4.4.1. Corporate income tax

Who are the payers of corporate income tax?

According to Article 77 of the Tax Code of the Republic of Kazakhstan, legal entities, residents of the Republic of Kazakhstan, except for the National Bank of the Republic of Kazakhstan and state institutions, as well as legal entities, non-residents, which perform activity in the Republic of Kazakhstan via their permanent establishments or receive income from the sources in the Republic of Kazakhstan shall be deemed the payers of corporate income tax.

What is an object of corporate income tax?

According to Article 78, taxable income, income subject to taxation at the source of payment, net profit of a legal entity – non-resident, which performs its activity in the Republic of Kazakhstan via its permanent establishment shall be deemed the corporate income tax taxable objects.

How the taxable income is formed?

Taxable income shall be determined as a difference between the adjusted aggregate annual income and the deductions, stipulated by the Tax Code, taking into account the adjustments of taxable income.

Aggregate annual income of legal entity – resident shall consist of all types of incomes due (received) in the Republic of Kazakhstan and outside within a fiscal period, and, moreover, include income from disposal of goods (works, services), property received for free, dividends, remuneration and any other types of incomes as stipulated for by Article 80 of the Tax Code. Aggregated annual income of taxpayer shall be subject to adjustment in accordance with Article 91 of the Tax Code. Thus, for example, incomes received from transactions with state securities and some other types of incomes shall be deducted from it.

According to the general rule as stipulated for by Article 92 of the Tax Code, expenses of the taxpayer associated with aggregate annual income generation shall be deducted when determining the taxable income, except for the expenses not subject to deduction as stipulated for by the provisions of Article 104 of the Tax Code. At the same time some types of expenses shall be charged to deductions within the limits stipulated by the legislative standards.

Taxable income shall be subject to further adjustment in accordance with the procedure as stipulated for by Article 122 of the Tax Code. In particular, expenses, actually incurred by the taxpayer to maintain the objects of social sector, shall be deducted from the taxable income within the limits of 2% from the taxable income.

What are the cases when the corporate income tax shall be withdrawn at the source of payment?

According to Article 131 of the Tax Code, some types of incomes shall be subject to taxation at the source of income. In particular, they are dividends, incomes of non-residents received from the sources in the Republic of Kazakhstan, remuneration paid by legal entity and others. Tax agent shall determine an amount of tax by applying the rate of 15% to the amount of income payable (except for the income of non-residents received from the sources in the Republic of Kazakhstan). Tax shall be withdrawn at the source of payment when paying the income, regardless the form and place of income payment. It shall be transferred, according to the general rule, within a period of no later then five working days after the expiration of the month a payment has occurred in.

What is the procedure to calculate and pay corporate income tax?

Corporate income tax shall be calculated for a tax period (calendar year) by applying the rate of 30% to the taxable income. If land is a basic production mean for a taxpayer, then his taxable income shall be taxed at a rate of 10%.

Taxpayers shall pay corporate income tax by making advance payments of equal shares within a tax period no later than 20^th day of the current month. Declaration on corporate income tax shall be submitted to the tax bodies not later than 31 March of a year following the reporting tax period (except for the legal entities using the special tax regime). A taxpayer shall make the final settlement on corporate income tax on the results of the tax period not later than within ten days following 31 March.

What is the procedure to tax non-residents by corporate income tax?

Determination of taxable income, calculation and payment of corporate income tax from legal entity – non-resident performing an activity in the Republic of Kazakhstan via the permanent establishment, shall be carried out in the same procedure as for residents. At the same time, all types of income associated with the activity of the permanent establishment shall be charged to income of legal entity – non-resident. Expenses directly associated with income gaining from the activity in the Republic of Kazakhstan via the permanent establishment, regardless the fact whether they have been incurred in the Republic of Kazakhstan or outside (except for the expenses not subject to deduction) shall be charged to deductions.

In addition to corporate income tax, net profit of the legal entity – non-resident performing activity in the Republic of Kazakhstan via the permanent establishment, shall be subject to taxation at the rate of 15%.

Income of the legal entity – non-resident, not associated with its permanent establishment in the Republic of Kazakhstan, shall be subject to income tax at the source of payment without deductions at the rates as stipulated for by Article 180 of the Tax Code – from 5 to 20% depending on type of tax. A tax agent, a person paying the income, shall bear obligation and responsibility to calculate, withhold and pay the income tax at the source of income to the state budget

When taxing the income of non-residents you shall, however, take into consideration the availability of international treaties, ratified by the Republic of Kazakhstan, as in case of availability of such treaty, its provisions shall prevail over the standards of the Tax Code of the Republic of Kazakhstan.