Tax declaration in Kazakhstan

22.03.2024

• Who is obliged to submit a tax return
• Tax return filing procedure
• Double taxation arise

Author: Elena Kravchenko, Associate.

March 31 is the deadline for filing individual income tax returns in Kazakhstan. How should foreign citizens report their taxes if they live and work in Kazakhstan? How to avoid double taxation? We recount it by examples.

Who is obliged to submit a tax return

According to the tax legislation of Kazakhstan, individual income tax declaration must be submitted by:

• Tax residents of the Republic of Kazakhstan (individuals/individual entrepreneurs).

We remind that according to Article 217 of the Republic of Kazakhstan Tax Code - individuals are recognized as Kazakh tax residents if they actually stayed in the country for more than 183 days during any 12 months (permanently residing in the Republic of Kazakhstan) or their vital interests center is located in Kazakhstan (not permanently residing in the Republic of Kazakhstan). Center of vital interests is recognized as being in Kazakhstan if the following conditions are simultaneously met: Individual holds citizenship of the Republic of Kazakhstan or a residence permit of Kazakhstan;   Spouse and (or) close relatives of the individual reside in the Republic of Kazakhstan;   Availability in the Republic of Kazakhstan of immovable property owned by the individual and (or) spouse and (or) close relatives of the individual, available at any time for his residence and (or) for the residence of spouses. Example 1 An individual stays outside Kazakhstan, manages a company and provides services in another country for 8 months of the year. During this time, his wife and children remained in Kazakhstan. He is also paying a mortgage loan for an apartment in Kazakhstan. Although he was abroad for more than 183 days per year, he is a Kazakhstan tax resident. Example 2 An individual reside in Kazakhstan for more than 183 days in 2023, but worked remotely for two companies: Belarusian and Kazakh company, while paying a mortgage loan for an apartment in Belarus. Formally, the person will be recognized as a tax resident of Kazakhstan (according to the criterion of the number of days of residence). At the same time, if the person stayed in Kazakhstan for less than 183 days, he could be recognized as a tax resident of Belarus - due to close economic ties with Belarus.

Tax return filing procedure

You can submit a tax return:

• electronically (using the "SONO" application or on the "Taxpayer's Cabinet" portal);
• paper form by submitting it in person to the tax authority or sending it by post.

Information required to complete the declaration

• General information about the declarant (TPN, full name, tax reporting period);
• List of property and other income;
• Rights to tax credits/deductions (e.g. confirmation of tax payment at source in another country).
   

Foreign income subject to mandatory declaration

• sale of goods in a foreign country;
   
• work performance, rendering of services outside the Republic of Kazakhstan;
   
• income from the increase in the value of immovable property upon sale;
   
• income from the increase in the value of securities or shares in a non-resident legal entity upon sale;
   
• dividends received from a non-resident legal entity;
   
• royalties received from a non-resident legal entity;
   
• income from renting out immovable property located outside the Republic of Kazakhstan;
   
• income from rendering transportation services in international transportation received from a non-resident of the Republic of Kazakhstan;
   
• income from activities outside the Republic of Kazakhstan under a labor agreement (contract) concluded with a non-resident who is an employer;
   
• other income from entrepreneurial activity.

Double taxation arise

Example: If an individual is a tax resident of one country and at the same time rents out real estate in another country, then under the current rules of the IRRSA, depending on the content, tax liabilities may arise in one, the other or both countries for certain types of income. Bilateral agreements on avoidance of double taxation are in place to prevent double taxation.

How to apply double taxation avoidance rules

In order to apply double taxation avoidance rules and obtain the right to a tax credit, the following documents must be submitted to the tax inspectorate:

• Documents confirming the payment of tax in a foreign country;
• A copy of the tax return that was submitted to the tax authority of the foreign state.

After accepting the above documents and entering information about your tax residency status of another country into the database, the tax authorities of Kazakhstan will be able to apply double taxation avoidance rules.
 

If you have any questions related to income declaration, REVERA specialists are always ready to help — ke@revera.kz.

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