Nonresidents’ income from sources in the Republic of Kazakhstan

2.3 Nonresidents’ income from sources in the Republic of Kazakhstan

The following types of income shall be considered nonresidents’ income from sources in the Republic of Kazakhstan:

1) income from the realization of goods, the performance of work, or the delivery of services in the Republic of Kazakhstan;

2) income earned from management, financial (with the exception of services involving the insurance and/or reinsurance of risks), consulting, auditing, marketing, legal (with the exception of attorney’s services), agency, and information services provided to residents or nonresidents doing business in the Republic of Kazakhstan through a permanent establishment, and related to said permanent establishment, regardless of where the services are actually provided;

3) capital gains resulting from:

the realization of property located on the territory of the Republic of Kazakhstan;

the realization of securities issued by residents, as well as a share interest in a resident legal entity or in property located in the Republic of Kazakhstan;

4) income from concession of the right of claim on a debt to residents or nonresidents in connection with doing business in the Republic of Kazakhstan through a permanent establishment;

5) charges (fines, penalties) for failure to fulfill or improper fulfillment of obligations by residents and nonresidents, which have arisen in the course of operations by said nonresidents in the Republic of Kazakhstan, including obligations under contracts (agreements, accords) for the performance of work (delivery of services) and/or under foreign trade contracts for the delivery of goods;

6) income in the form of dividends received from a resident legal entity, and income from a share interest in such a legal entity;

7) income in the form of interest, with the exception of interest on debt securities, received from:

residents;

nonresidents with a permanent establishment or property located in the Republic of Kazakhstan, if the debt owed by these nonresidents applies to their permanent establishment or property;

8) income in the form of interest on debt securities, received from:

resident issuers;

nonresident issuers with a permanent establishment or property located in the Republic of Kazakhstan, if the debt owed by these nonresidents applies to their permanent establishment or property;

9) income in the form of royalties received from residents or nonresidents in connection with doing business in the Republic of Kazakhstan through a permanent establishment;

10) income from the leasing of property located in the Republic of Kazakhstan;

11) income earned from real property located in the Republic of Kazakhstan;

12) income in the form of insurance premiums paid under agreements for the insurance or reinsurance of risks arising in the Republic of Kazakhstan;

13) income from providing transportation services for international shipments, one of the parties of which is the Republic of Kazakhstan;

14) income from operations in the Republic of Kazakhstan under individual labor agreements (contracts) or under other agreements of a civil-legal nature;

15) honoraria for managers and/or other payments received by members of a top administrative body (council of directors, board, or other similar body) of a resident legal entity, regardless of where the actual performance of the administrative duties assigned to such persons takes place;

16) supplemental payments made in connection with residing in the Republic of Kazakhstan;

17) income in the form of compensation for expenditures borne by an employer to provide material and social benefits or other material advantages to nonresident individuals working in the Republic of Kazakhstan, including expenditures on meals, housing, enrollment of children at educational institutions, and expenses related to leisure activities, including vacation travel for their family members;

18) pension payments effected by resident pension savings funds;

19) income paid to people employed in the arts: theater, film, radio and television performers, musicians, artists, and athletes from activities in the Republic of Kazakhstan, regardless of the person to whom payments are made;

20) winnings paid by residents;

21) income earned from providing independent personal (professional) services in the Republic of Kazakhstan;

22) income in the form of property located in the Republic of Kazakhstan that is received free of charge, including income from such property;

23) other income not covered under the preceding subitems that arises on the basis of activities performed in the Republic of Kazakhstan.

2.4 PROCEDURE FOR THE TAXATION OF INCOME EARNED BY NONRESIDENT LEGAL ENTITIES DOING BUSINESS WITHOUT CREATING A PERMANENT ESTABLISHMENT IN THE REPUBLIC OF KAZAKHSTAN

Income earned by a nonresident legal entity that defined above that is not related to a permanent establishment in the Republic of Kazakhstan shall be subject to the income tax at the source of payment without any deductions, at the rates set below.

Rates for the income tax at the source of payment

The income of a nonresident from sources in the Republic of Kazakhstan not related to a permanent establishment shall be subject to taxation at the source of payment at the following rates:

The payment of income shall be defined as the mean the transfer of money in cash and/or noncash form, securities, goods, property, and the performance of work or delivery of services. The following shall not be subject to taxation at the source of payment:

1) payments related to the delivery of goods onto the territory of the Republic of Kazakhstan under foreign trade transactions;

2) income from providing services related to the opening and maintenance of correspondent accounts of resident banks and the performance of settlements on them;

3) capital gains from the realization of securities;

4) income from operations with government securities;

5) payments related to an adjustment, based on quality, in the selling price of crude oil transported via the unified pipeline system outside the Republic of Kazakhstan;

6) interest accumulated (accrued) on debt securities paid by resident buyers (not issuers) to nonresidents at the time of their purchase.

The taxation of a nonresident’s income at the source of payment shall be effected regardless of whether said nonresident turns over this income to third parties and/or to its subdivisions in other states. The procedure for the calculation and withholding of income tax at the source of payment from interest on debt securities shall be established by the authorized government agency. The person paying income (including a nonresident doing business in the Republic of Kazakhstan through a permanent establishment) is liable and responsible for the calculation and withholding of the income tax at the source of payment, and for payment of the tax to the state budget. Such a person shall be recognized as a tax agent in accordance with item 1 of Article 10 of Tax Code. A nonresident shall be recognized as a tax agent as of the moment said person begins doing business in the Republic of Kazakhstan, if its period of operation exceeds that established for the creation of a permanent establishment. The income tax shall be withheld at the source of payment regardless of the form and place of payment of the income.