Memo: Grounds for Revocation of Astana Hub Tax Benefits

Astana Hub tax incentives are not granted unconditionally. To retain these benefits, a participant must comply with the requirements of the special regime. Therefore, the risk of losing tax incentives arises not only when a company is formally excluded from Astana Hub, but also when it no longer meets the conditions for applying the tax preferences in practice.

Key Principle:

A participant must be able to demonstrate that its activities, income, documentation, and reporting confirm the conduct of priority ICT activities. If monitoring reveals non-compliance with the applicable requirements, the company may be transferred to the general taxation regime.

Main Grounds for Loss of Tax Benefits

1. Violation of the 90/10 Rule

One of the primary reasons for losing tax benefits is failure to comply with the 90/10 rule. The rule requires that:

1. At least 90% of the participant’s total annual income must be derived from priority ICT activities.
2. No more than 10% of total annual income may come from other, non-core activities.

Risks arise when a company receives significant revenue from activities that are not classified as priority ICT activities, such as:

• Sale of equipment;
• Leasing of premises;
• Installation or engineering services;
• General consulting services;
• Training unrelated to ICT;
• Resale of third-party solutions;
• Other non-core services.

Such income is not necessarily prohibited. However, if its share exceeds the allowable limit, the participant may lose the right to apply tax incentives.

2. Activities Not Matching the List of Priority ICT Activities

Tax benefits apply only to activities that correspond to the approved list of priority ICT activities.

A risk arises when a company registers an IT project but, in practice, provides services that do not fall within the priority ICT categories.

To maintain eligibility for tax incentives, the company’s actual activities should be clearly linked to a specific priority activity rather than described in broad terms such as “IT services” or “consulting.”

3. Non-Compliance with the Business Plan

The business plan submitted during Astana Hub registration remains important throughout participation.
If a company’s actual operations significantly differ from the business plan, this may create risks for retaining tax benefits.
Risks arise if:

1. The company changes its product, service, or monetization model;
2. New activities appear that were not included in the business plan;
3. The company starts generating significant income from new business areas;
4. Actual contracts and acceptance certificates do not correspond to the declared project;
5. The company ceases development of the project for which participant status was granted.

If the business model changes, it is advisable to assess in advance whether the business plan should be updated and whether Astana Hub should be notified or approval obtained.

4. Absence of Separate Accounting

Failure to maintain separate accounting records for core and non-core income is a significant risk.

If a company cannot demonstrate which portion of its income relates to priority ICT activities and which relates to other activities, it will be difficult to prove compliance with the 90/10 rule.

Problems may arise when:

1. All income is recorded under one general category;
2. No analytical breakdown exists by activity type, project, or contract;
3. Core and non-core services are combined within one contract without cost allocation;
4. Accounting records cannot substantiate the calculation of core and non-core income shares;
5. There are no documents confirming the ICT nature of the income.

Documentation and Reporting Violations

5. Incorrect Contracts, Acceptance Certificates, and Invoices

Even if a company actually provides IT services, tax benefits may be at risk due to improper documentation.
Contracts, acceptance certificates, invoices, and supporting documents must demonstrate a clear connection between the income and priority ICT activities.

Examples of risky wording include:

• “Consulting services”;
• “Business support services”;
• “Technical support” without identifying the software product;
• “Service services”;
• “Marketing services”;
• “Training” without reference to ICT.

Documents should clearly describe the nature of the work, such as:

• Software development;
• Software modification;
• Information system implementation;
• SaaS platform maintenance;
• Data processing;
• AI module development.

6. Violation of Reporting Obligations

Astana Hub participants must submit reports and demonstrate project development.

Risks arise if a company:

1. Fails to submit quarterly reports;
2. Provides incomplete or inaccurate information;
3. Does not disclose changes in activities;
4. Fails to provide documents upon Astana Hub’s request;
5. Includes information in reports that does not correspond to contracts, acceptance certificates, or accounting records.

Reporting should always be consistent with actual business activities, contractual documentation, and accounting data.

7. Failure to Provide Audit Confirmation

If a participant’s annual income exceeds 100 million KZT, an audit confirmation or agreed-upon procedures report is required.
Failure to provide such confirmation, or the discovery of inconsistencies during an audit, may result in:

• Loss of tax incentives;
• Additional tax assessments;
• Further inquiries from Astana Hub or government authorities.

8. Non-Payment of Membership Fees and Failure to Fulfill Reciprocal Obligations

Astana Hub participants are required to pay membership fees and fulfill reciprocal obligations.
Failure to do so may be considered non-compliance with participation requirements and may lead to claims from Astana Hub.
Risks arise if:

1. Membership fees are not paid or are paid late;
2. The calculation basis for membership fees is incorrect;
3. Reciprocal obligations are not fulfilled;
4. There is no evidence confirming fulfillment of reciprocal obligations;
5. The company ignores notifications or requests from Astana Hub.

Conclusion

The most common grounds for revocation of Astana Hub tax benefits are related to losing compliance with the special regime requirements.

The most critical risks include:

• Violation of the 90/10 rule;
• Significant income from non-core activities;
• Actual operations not matching the business plan;
• Lack of separate accounting;
• Improper documentation;
• Reporting violations;
• Failure to provide required audit confirmation when income exceeds the established threshold.