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

Article 295. General provisions

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

Double taxation is eliminated by applying the following provisions:

1) exemption from taxation in accordance with Article 296 of this Code;

2) adjustments to the financial profit before tax of a controlled foreign company, subject to the conditions specified in paragraph 3 of Article 297 of this Code;

3) reduction of financial profit before taxation of a controlled foreign company in accordance with paragraph 4 of Article 297 of this Code;

4) offset against the corporate income tax payment in the Republic of Kazakhstan in the manner prescribed by paragraph 4 of Article 303 of this Code.

Footnote. Article 295 as amended by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (effective from 01.01.2020).



Article 296. Tax exemption

1. 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 requirements below is met:

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

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

3) if the profits tax was levied on the financial profit of a permanent establishment of a controlled foreign company in the state of incorporation of the controlled foreign company that set up the permanent establishment, at an effective rate of 20 and more percent;

4) if the financial profit of a controlled foreign company or the financial profit of a permanent establishment of a controlled foreign company was taxed in the state of registration of a controlled person, through which the resident indirectly owns participatory interests or has indirect controlling interest in the controlled foreign company, at an effective rate of 20 and more percent;

5) if the share of passive income of a controlled foreign company or a permanent establishment of a controlled foreign company, except for those registered in states with preferential taxation, is less than 20 percent;

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

2. For the purposes of applying paragraph 1 of this Article, a resident must have available (with a mandatory translation into Kazakh or Russian) the following documents:

1) in case of application of subparagraph 1) or 2) of paragraph 1 of this Article:

copies of documents confirming the indirect participation or indirect control of a resident in a controlled foreign company, specified in subparagraphs 1) or 2) of paragraph 1 of this Article, or a copy of a document certified by the signature of the first head (or a person authorized to sign the financial statements) of the resident, disclosing the unified organizational structure of the consolidated group, of which the resident is a member (shareholder), reflecting the names of all participants in such a consolidated group and their geographical location (names of states (territories), where the participants of the consolidated group are created (founded), the size of participation shares and the numbers of state and tax registration of all participants in the consolidated group (if they have tax registration);

2) in case of application of subparagraph 3) of paragraph 1 of this Article:

a copy of the approved separate financial statements of the controlled foreign company that has created a permanent establishment;

a copy of the approved financial statements of the permanent establishment of the controlled foreign company;

a document certified by the signature of the first head (or a person authorized to sign the financial statements) of the controlled foreign company, disclosing information on the inclusion in the financial profit of the controlled foreign company that has created a permanent establishment, the financial profit of such a permanent establishment, or an explanatory note to the audited financial statements, certified by a person who audited the financial statements of a controlled foreign company, disclosing information on the inclusion in the financial profit of a controlled foreign company that has created a permanent establishment, the financial profit of such a permanent establishment;

a copy of a document (documents) drawn up in a foreign language confirming the payment of income tax on the financial profit of a permanent establishment of a controlled foreign company in a foreign state in which a controlled foreign company that has created a permanent establishment is registered.

In case of inclusion of withholding tax, when determining the effective rate, the resident must have:

a copy of a document (documents) drawn up (compiled) in a foreign language confirming withholding and transfer to the budget of a foreign state (foreign states) of withholding tax from income (incomes) included in financial profit before taxation;

a document certified by the signature of the first head (or a person authorized to sign the financial statements) of a controlled foreign company and (or) a permanent establishment of a controlled foreign company, disclosing information on the inclusion in financial profit before taxation of income (incomes) subject to withholding tax, or an explanatory note to the audited financial statements, certified by the person who audited the financial statements of a controlled foreign company and (or) a permanent establishment of a controlled foreign company, disclosing information on the inclusion in financial profit before taxation of income (incomes) subject to withholding tax payments;

3) in case of application of subparagraph 4) of paragraph 1 of this Article:

a copy of the approved consolidated financial statements of a controlled person through whom indirect ownership or indirect control of the controlled foreign company is carried out;

a copy of the approved separate unconsolidated financial statements of the controlled foreign company or the financial statements of the permanent establishment of the controlled foreign company;

a document certified by the signature of the first head (or a person authorized to sign the financial statements) of a controlled foreign company and (or) a permanent establishment of a controlled foreign company, disclosing information on the inclusion in the consolidated financial profit of a controlled person through whom the resident indirectly owns participation interests or has indirect control in a controlled foreign company, financial profit of a controlled foreign company or financial profit of a permanent establishment of a controlled foreign company, or an explanatory note to the audited financial statements certified by the person who audited the financial statements of the controlled foreign company and (or) the permanent establishment of the controlled foreign company, disclosing information about included in the consolidated financial income of a controlled person through whom a resident indirectly owns participation interests or has indirect control in a controlled foreign company, financial profit of a controlled foreign company or financial profit of a permanent establishment of a controlled foreign company;

a copy of a document (documents) drawn up in a foreign language confirming the payment in a foreign state in which a controlled person is registered, through whom a resident indirectly owns participation interests or has indirect control in a controlled foreign company, income tax on financial profit of a controlled foreign company or financial profit of a permanent establishment of a controlled foreign company.

If the withholding tax is included in determining the effective rate, the resident must have:

a copy of a document (documents) drawn up (drawn up) in a foreign language confirming the withholding and transfer to the budget of a foreign state (foreign states) of withholding tax from income (incomes) included in financial profit before taxation;

a document certified by the signature of the first head (or a person authorized to sign the financial statements) of a controlled foreign company and (or) a permanent establishment of a controlled foreign company, disclosing information on the inclusion in financial profit before taxation of income (incomes) subject to withholding tax, or an explanatory note to the audited financial statements, certified by the person who audited the financial statements of a controlled foreign company and (or) a permanent establishment of a controlled foreign company, disclosing information on the inclusion in financial profit before taxation of income (incomes) subject to withholding tax payments;

4) in case of application of subparagraph 5) of paragraph 1 of this Article:

a copy of the approved separate non-consolidated financial statements of a controlled foreign company or permanent establishment of a controlled foreign company;

a document certified by the signature of the first head (or a person authorized to sign financial statements) of a controlled foreign company and (or) a permanent establishment of a controlled foreign company, disclosing information in the context of each type of passive income, indicating the amount of income received by a controlled foreign company or a permanent establishment of a controlled foreign company company for the reporting period, or an explanatory note to the audited financial statements, certified by the person who audited the financial statements of a controlled foreign company and (or) the permanent establishment of a controlled foreign company, disclosing information by each type of passive income, indicating the amount of income received by a controlled foreign company or a permanent establishment of a controlled foreign company during the reporting period.

3. Is excluded by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (shall be enforced from 01.01.2020).

Footnote. Article 296 as amended by the Law of the Republic of Kazakhstan dated 10.12.2020 No. 382-VI (see Article 2 for the procedure of entry into force).