CHANGES IN THE TAX CODE OF THE REPUBLIC OF KAZAKHSTAN UNDER INTERNATIONAL TREATIES (MLI) FROM 2023
Amendments have been made in the terms of the application of international treaties to passive income paid to non-residents (dividends, royalties) in the Tax Code of Kazakhstan.
The Multilateral Convention has been used since January 1, 2021 to implement tax treaty-related measures for the prevention of base erosion and profit shifting (BEPS) in the Republic of Kazakhstan.
The purpose of a multilateral convention is the elimination of non-taxation or reduced taxation through tax avoidance or tax evasion.
The introduction of amendments to the Article 667 of the Tax Code of the Republic of Kazakhstan “About taxes and other obligatory payments to the budget” implies the presence of additional conditions for bilateral tax agreements application by the tax agent. (The amendments entered into force on January 1, 2023).
The introduction of amendments to Article 667 of the Tax Code of the Republic of Kazakhstan, “On taxes and other obligatory payments to the budget,” requires the application of additional conditions for the bilateral tax agreements by a tax agent. (The amendments entered into force on January 1, 2023).
At the same time, when paying income in the form of dividends, remuneration, and/or royalties to a non-resident-an interconnected person-a resident of the state that concluded an international agreement with the Republic of Kazakhstan, as amended by a multilateral international agreement, the tax agent has the right to apply the provision of part one of this paragraph while simultaneously fulfilling the following conditions:
such income is subject to inclusion in the taxable income of a non-resident in a foreign state where the non-resident is a resident and is subject to taxation without the right to exclude such income from taxable income and (or) reduce (adjust) taxable income by the amount of such income in the reporting period and (or ) refund in the reporting and (or) subsequent periods of the tax paid on this taxable income.
For the purposes of Part three of this paragraph, the nominal rate is considered the one established by the tax legislation of a foreign state.
The statutory tax rate applied to the taxation of income in a foreign state where the non-resident is a resident equals, at least, 15% in the reporting period.
In addition, as provided in Paragraph 5 of Article 4 of the Tax Code, if an international treaty ratified by the Republic of Kazakhstan establishes rules other than those contained in the Tax Code, the regulations of the mentioned treaty shall apply.
In view of the aforesaid, the changes to Article 667 of the Tax Code shall be applied in strict accordance with the provisions of the mentioned treaty shall apply.