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Dear Readers,

We present a brief overview of the changes the new Tax Code introduces to core definitions, principles, and the legal foundations of taxation.

Definitions

Unlike the current Tax Code, which grouped all definitions into one cumbersome article (Art. 2), the new Tax Code distributes terms across thematic blocks (Arts. 2–21). Below we set out the clarifications and additions we consider most significant.

Parties to Tax Relations

  • Definitions for all parties to tax relations (resident/non-resident legal entity, employee, tax agent, etc.) are consolidated and systematized in one article.
  • The concept of a tax agent now expressly includes individuals and an online-platform operator.
  • The amendments add new categories: a foreign company operating through an online platform; a taxpayer under tax monitoring; a legal entity that previously operated as a bank.

Criterion of Effective Place of Management

Residency is determined not only by the place of incorporation but also by the effective place of management (the location of the de facto governing body). Thus, legal entities recognized as residents include not only Kazakh companies but also foreign organizations whose effective place of management is in Kazakhstan.

Terms Related to Tax Debts

  • The new Tax Code introduces a threshold amount of tax debt — that triggers security/enforcement measures for tax collections. The threshold is set at no less than 20 MCI and may be determined separately for each method/measure.
  • For participants in horizontal monitoring, a reduced multiplier to the National Bank’s base rate applies when calculating penalty interest—0.65; for other taxpayers, as before, 1.25.

Royalty

  • Royalty now includes software update services, except versions intended to correct errors/defects and modifications unrelated to software development.
  • A payment solely for the full transfer of exclusive rights does not constitute royalty (previously, full or partial transfer was excluded).
  • Vessels leased without crew do not give rise to royalty (earlier, bareboat/demise charters for maritime/aircraft were directly treated as royalty).
  • “Know-how” is defined as confidential technical, technological, organizational or other information that has commercial value and is used in professional or business activities.

Definitions of Services

  • Information processing services now include rating services, with a definition provided.
  • The definition of marketing services is broadened (adding aims such as brand/sales promotion, audience engagement, and performance targets).
  • Definitions of design, engineering, and consulting services remain substantively unchanged.

Online Platform

  • The concept of an online platform is significantly expanded: it now covers an online store and/or marketplace for selling goods and providing services.
  • Electronic trade in goods is defined as sales to individuals via an online platform (without the three previous mandatory conditions: electronic form of the transaction, cashless payment, delivery).

Interest

  • The classification of interest is specified across nine separate financial instruments.
  • An exclusion is added for indexing tenge loans—the indexation of a tenge-denominated loan amount due to foreign exchange movements does not constitute interest.

Dividends

  • The new Tax Code introduces the concept of constructive dividends, covering cases of concealed profit distribution. Dividends are thus divided into dividends from income distribution and constructive dividends.
  • Income distributions now include increases in contributed capital at the expense of the entity’s own equity (with stated exceptions) and cases related to the distribution of assets by law firms (partner exit, cessation of activities, liquidation).
  • Constructive dividends are tied to adjustments under the Transfer Pricing Law (in place of prior “plus/minus to market” clauses) and include property or benefits provided by a legal entity to its shareholders, participants, founders, or related parties.
  • It is clarified that royalty for patented industrial property is not treated as a constructive dividend.

Related Parties

  • The family criterion is expanded: in addition to close relatives and affines, it now includes the spouse of a major participant/official of a legal entity.
  • For transfer-pricing adjustments, relatedness is determined under the Transfer Pricing Law.

Organization Operating in the Social Sphere

  • An organization is deemed to operate in the social sphere if at least 90% of its annual aggregate income derives from nine specified social areas (health care, education, science, sports, etc.).
  • For the 90% calculation, the following may additionally be counted: gratuitous receipts (including charitable and sponsorship assistance), entry/membership fees, deposit interest, and the excess of positive over negative foreign exchange differences.
  • Organizations earning income from the production/sale of excise-taxable goods are not classified as operating in the social sphere.

“Astana Hub” Participant (effective until 1 January 2029)

Instead of the criterion “income derived exclusively from priority activities,” a 90% threshold is established: an Astana Hub participant must derive at least 90% of annual aggregate income from priority ICT activities.

Exchange Rates

The “market exchange rate” is replaced by the National Bank’s official exchange rate.

Legal Foundations of Taxation and Tax Policy

Timing for Amendments to the Tax Code

The timing for “tightening” changes has not changed: a law must be adopted by 1 July and takes effect on 1 January of the following year. The new Tax Code removes fixed dates for other amendments.

Principle of Transparency

The list of principles is expanded by adding the principle of transparency. It means openness, clarity, and accessibility of information about taxes and procedures; an obligation for tax authorities to act openly and objectively; and a taxpayer’s right to reasoned, clear, and comprehensive explanations. A breach of transparency is expressly designated as grounds for appealing actions (or inaction) of the tax authorities.

Principle of Good Faith

  • The principle of good faith is strengthened and specified. The new text:
    • sets out a list of prohibited practices aimed at reducing tax liabilities;
    • provides that a supplier’s failure to pay taxes cannot be the sole ground for denying recognition of settlements with that supplier;
    • prohibits taking into account, for tax purposes, income and assets obtained through crimes and bribes.

At the same time, the new Tax Code preserves the following rules: correction without penalties and interest when relying on prior written guidance by the authorized body; the burden of proof rests with the tax authorities; and ambiguities are interpreted in favor of the taxpayer.

Tax Incentives

The tax authorities are obliged to annually prepare an analytical report assessing the effectiveness of tax incentives and the prudence of their continued application. If the incentives do not achieve the stated goals or their budgetary impact is adverse, the authorities may clarify or repeal the incentives. New incentives are not permitted if the total volume of existing incentives reaches 10% of GDP for the preceding year.

Methodological Council on Taxation

The Consultation Council is replaced with the Methodological Council on Taxation, established to develop proposals for eliminating ambiguities and contradictions arising in the performance of tax obligations. The emphasis shifts from “anti-avoidance” functions to methodological clarity and predictability in the application of norms.