Kazakhstan is interested in advancing the IT sector and is committed to facilitating and promoting businesses within this industry. To achieve this goal, they have established Astana-Hub, an International Technopark for IT startups, aimed at minimizing the tax burden on businesses in this field.
One significant tax advantage involves lowering the corporate income tax (CIT) rate to 0%. Until January 1st, 2023, all members of Astana-Hub enjoyed CIT benefits. However, as of January 1st, 2023, new regulations were introduced, now not all the members of Astana-Hub are entitled for these benefits. To be eligible for the tax benefit, participants must follow the specific requirements outlined in the CIT regulations.
To qualify for the benefit, the CIT rules categorize participants into two groups: those involved in IT product development and those offering IT services, with different regulations applicable to each category.
Criteria for obtaining CIT benefits for IT-products:
- Register copyright on intellectual property
- Hold a sole entitlement to an intellectual property object, which has been acquired from the author or another rights holder through a document agreement
- When computing Corporate Income Tax (CIT), adapt the CIT Regulations that encompass a formula for CIT calculations, which factors in income and expenses associated with specific transactions
- In the context of international transactions, income should also be established following the guidelines recognized by the Transfer Pricing Law
Criteria for obtaining CIT benefits for IT-services:
- Perform services in accordance with the list outlined by the CIT regulations
- Confirming alignment between the initial business plan and the actual business performance is crucial
- Conducting activities within the borders of the Republic of Kazakhstan
- Executing operations with an appropriate number of full-time employees as needed in the practice
- Employees are required to possess the essential qualifications and work experience
- Ensuring that the expenses incurred by an Astana-Hub participant match the actual and necessary expenses required for conducting their activities
- The allowable margin for variance between the business plan and actual figures should not exceed 20%
- In order to receive timely confirmation of data compliance from Astana-Hub, it is necessary to regularly adjust original business plan to the company’s current performance and submit it to Astana-Hub to avoid deviations
Strict adherence to all the regulations is essential to maximize the benefit. The experts at FChain are available to assist you in recognizing all the subtleties of the Astana-Hub CIT Rules that should be considered for the tax optimization.
article prepared by Fatima Nuritova
23rd of October 2023
