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

Article 646. Rates of income tax at source of payment

Note!

The introduced amendment to Sub-paragraph one of Paragraph 1 shall remain in force before 01.01.2029 in accordance with the Law of the Republic of Kazakhstan dated 26.12.2018 No. 203-VI.

1. Income of a non-resident from sources in the Republic of Kazakhstan is subject to taxation at the source of payment at the following rates, unless otherwise provided by paragraphs 2, 3, 4 and 5 of this article:

1) 20 percent – regarding income specified in Article 644 of this Code, except for income indicated in subparagraphs 2) - 5) of this paragraph;

2) 15 percent – regarding insurance premiums under risk insurance contracts;

3) 5 percent - regarding insurance premiums under risk reinsurance contracts;

4) 5 percent – regarding income from rendering international transportation services;

5) 15 percent - income from increase in value, dividends, interest, royalties.

2. Income of a person registered in a state with preferential taxation included in the list approved by the authorized body, defined in Article 644 of this Code, shall be subject to taxation at source of payment at a rate of 20 percent.

Paragraph 3 shall remain in force before 01.01.2029 in accordance with the Law of the Republic of Kazakhstan dated 26.12.2018 No. 203-VI.

3. Income from increment of value in sale of shares issued by legal entities specified in Subparagraph 6) of Paragraph 1 of Article 293 of this Code, participatory interests in legal entities specified in Subparagraph 6) of Paragraph 1 of Article 293 of this Code, as well as dividends received from legal entities specified in Subparagraph 6) of Paragraph 1 of Article 293 of this Code shall be subject to taxation at the source of payment at a rate of 5 percent.

4. Income of a non-resident in the form of dividends, with the exception of those paid to persons registered in a state with preferential taxation, included in the list approved by the authorized body, is subject to taxation at the rate of 10 percent, provided that the following conditions are met simultaneously:

on the date of accrual of dividends, the taxpayer has held shares or participation interests on which dividends have been paid for more than three years;

a resident legal entity paying dividends is not a subsoil user during the period for which dividends are paid;

the property of persons (person) who are (is) subsoil users (subsoil user) in the value of the assets of a resident legal entity paying dividends, as of the date of payment of dividends, is no more than 50 percent.

If a resident legal entity, with the exception of the legal entity specified in subparagraph 6) of paragraph 1 of Article 293 of this Code, which pays dividends, reduces the calculated corporate income tax by 100 percent on activities, including those carried out under an investment contract, which provides for such a reduction, the provisions of this paragraph shall apply in the following order:

if the share of corporate income tax reduced by 100 percent in the total amount of the calculated corporate income tax on the whole for the resident legal entity paying dividends is 50 percent or more, then the provision of this paragraph shall not apply; if the share of the corporate income tax reduced by 100 percent in the total amount of the calculated corporate income tax on the whole for the resident legal entity paying dividends is less than 50 percent, then the provisions of this paragraph shall apply to the entire amount of dividends.

The period of ownership of shares or participation interests by the taxpayer specified in part one of this paragraph is determined in aggregate, taking into account the periods of ownership by the previous owners of shares or participation interests, if such shares or participation interests were received by the taxpayer as a result of reorganization of the former owners or acquiring by one legal entity from another legal entity, provided that the founders (owners) of these legal entities are the same persons.

The provisions of this paragraph shall apply only to income previously subject to corporate income tax and received from a resident legal entity in the form of:

income payable on shares, including those that are the underlying assets of depositary receipts;

parts of net income distributed by a resident legal entity between its founders, participants;

income from the distribution of property upon liquidation of a resident legal entity or reduction of the authorized capital by proportionally reducing the amount of contributions of the founders, participants or by full or partial redemption of the shares of the founders, participants, as well as withdrawal by the founder, a member of the participation interest in the resident legal entity, with the exception of property made by the founder, participant as a contribution to the authorized capital.

In this case, the share of property of persons (person) who are (are) subsoil users (subsoil user) in the value of assets of a resident legal entity paying dividends shall be determined in accordance with Article 650 of this Code.

For the purposes of this paragraph, a subsoil user shall not be recognized as a subsoil user who is such solely because of the possession of the right to extract groundwater and (or) common minerals for his own needs.

5. Income of a non-resident in the form of dividends paid by legal entities - subsoil users, with the exception of those paid to persons registered in a state with preferential taxation, included in the list approved by the authorized body, is subject to taxation at the rate of 10 percent, provided that the following conditions are met simultaneously:

on the date of accrual of dividends, the non-resident taxpayer has held shares or participation interests on which dividends are paid for more than three years;

within the twelve-month period preceding the first day of the month in which the dividends are accrued, the legal entity - subsoil user, which is a resident, paying dividends, carries out subsequent processing (after primary processing) of at least 70 percent of the mineral raw materials extracted during the specified period, including coal, on its own and (or) owned by a legal entity - a resident, which is a related entity, production facilities, located in the territory of the Republic of Kazakhstan. In the event that a legal entity - a subsoil user that is a resident, with the exception of the legal entity specified in subparagraph 6) of paragraph 1 of Article 293 of this Code, which pays dividends, reduces the calculated corporate income tax by 100 percent on activities, including those carried out as part of an investment contract under which such a reduction is stipulated, the provisions of this paragraph shall apply in the following order:

if the share of corporate income tax reduced by 100 percent in the total amount of the calculated corporate income tax on the whole for the resident legal entity paying dividends is 50 percent or more, then the provision of this paragraph shall not apply; if the share of the corporate income tax reduced by 100 percent in the total amount of the calculated corporate income tax on the whole of the resident legal entity paying the dividends is less than 50 percent, then the provisions of this paragraph shall apply to the entire amount of dividends.

The period of ownership of shares or participation interests by the taxpayer specified in part one of this paragraph is determined in aggregate, taking into account the periods of ownership of shares or participation interests by the previous owners, if such shares or participation interests were received by the taxpayer as a result of reorganization of the former owners.

For the purposes of this paragraph, when determining the volume of mineral raw materials, including coal, sent for further processing, the following raw materials shall be taken into account:

sent directly to the production of products resulting from any processing following primary processing;

used in the production of primary processing products for the purpose of their further use in subsequent processing.

The provisions of this paragraph shall apply only to income previously subject to corporate income tax and received from a resident legal entity in the form of:

income payable on shares, including those that are the underlying assets of depositary receipts;

parts of net income distributed by a resident legal entity between its founders, participants;

income from the distribution of property upon liquidation of a resident legal entity or reduction of the authorized capital by proportionally reducing the amount of contributions of the founders, participants or by full or partial redemption of the shares of the founders, participants, also when the founder, participant withdraws the participation interest in the resident legal entity, except for property contributed by the founder, participant as a contribution to the authorized capital.

At the same time, the share of property of persons (person) who are (is) subsoil users (subsoil user) in the value of assets of a resident legal entity paying dividends shall be determined in accordance with Article 650 of this Code.

For the purposes of paragraph 4 of this article and this paragraph, income previously subject to corporate income tax is determined in the following order:

taxable income reduced by the amount of income and expenses provided for in Article 288 of this Code, as well as by the amount of losses carried forward in accordance with Article 300 of this Code,

minus

the amount of corporate income tax calculated by multiplying the rate established by paragraph 1 or 2 of Article 313 of this Code and taxable income reduced by the amount of income and expenses provided for by Article 288 of this Code, as well as by the amount of losses carried forward in accordance with Article 300 of this Code.

Income previously subject to corporate income tax shall be determined for each tax period for which dividends are distributed.

At the same time, when determining income previously subject to corporate income tax, the amount of paid advance payments on corporate income tax shall not be taken into account.

In cases of distribution and payment of dividends before the end of the tax period specified in Article 314 of its Code, the tax agent is not entitled to apply the provisions of paragraph 4 of this article and this paragraph.

At the same time, after the end of the relevant tax period, if the conditions established by paragraph 4 of this article and this paragraph are met, the tax agent has the right to make changes and additions to the previously submitted tax reporting on corporate income tax withheld at the source of payment from the income of a non-resident, in the manner prescribed by Article 211 of this Code. In the event of an overpaid amount of corporate income tax, the tax agent has the right to offset and (or) return such an amount in the manner prescribed by paragraph 1 of Chapter 11 of this Code.

Footnote. Article 646 as amended by the Law of the Republic of Kazakhstan dated 26.12.2018 No. 203-VI (shall be enforced from 01.01.2019); dated 11.07.2022 No.135-VII (shall be enforced from 01.01.2023).