Kazakhstan's New Tax Code: Key Updates In International Taxation

Effective from 1 January 2026, Kazakhstan's new Tax Code introduces a series of material reforms across the tax and budget framework. Several of these changes directly impact cross-border transactions, tax treaty planning, and the taxation of foreign businesses deriving income from Kazakhstan.

This legal alert provides an overview of the most notable amendments in international taxation and outlines their potential implications for non-residents operating in, or receiving income from, Kazakhstan.

1. Expansion of Income Deemed Sourced from Kazakhstan

The new Tax Code significantly broadens the list of services treated as Kazakhstan-sourced income, even when such services are rendered entirely outside Kazakhstan.

The following categories have now been formally added:

• Information processing services, which may include market analytics and research; Big Data / Data-as-a-Service (DaaS); rating and scoring services; analytical platforms and aggregators; web scraping and data processing; IT analytical and information services; and similar activities;
• Advertising services, including digital and targeted advertising on international social media platforms;
• Design services.

Under these amendments, payments for such services made to non-residents may become subject to withholding tax in Kazakhstan, regardless of the place of performance.

Accordingly, each case must now be carefully analyzed for the availability of tax treaty relief, particularly under Articles governing Business Profits and Royalties. The risk of misclassification is significantly higher under the new regime.


2. Introduction of New Categories of Kazakhstan-Sourced Income

2.1. Unpaid exports of goods or services
If a Kazakh entity exports goods or provides services and the payment remains outstanding for more than 12 months, the unpaid amount is deemed income of the non-resident purchaser.

2.2. Loans issued to non-residents
A loan taken by a non-resident that is not repaid in accordance with the contractual repayment schedule may give rise to taxable income in Kazakhstan. The taxable base may include the principal amount.


3. Substantial Expansion of the Definition of "Royalties"

3.1. Software-related payments
Payments for software updates and upgrades are now expressly classified as royalties.
However, the following do not fall under the definition of royalties:

• bug fixes;
• error corrections;
• services not related to software development or enhancement.

This requires precise contractual structuring in IT development and support agreements, as royalty classification may reduce the availability of full tax exemption under applicable tax treaties.

3.2. Know-how
Know-how is now formally defined as confidential technical, technological, organisational, or other commercially valuable information used in professional or entrepreneurial activities.

Such payments are treated as royalties unless a tax treaty explicitly provides otherwise.


4. Royalty Exemption for Astana Hub Residents

Royalties paid by Astana Hub residents to foreign providers for qualified IT activities are fully exempt from withholding tax.


5. Differentiated Withholding Tax Rates on Dividends

Using an illustrative exchange rate of 510 KZT/USD:

• Up to 230,000 MCI (approximately USD 1.95 million) – 5%
• Above 230,000 MCI (approximately USD 1.95 million) – 5% on the first portion; 15% on the excess

These reduced rates apply only where the non-resident directly holds at least 25% of the company's capital. Importantly, more favorable treaty rates may still apply.


6. New Rates on Interest and Financial Instruments

• 10% – interest on loans and debt securities
• 15% – income from other financial instruments.

7. Permanent Establishment (PE): New Rules for Combining Related Projects

The Tax Code introduces broader criteria for determining when a non-resident is deemed to have a Permanent Establishment (PE) in Kazakhstan. Tax authorities may now combine not only consecutive or interdependent contracts but also contracts that are similar in substance.

Similar contracts may include projects that:

• use comparable methods or technology;
• pursue similar commercial objectives;
• rely on shared infrastructure;
• are executed using the same personnel, equipment, or resources.

Even if the contracts are formally separate and concluded with different clients, they may be treated as a single unified project if the underlying activities are substantially similar.


8. Reinstatement of a Permanent Establishment

If a non-resident previously had a PE deregistered and later resumes similar activities within 12 months, the PE is considered re-established from the moment activities restart.

Consequences:

• the traditional 183-day threshold does not apply;
• registration obligations arise immediately upon resumption.

This affects non-residents engaged in recurring or cyclical projects such as construction, engineering, IT deployment, and maintenance services.


Conclusion

Kazakhstan's new Tax Code materially reshapes the international tax landscape for non-residents. Beyond expanding the scope of Kazakhstan-sourced income and redefining royalty payments, the Code introduces significant new PE risks through project aggregation rules and automatic reinstatement of PE status.

Non-residents should reassess their contract structures, timelines, and tax treaty positions to mitigate unintended withholding tax and PE exposure. Kazakh entities should also review agreements, documentation, and payment processes to ensure compliance under the new framework.