Taxes and Other Obligatory Payments to the Budget (the “Tax Code”). The Tax Code was adopted on December 10, 2008 of No. 99-IV. This Code shall regulate the government-directed relations associated with establishing, introduction and the procedure for the payment of taxes and other obligatory payments to the budget as well as relations between the state and the taxpayer (the tax agent) which are associated with the performance of tax obligations.

Kazakhstan declared its sovereignty as a member of the USSR in October 1990, and following the dissolution of the Soviet Union the country declared independence in December 1991. The first piece of Tax Legislation of the sovereign republic was the 1991 decree “On Taxes from Enterprises, Associations and Organizations”.

7In 1995 the President issued a Decree “On Taxes and Other Obligatory Payments to the Budget" (the “Decree”), which regulated the tax system in Kazakhstan. The Decree only provided for general information on taxes and referred to several instructions which provided for specific information on each of the taxes.

In 2002 the Code of the Republic of Kazakhstan On Taxes and Other Obligatory Payments to the Budget (the “2002 Tax Code”) came into force. The 2002 Tax Code was a more comprehensive legal act than the Decree. In fact, the 2002 Tax Code regulated the relationships between the state and the taxpayer and provided for procedures on calculation and payment of taxes.

In 2008 the President announced that the Republic of Kazakhstan requires a new tax code, which should provide for lower tax rates and simplified tax administration procedures. As a result, the Code of the Republic of Kazakhstan On Taxes and Other Obligatory Payments to the Budget (the “Tax Code”) was adopted on 10 December 2008 and came into force as of 1 January 2009.

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