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

Article 338. Other income from sources outside the Republic of Kazakhstan

Other income from sources outside the Republic of Kazakhstan is recognized as all types of income not specified in subparagraphs 1) - 16) of Article 321 of this Code (to be) received by a taxpayer in a reporting taxable period from a person who is not a tax agent and is not income from sources in the Republic of Kazakhstan regardless of the place of its payment.

An amenmend is provided in Article 339 by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (shall be enforced from 01.01.2021).



Article 339. General provisions on a controlled foreign company

The financial profit of a controlled foreign company or the financial profit of a permanent establishment of a controlled foreign company is not subject to double taxation.

Double taxation is eliminated as follows:

1) exemption from taxation in accordance with paragraph 2 of Article 340 of this Code;

2) adjustments of financial profits before the taxation of a controlled foreign company in accordance with the conditions specified in paragraph 3 of Article 297 of this Code;

3) reducing financial profit before the taxation of a controlled foreign company in accordance with paragraph 3 of Article 340 of this Code;

4) the offset of payment of individual income tax in the Republic of Kazakhstan in the manner determined by paragraph 2 of Article 359 of this Code.

An amenmend is provided in Article 340 by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (order of enforcement see art. 2); dated 11.07.2022 No. 135-VII (shall be enforced from 01.01.2023).



Article 340. Taxation of the profit of a controlled foreign company

1. Consolidated profit of controlled foreign companies or permanent establishments of controlled foreign companies, calculated with account of the provisions of this article and Article 297 of this Code, is included in the annual income of a resident individual and is subject to individual income tax in the Republic of Kazakhstan.

Such consolidated profit of controlled foreign companies or permanent establishments of controlled foreign companies shall be included in an individual income tax declaration.

2. The financial profit of a controlled foreign company or the financial profit of a permanent establishment of a controlled foreign company is exempt from taxation in the Republic of Kazakhstan if one of the following conditions is observed:

1) in case of indirect participation or indirect control of a resident in a controlled foreign company through another resident;

2) in case of indirect participation or indirect control of a resident in a controlled foreign company through a person that is not a controlled person;

3) if the profit tax was levied on the financial profit of a permanent establishment of a controlled foreign company at an effective rate of 10 or more percent in the state of registration of the controlled foreign company that set up the permanent establishment;

4) if the profit tax was levied on the financial profit of a permanent establishment of a controlled foreign company at an effective rate of 10 or more percent in the state of registration of the controlled person through which the resident indirectly owns participatory interests or has indirect control interest in a controlled foreign company;

5) if the financial profit of a controlled foreign company or the financial profit of a permanent establishment of a controlled foreign company registered in a state with preferential taxation was taxed at an effective rate of 10 or more percent;

6) with direct and (or) indirect ownership and (or) control by an investment resident of the International Financial Center Astana in a controlled foreign company.

For the purposes of this paragraph, a resident individual must have supporting documents specified in paragraph 2 of Article 296 of this Code.

3. The individual-resident has the right to reduce financial profits before the taxation of a controlled foreign company or financial profit before taxation of a permanent institution of a controlled foreign company for the following amounts:

1) the amount of the reduction determined by the following formula:

Y = FP × (D (1)/SSD), where:

Y - the amount of reduction;

FP - a positive amount of financial profit before taxation of a controlled foreign company;

D (1) - taxable income of a controlled foreign company from entrepreneurial activity in the Republic of Kazakhstan through a branch, a representative office, permanent institution taxed with corporate income tax in the Republic of Kazakhstan at a rate of 20 or more percent, within the taxable income of the branch, provided that financial profit prior to taxation of a controlled foreign company takes into account the taxable income specified in this subparagraph;

SSD - a total amount of income;

2) the amount of the reduction determined by the following formula:

Y = FP × (D (2)/SSD), where:

Y - the amount of reduction;

FP - a positive amount of financial profit before taxation of a controlled foreign company;

D (2) - income from the provision of services (performance of work) in the Republic of Kazakhstan without the formation of a permanent institution received by a controlled foreign company from sources in the Republic of Kazakhstan, taxed in the Republic of Kazakhstan with a corporate income tax at a source of payment at a rate of 20 percent, provided that the financial profit before taxation is determined taking into account the income specified in this subparagraph;

SSD - a total amount of income;

3) dividends received by a controlled foreign company from sources in the Republic of Kazakhstan that are not taxable with corporate income tax at the source of payment in accordance with subparagraphs 3), 4) and 5) of paragraph 9 of Article 645 of this Code, provided that the financial profit before taxation of a controlled foreign company includes such an income;

4) the amount of dividends received by one controlled foreign company from another controlled foreign company, which is part of a single organizational structure of a consolidated group.

At the same time, the financial profit of one controlled foreign company should include such dividends that are previously taxed (subject to taxation in the current period) with an individual income tax of financial profits of another such controlled foreign company in the Republic of Kazakhstan and (or) are reduced in accordance with subparagraphs 3), 5) , 6), 7), 8) and 9) of this paragraph or part one of this subparagraph;

5) the amount of dividends received by a controlled foreign company from a foreign company, which is part of a single organizational structure of a consolidated group.

At the same time, the financial profit of one controlled foreign company should include such dividends that are previously taxed (subject to taxation in the current period) with an individual income tax of financial profits of another such controlled foreign company in the Republic of Kazakhstan and (or) are reduced in accordance with subparagraphs 3), 4), 6), 7), 8) and 9) of this paragraph or part one of this subparagraph;

6) the amount of the reduction determined by the following formula:

Y = FP × (D (6)/SSD), where:

Y - the amount of reduction;

FP - a positive amount of financial profit before taxation of a controlled foreign company;

D (6) - income in the form of remuneration and (or) from an increase in value and (or) in the form of royalties received by a controlled foreign company from sources in the Republic of Kazakhstan, previously taxed in the Republic of Kazakhstan with a corporate income tax at a source of payment, provided that financial profit before taxation of a controlled foreign company includes such income;

SSD - a total amount of income;

7) the amount of the reduction determined by the following formula:

Y = FP × (D (7)/SSD), where:

Y - the amount of reduction;

FP - a positive amount of financial profit before taxation of a controlled foreign company;

D (7) - income from the increase of value received by one controlled foreign company from the sale of another controlled foreign company, which is the founder of the resident of the Republic of Kazakhstan, corresponding to the terms of subparagraph 7) or 8) of paragraph 9 of Article 645 of this Code, provided that financial profit of one controlled foreign company includes such an income;

SSD - a total amount of income;

8) income in the form of remuneration and (or) from an increase in value and (or) in the form of royalties received by a foreign company from sources in the Republic of Kazakhstan that are not taxable with a corporate income tax at the source of payment in accordance with subparagraphs 6), 7), 8) and 9) of paragraph 9 of Article 645 of this Code, provided that financial profit before taxation of a controlled foreign company includes such income;

9) the amounts of dividends received by a controlled foreign company from sources in the Republic of Kazakhstan, previously taxed in the Republic of Kazakhstan with a corporate income tax at the source of payment, provided that financial profit before taxation includes such dividends;

10) the amount of dividends received by a controlled foreign company from a foreign company, which is part of a single organizational structure of a consolidated group.

At the same time, the financial profit of one controlled foreign company should include such dividends received from the sources of the Republic of Kazakhstan, which were previously taxed in the Republic of Kazakhstan with a corporate income tax at the source of payment and (or) were not subject to corporate income tax at the source of payment in accordance with subparagraphs 3), 4 ) and 5) paragraph 9 of Article 645 of this Code.

The provisions of part one of this paragraph do not apply to a controlled foreign company and (or) a permanent institution of a controlled foreign company, which are registered in states with preferential taxation.

For the purposes of this paragraph, a resident individual must have supporting documents specified in paragraph 10 of Article 297 of this Code.

4. A resident individual is obliged to submit a statement ofparticipation (control) in a controlled foreign company in the manner specified in Article 298 of this Code.

Note.

The definitions of the terms used in this article are provided in Article 294 of this Code.
Clause 3. Income adjustment

To Article 341 is provided for amendment by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 165-VI (shall be enforced from 01.01.2020); 26.12.2018 No. 203-VI (shall be enforced from 01.01.2020); 02.04.2019 № 241-VI (shall be enforced from 01.01.2020); dated 10.12.2020 No. 382-VI (order of enforcement see art. 2); dated 24.06. 2021 No. 53-VII (shall be enforced from 01.01.2025); dated 11.07.2022 No. 135-VII (order of enforcement see art. 3); dated 21.12.2022 No. 165-VII (shall be enforced from 01.01.2023).