On taxes and other obligatory payments to the budget (Tax Code)

Article 219. Non-residents

For the purposes of this Code, a non-resident is:

1) an individual or legal entity that is not a resident in accordance with the provisions of Article 217 of this Code;

2) a foreigner or stateless person who is recognized as a non-resident in accordance with the provisions of the international treaty governing the avoidance of double taxation and the prevention of tax evasion despite the provisions of Article 217 of this Code.
Article 220. Permanent establishment of a non-resident

1. Unless otherwise established by an international treaty, a permanent establishment of a non-resident in the Republic of Kazakhstan shall be one of the below indicated places of operation through which a non-resident conducts entrepreneurial activity in the territory of the Republic of Kazakhstan, regardless of the timing of such an activity:

1) any place of goods’ production, processing, assembling, packaging, packing, and (or) delivery;

2) any place of management;

3) any place of geological study of subsoil resources, exploration, preparatory works for the extraction of minerals and (or) extraction of minerals and (or) performance of works, rendering of services for control and (or) monitoring of exploration and (or) extraction of minerals;

4) any place for carrying out a pipeline-related activity (including control or monitoring);

5) any place of an activity related to the installation, debugging and operation of gaming machines (including gaming consoles), computer networks and communication channels, rides, and also those related to transport or another infrastructure;

6) the place of sale of goods in the territory of the Republic of Kazakhstan, except for the sale of goods at exhibitions and fairs, unless otherwise established by paragraph 5 of this article;

7) any place of construction activities and (or) construction and installation works, as well as rendering of services for monitoring the performance of these works;

8) the location of a structural unit of a non-resident legal entity, except for a representative office carrying out the activity specified in paragraph 6 of this article;

9) the location of a person carrying out intermediary activity in the Republic of Kazakhstan on behalf of a non-resident in accordance with the Law of the Republic of Kazakhstan “On Insurance Activity”;

10) the location of a resident that is a party to a joint activity agreement concluded with a non-resident in accordance with the legislation of a foreign country or the Republic of Kazakhstan, if such a joint activity is carried out in the territory of the Republic of Kazakhstan.

2. A permanent establishment of a non-resident is the place of rendering services, performing works in the territory of the Republic of Kazakhstan not provided for in paragraph 1 of this article, through employees or other personnel hired by a non-resident for such purposes, if such an activity is carried out in the territory of the Republic of Kazakhstan for more than one hundred and eighty-three calendar days within any consecutive twelve-month period from the date of commencement of business within a single project or related projects.

For the purposes of this Section, interrelated or interdependent contracts (agreements) are recognized as related projects.

Interrelated contracts (agreements) are contracts (agreements) that simultaneously meet the following requirements:

1) under such contracts (agreements) a non-resident or its related party renders (performs) identical or homogeneous services (works) to one and the same tax agent or its related party;

2) the time period between the completion of services’ provision (works’ performance) under one contract (agreement) and the conclusion of another contract (agreement) does not exceed twelve consecutive months.

Contracts (agreements) concluded by a non-resident or its related party with a tax agent or its related party are recognized as interdependent if a failure to fulfill obligations for one of them by a non-resident or its related party affects the performance of obligations under another contract (agreement) by such a non-resident or its related party.

3. Notwithstanding the provisions of paragraphs 1 and 2 of this article, in case a non-resident carries out entrepreneurial activity in the territory of the Republic of Kazakhstan through a dependent agent, such a non-resident will be deemed as having a permanent establishment in connection with any activityconducted by the dependent agent for this non-resident, regardless of the timing of such activities.

For the purposes of this Section, a dependent agent is an individual or a legal entity that simultaneously meets the following requirements:

1) he/she/it is authorized, on the basis of contractual relations, to represent interests of a non-resident in the Republic of Kazakhstan, to act and (or) perform certain legal actions on behalf of and at the expense of a non-resident, including the conclusion of a paid services agreement or playing a major role in concluding such an agreement or in transfer of the right of ownership (right to use) of property belonging to a non-resident on the basis of the right of ownership (right to use);

2) he/she/it carries out activity specified in subparagraph 1) of this paragraph not as part of the activityof a customs representative, professional participant of the securities market and other brokerage activities, except for the activity of an insurance broker and cases where such an agent acts exclusively or primarily on behalf of a non-resident;

3) his/her/its activity is not limited to the activities specified in paragraph 6 of this article.

4. A non-resident’s activity carried out in the territory of the Republic of Kazakhstan through a subsidiary established in accordance with the legislation of the Republic of Kazakhstan results in the setting up of a permanent establishment of a non-resident if the subsidiary is recognized as a dependent agent, in accordance with paragraph 3 of this article.

5. A non-resident sets up a permanent establishment in the Republic of Kazakhstan when selling goods at exhibitions and fairs held in the territory of the Republic of Kazakhstan if such realization lasts more than ten calendar days.

6. The following types of a non-resident activitythat are exclusively of a preparatory or auxiliary nature, not part of main types of entrepreneurial activity of a non-resident and last not more than three years do not result in the setting up of a permanent establishment of a non-resident in the Republic of Kazakhstan:

1) the use of any place solely for the storage and (or) demonstration of goods belonging to a non-resident, without their realization;

2) the maintenance of a permanent place of business solely for purchasing goods for a non-resident without their realization;

3) the maintenance of a permanent place of business solely for collecting, processing and (or) disseminating information, advertising or studying the market of goods, works, services sold by a non-resident.

In addition to the above, preparatory and auxiliary activities shall be conducted for the non-resident himself/herself, and not for third parties.

7. A non-resident’s activity on rendering an international outstaffing service in the territory of the Republic of Kazakhstan to a legal entity, including a non-resident operating in the Republic of Kazakhstan through a permanent establishment, does not result in the setting up of a permanent establishment for such a service in the Republic of Kazakhstan, provided that all of the following requirements are met:

1) such staff act on behalf of and in the interests of the legal entity to which they are provided;

2) a non-resident rendering an international outstaffing service is not liable for the performance of the staff provided;

3) the non-resident’s income from rendering an international outstaffing service for a taxable period does not exceed 10 percent of the total amount of the non-resident’s expenses for the provision of such staff over the specified period.

In this case, the amount of such income is determined in the form of a positive difference between the cost of international outstaffing services rendered by a non-resident for a taxable period and the cost of the non-resident’s total expenses for the provision of staff in the specified period.

To confirm the amount of expenses for the provision of such services, including the income of foreign staff, the non-resident is obliged to provide copies of source documents compiled in accordance with the legislation of the Republic of Kazakhstan and (or) a foreign state to the service recipient. For the purposes of calculating corporate income tax from the income of a non-resident providing international outstaffing services, such services of a non-resident are recognized as those rendered outside the Republic of Kazakhstan provided that requirements of this paragraph are met.

8. In case a non-resident carries out its activity in the territory of the Republic of Kazakhstan under a joint activity agreement:

1) the activity of each party to such an agreement sets up a permanent establishment in accordance with the provisions established by this article;

2) the tax obligation is fulfilled by each party to such an agreement independently in the manner determined by this Code.

9. A non-resident, carrying out entrepreneurial activity in the Republic of Kazakhstan that results in the setting up of a permanent establishment shall be obliged to register as a taxpayer with a tax authority in the manner specified in Article 76 of this Code.

A non-resident’s activity sets up a permanent establishment in accordance with the provisions of this Article from the date the non-resident commences the activity in the Republic of Kazakhstan, whether the non-resident is registered as a taxpayer with tax authorities or registration in the registration authority or not.

If a non-resident carries out entrepreneurial activity resulting in the setting up of two or more permanent establishments subject to registration with one tax authority, registration is mandatoryonly for one permanent establishment as part of the group of such permanent establishments of a non-resident.

If a non-resident has a registered permanent establishment carrying out the activity specified in paragraphs 2, 3, 5 or 7 of this article and carries out similar or same activity in a place other than that of registration of such a permanent establishment, the result of carrying out such an activity shall be the setting up of a permanent establishment subject to registration from the commencement of a similar or same activity.

If, after the removal of a non-resident’s permanent establishment from the state database of taxpayers, such a non-resident resumes an activity specified in paragraphs 2 and 5 of this article within a consecutive twelve-month period, he/she/it is recognized as having set up a permanent establishment and is subject to registration as a taxpayer from the commencement of such an activity.

10. For the purposes of applying this Code, the date of commencement of activity by a non-resident in the Republic of Kazakhstan is that of:

1) conclusion of any below mentioned contract (treaty, agreement) for:

the performance of works, rendering of services in the Republic of Kazakhstan, also under a joint activity agreement;

granting authority to carry out actions on his/her/its behalf in the Republic of Kazakhstan;

the purchase of goods in the Republic of Kazakhstan for the purpose of their realization;

the purchase of works, services for the purposes of performing works, rendering services in the Republic of Kazakhstan;

2) conclusion of the first labor contract (agreement, treaty) for the purposes of carrying out activities in the Republic of Kazakhstan;

3) arrival in Kazakhstan of a non-resident individual, non-resident’s employee or other hired staff for the fulfillment of the terms of the contract (agreement, treaty) specified in subparagraphs 1) or 2) of part one of this paragraph;

4) entry into force of a document certifying the right of a non-resident to carry out the activities specified in subparagraphs 3) and 4) of paragraph 1 of this article.

In the existence of several conditions established by this paragraph, the earliest of the dates specified in this paragraph shall be recognized as the date of commencement of the activities of a non-resident in the Republic of Kazakhstan.

11. If a non-resident carries out activity through a structural unit, which does not result in the setting up of a permanent establishment in accordance with the international treaty governing the avoidance of double taxation and the prevention of tax evasion, or paragraph 6 of this article, this Code’s provisions for a permanent establishment of a non-resident shall apply to such a structural unit of a non-resident. At the same time, such a structural unit has the right to apply the provisions of the international treaty governing the avoidance of double taxation and the prevention of tax evasion, in accordance with Articles 672, 673 and 674 of this Code.

Footnote. Article 220 as amended by the Law of the Republic of Kazakhstan dated 02.04.2019 № 241-VI (shall be enforced from 01.07.2019); dated 10.12.2020 No. 382-VI (effective from 01.01.2021).