Tax NewsFlash - November 2025

Dear Readers,

We present a brief overview of the key changes introduced by the new Tax Code with respect to the taxation of nonresidents and the application of double tax treaties.

The definition of royalties now includes software update services, except for versions intended to correct errors and defects, as well as modifications that are not related to further development of the software.

Payments for the full transfer of exclusive rights are no longer treated as royalties (previously, both full and partial transfers were excluded).

Vessels leased without crew are no longer treated as generating royalty income (previously, bareboat/demise charters for sea vessels and demise charters for aircraft were expressly classified as royalties).

The new Tax Code now introduces a definition of know-how and treats it as confidential information of a technical, technological, organizational or other nature that has commercial value and is used in professional or entrepreneurial activities.

The new rules extend the list of information processing services to include rating services, with a separate definition.

The legislator broadens the definition of marketing services to cover, among other things, brand and sales promotion, audience development and achievement of performance indicators.

At the same time, the new Tax Code leaves the definitions of design, engineering and consulting services largely unchanged.

The new Tax Code introduces the concept of constructive dividends, which covers cases of hidden profit distribution. As a result, dividends are now divided into dividends from profit distribution and constructive dividends.

The rules now link constructive dividends to adjustments under the Transfer Pricing Law (instead of the previous approach based on positive/negative deviations from market prices) and treat as constructive dividends the provision of assets or benefits to participants and their related parties at the company’s expense.

The new rules expressly clarify that royalties derived from patented industrial property are not treated as constructive dividends.

The new Tax Code divides the rules on the creation of a permanent establishment (PE) into separate articles by type of activity (general provisions, fixed place of business, services/works, dependent agent, joint activities), whereas the current version combines all PE cases in a single article (Articles 226–230).

Article 228 broadens the concept of connected projects in the context of services/works performed through employees or other personnel. In addition to interrelated and interdependent projects, a third category has been introduced – similar contracts.

Similar contracts are characterized by a common nature and purpose, similar content, a single technology, a single infrastructure, the same resources (equipment, personnel, infrastructure), and identical or similar works/services.

The Tax Code defines identical and similar works/services by reference to similar methodologies, technologies and approaches, and comparable qualifications of the performers.

The rules now treat the date of the underlying contract as the start date of a PE’s activities. The new Tax Code removes the previous list of alternative dates, under which the earliest of several events (contract signing, first employment contract, arrival of personnel, entry into force of a permit) was treated as the start date.

In the area of preparatory and auxiliary activities (Article 226(2)), the new rules remove procurement of goods for the nonresident and abolish the three-year time limit.

The new Tax Code groups the rules on nonresident income into three separate articles: income from sources in Kazakhstan (Article 679), payments not treated as income (Article 680) and income exempt from taxation (Article 681).

The rules extend the list of taxable services rendered outside Kazakhstan to include information processing, design and advertising services (Article 679(1)(3)).

The rules reduce from two years to 12 months the period after which an advance received by a nonresident for unperformed obligations is recognized as taxable income (Article 679(1)(5)).

The rules now treat a nonresident’s obligations to pay a resident for goods, work or services that remain unpaid for 12 months as income of the nonresident (Article 679(1)(6)).

The new rules introduce a separate category – income from financial loans (excluding bank loans) (Article 679(1)(39)). Under this provision, the following are recognized as income of a nonresident:

• the amount of the principal outstanding (separately for each overdue instalment, where a repayment schedule exists) under a financial loan received from a resident for a term of up to 24 months;
• the amount of the principal outstanding (irrespective of any repayment schedule) under a financial loan received from a resident for a term of 24 to 60 months;
• the amount of the financial loan received by the nonresident, equal to the principal amount of a financial loan obtained from a resident, where the loan term exceeds 60 months;
• payments made by a resident to accounts in foreign banks outside Kazakhstan to repay a financial loan;
• payments made by a resident for the benefit of the nonresident under a financial loan that provides for repayment to accounts in foreign banks outside Kazakhstan;
• deemed interest on an interest-free financial loan, calculated based on the average market rate on the amount of the disbursement, where the loan is granted by a resident to a non-affiliated nonresident.

The term financial loan is defined in the Law On Currency Regulation and Currency Control.

The exemption for capital gains from stock exchange transactions now applies only to nonresident individuals. It covers the disposal of securities that are included in the official list of the stock exchange in Kazakhstan on the date of sale and are sold through open trading on that exchange.

The exemption for capital gains from the disposal of shares/interests in Kazakhstani companies after a holding period of more than three years, where the company is not engaged in subsoil use, has been abolished.

The rules exempt from taxation capital gains from the disposal of debt securities issued by residents if all of the following conditions are met: the securities have been held for more than three years; the issuer is not a subsoil user; and subsoil-user assets account for no more than 50 per cent of the issuer’s assets on the date of disposal. The exemption does not apply to residents of tax havens.

For dividends paid to major shareholders (direct or indirect ownership of at least 25% in the resident paying the dividends), the new rules introduce a progressive rate scale of 5%/15%, with a threshold of 230,000 times the Monthly Index Factors.

A reduced rate of 10% applies to interest on loans, borrowings and debt securities.

The base rate of 15% applies to other income in the form of dividends, royalties and interest.

Following the repeal of tax exemptions for capital gains from the disposal of shares/interests in Kazakhstani companies, the special capital gains taxation regime now applies not only to transactions involving Kazakhstani subsoil users, but also to other companies with assets in Kazakhstan (subject to certain conditions). In addition to immovable and other property subject to state registration, this regime now covers the disposal of:

•  securities issued by a resident;
• interests in a resident company or in a consortium that includes a resident (including a subsoil user);
• shares/interests in a legal entity or consortium whose assets consist, on the date of disposal, of 50 per cent or more of the assets of a resident (including a subsoil user).

The state authorities will develop the methodology for determining the share of assets and for calculating the relevant indicators.

The requirement for tax to be withheld at source by the tax agent upon payment, as well as the overall logic of capital gains taxation, remains unchanged. A resident legal entity (not necessarily a subsoil user) may choose to pay the tax at its own expense instead of the tax agent; amounts received from the tax agent are not treated as income of such resident.

If the tax agent fails to discharge its obligations, the liability to pay tax is shifted to the resident legal entity whose assets back the shares/interest being disposed of (including subsoil users).

The new rules expand the definition of payment of income and treat state registration of the acquired property as a payment of income where no actual cash payment has been made.

Taxpayers must document the breakdown between income in the form of royalties and income from related support and technical services in order to apply separate taxation. If they do not, the tax authorities treat and tax the full amount received by the nonresident as royalties.

Treaty benefits do not apply if the tax agent pays the tax from its own funds without withholding tax from the income of the nonresident.

The new Tax Code divides the rules on the application of international treaties into four subsections:

• general provisions;
• procedure for the tax agent to apply a treaty on its own;
• procedure for a nonresident legal entity working in Kazakhstan through a permanent establishment to apply a treaty on its own;
• procedure for a nonresident individual to apply a treaty on its own.

Previously, a tax agent applying treaty benefits on its own relied on specific provisions on the application of the Multilateral Convention embedded directly in the relevant article (including confirmation that the nominal tax rate in the recipient state is at least 15 per cent and that the income is included in the taxable base there). The new Tax Code removes this block and moves the framework for applying the Multilateral Convention to the general provisions (Article 698).

For active income, a taxpayer can normally provide a tax residence certificate and confirm the absence of a permanent establishment. For passive income, a taxpayer must, in addition to a residence certificate, confirm beneficial ownership of the income and that the income is not attributable to a permanent establishment in Kazakhstan.

Where a treaty with a given state is modified by the Multilateral Convention, the anti-avoidance rules under that Convention, including the principal purpose test, continue to apply.