RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/KAZ/29
12 October 2000
(00-4205)
Working Party on the
Accession of KazakstanOriginal:  English
ACCESSION OF KAZAKSTAN
Memorandum on Taxation Regime
The Ministry of Economy of the Republic of Kazakstan has submitted the following
information.
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Tax legislation of the Republic of Kazakstan consists of the Law of the Republic of
Kazakstan "On Taxes and Other Obligatory Payments to Budget", acts of the President of the
Republic of Kazakstan and the Government of the Republic of Kazakstan, as well as the acts of the
Ministry of the State Revenues of the Republic of Kazakstan, which have been agreed with the
Ministry of the Finance of the Republic of Kazakstan, and registered with the Ministry of Justice ofthe Republic of Kazakstan.
If an International Treaty establishes other rules,  than those, stipulated by the Law, the rules
of the International Treaty are applied.
The following taxes, fees and other obligatory payments are currently effective in the
Republic  of Kazakstan:
- Income tax;
- Value added tax – VAT;
- Excise tax;
- Social tax;- Tax on property of  legal entities and physical persons;
- Vehicles tax;
- Land tax;
- Fee on auction sales; and
- Special payments and taxes for subsurface users.
The  main taxes, which form the state budget are  income tax, VAT and excises.
Income tax
Payers of income tax on legal entities and physical persons  shall be the legal entities and
physical persons, who gained taxable income during a tax year.  The aggregate annual income of a
resident taxpayer includes all sources of income in the Republic of Kazakstan, and outside the
Republic of Kazakstan.  The aggregate annual income of a non-resident taxpayer consists only of
income, received from the sources in the Republic of Kazakstan.
 Taxable income of legal entities shall be subject to taxation at the rate of 30 per cent
(20 per cent in the special economic zones).  Legal entities, for which land is the main productionWT/ACC/KAZ/29
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mean shall be levied by  tax at the rate of ten per cent of the income, derived from direct utilization
thereof. The taxable income of a physical person is subject to taxation at a progressive rate, which
varies within the limits from five to 30 per cent.  Income tax on physical persons shall be withheld at
the source of payment.
 The dividends paid to legal and physical persons are subject to taxation at source of payment
at the rate of 15 per cent and are not subject to further taxation, provided that the documents
confirming the payment of this tax at a source of payment are available.
The current tax legislation of Republic of Kazakstan provides for the tax preferences, which
are granted to separate legal entities – Non-commercial Organizations, State Bodies, as well as
International Organizations, the list of which is defined by the Government of the Republic ofKazakstan.
Besides, the taxpayers under the contract with the Authorized Body on Investments can be
exempted from payment of the income tax for the period to five years from the moment of gaining of
the taxed income, but no more than for eight years from the moment of signing the contract. Thespecific terms for the income tax privileges are established with respect to each taxpayer under the
contract, and depending of existing priorities, terms, conditions and the period of recoupment of the
Project.
Value added tax
The turnover of products (works, services) at the different production stages and distribution
till final sale for purposes of consumption and utilization is levied by the value added tax (VAT). It is
levied on products, as well as on services, rendered within the country, irrespective of whether they
were manufactured in local market or imported. The tax is paid in each component in the sales chain,but the system of offsets eliminates any "cascade" effect.
 The basic rate of VAT is equal to 20 per cent.  The foodstuff of first necessity are taxed by
VAT at the rate of 10 per cent.  Exports are levied by VAT at a zero rate, except the exports to Russia,
because at present in trade between Kazakstan and Russia the principle of VAT collection at the place
of production, rather than at the point of destination is applied.  However, as a result of negotiations
with Russia, held from 30 August till 1 September 2000,  the Agreement on transition to a system ofVAT collection at the point of destination in trade between Kazakstan and Russia was drafted and
approved as a whole. This Agreement is expected to be  signed in the near  future.
VAT is all-inclusive with a few exceptions.
Import of goods exempted from VAT are as follows:- Import of the national and foreign currency (except for numismatic items), and
securities;
- Import of goods by individuals in accordance with the standards of duty-free imports
of goods, which are established by the Government of the Republic of Kazakstan;
- Import of goods procured at the expense of the state external loans;
- Import of goods by the National Bank of the Republic of Kazakstan for its own
needs;
- Goods, except for excisable ones, imported as humanitarian aid according to the order
set by the Government of the Republic of Kazakstan;
- Goods, except for excisable ones, imported for charitable purposes at line of the
State, Governments, International Organizations, including technical assistance;
- Goods,  imported for official use by foreign diplomatic representative offices and
those, which are equivalent to them, as we ll as for personal needs by diplomatic,
administrative and technical staff of these representative offices, including theirWT/ACC/KAZ/29
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families residing with them and those,  which are exempted from VAT under
international agreements to which the Republic of Kazakstan is a party;
- Import of goods transported through the customs border of the Republic of
Kazakstan, exempted within the customs regime established  by the customs
legislation of the Republic of Kazakstan, except the regime "Release of goods for freecirculation"; and
- Import of pharmaceuticals, medicine-substances including those, which are prepared
in pharmacies; prosthetic and orthopaedic articles; materials for the production of
pharmaceuticals; items for medical purposes and medical equipment, as well as
materials and spare parts for production thereof.
The list of pharmaceuticals, medicine-substances,  prosthetic and orthopaedic articles; items
for medical purposes and medical equipment, as well as the materials and spare parts for production
thereof, import of which is exempted from value added tax, shall be approved by Government of
Republic of Kazakstan:
- Import of goods out of the proceeds of  the grants, provided at line of the States,
Governments of Countries and International Organizations.
Excises
Excise tax shall be levied on the goods produced in the territory of the Republic of Kazakstan
or imported into the territory of the Republic of Kazakstan and listed in the Law "On Taxes and Other
Obligatory Payments to Budget".
Excises are the indirect taxes, levied on production and included to the sales value.  The
exported excisable goods are not subject to  the excise tax under the condition of confirmation byproducers of the fact of exportation of these goods, except for the cases, specified in the International
Treaties, to which the Republic of Kazakstan is a party.  Throughout the territory of the Republic of
Kazakstan, unified rates of excises are applied.  The Government of the Republic of Kazakstan
approves the rates of excise tax for excisable goods, produced in the territory of the Republic of
Kazakstan or imported into the territory of the Republic of Kazakstan in percentage to the value of
goods or in the form of established amount with regard to the physical volume, expressed in natural
units.
List of excisable goods and appropriate excise rates, which are effective  in the Republic of
Kazakstan is presented  in Table 1.
Table 1
Excisable goods Excise rate
On domestically produced goods
in Tenge, in Euro (at the
exchange rate as of
1 October 2000), in per cent tothe valueOn imported goods in Euro, in
per cent to the customs value
All kinds of spirit 300 Tenge/litre 3 Euro/litre
Spirit, allowed for the production ofalcoholic products (except beer), ifa commodity  producer holds alicense for the given kind of activity30 Tenge/litre 0.3 Euro /litreWT/ACC/KAZ/29
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Excisable goods Excise rate
Alcoholic products (except vodka
and special vodka, balsams,cognacs, liqueur and vodka items,fortified  juices, fortified drinkswith a   volume share to30 per cent)80 Tenge/litre 1.7 Euro/litre
Vodka and special vodka 100 Tenge/ litre 1.7 Euro/litre
Balsams (except medical balsams) 50 Tenge/litre 1.7 Euro / litre
Balsams,  registered as a
pharmaceutical10 Tenge/litre 0.4 Euro / litre
Cognacs 20 Tenge/litre 1.7 Euro /litre
Soft alcoholic fortified drinks,
fortified with a volume share of
ethyl alcohol from 1,5 to 12 per
cent30 Tenge/litre 0.4 Euro / litre
Wine and wine drinks (except
champagne,  sparkling and aeratedones)10 Tenge/litre 0.4 Euro/litre
Champagne wines, sparkling wines
and aerated ones20 Tenge/litre 0.4 Euro/litre
Processed wine making stuff 10 Tenge/litre 0.4 Euro/litre
Beer 6 Tenge/ litre 0.2 Euro/litre
Tobacco items and other items,
containing tobacco0.75 Euro / 1000 unit 2.0 Euro / 1000 unit
Sturgeon and salmon, delicacies
made thereof100 per cent 100 per cent
Jewellery made of gold, platinum or
silver10 per cent 10 per cent
Objects made of crystal, lighting
appliances made of crystal00
Diesel fuel See  Table 2 20 Euro/ 1 ton
Crude oil including gas condensate 0 0
Gasoline (except aviation gasoline)
Except for:Gasoline, exported to the CIS
countries,  in trade with which
indirect taxes are levied inaccordance with “country of origin”principleSee Table 2 31 Euro/ 1 ton
Passenger automobiles 10 per cent, but not less
0.5 Euro/cm3 (only for automobilewith value of motor more than
3,000 cm3)
Firearms and gas weapons (except
ones, which are being acquired forthe needs of state power  bodies)00
Electric power 0.03 Tenge/ kW.h 0.03 Tenge/ kW.h
Gambling business 20 per cent  -
Lotteries, except state (national) 10 per cent -
The exchange of Euro to Tenge as of  1 October 2000 was  142.75 Tenge per Euro
Excise rates on gasoline (other than aviation gasoline) and diesel fuel, produced in the
territory of the Republic of Kazakstan and sold by legal entities and physical persons, which carry out
the wholesale trade and retail sales of gasoline (other than aviation gasoline) and diesel fuelWT/ACC/KAZ/29
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Table 2
Payer Excise rate per 1 ton (in Tenge)
Gasoline (other
than aviation
gasoline) (Tariff code –271000270,271000360) Diesel fuel (Tariff
code 271000610,
271000650,271000690)
Sale of own products  by  oil refinery plantsto legal entities and physical persons,carrying out  retail sales (to final
consumers), wholesale trade  (for the
purposes  of further resale)Oil refinery plants 4,500 540
Sale of own products  by  oil refinery plants
to the enterprises - consumers for their
production needs, including barter
operations and mutual offsetsOil refinery plants 5,000 600
Sale of own products  by  oil refinery plants
through their own retail sales  networkOil refinery plants 5,000 600
Sales by legal entities and physical persons
of lubricants by retail sale (to finalconsumers)Legal entities and
physical personscarrying out  retailsales of lubricants500 60
Wholesale trade by legal entities and
physical persons of lubricants (for the
purposes of further resale) to  legal entities
and physical persons carrying out retail salesLegal entities and
physical persons
carrying out
wholesale trade oflubricants00
The Republic of Kazakstan will apply the national treatment regime principle with respect to
excise taxes from the date of accession to the WTO.
Improvement of tax legislation
       Currently, the Interdepartmental Working Group of the Republic of Kazakstan is developing the
Draft New Tax code - codified Law of direct force, integrating many provisions of the current
normative legal acts on taxes and other mandatory payments to the budget, that is result of the last
four years work.
     The current tax legislation is going to be improved in the directions, as follows:
- Consecutive decrease of the tax burden of the economic subjects;
- Establishment of equal conditions for economic activity of all taxpayers; and
- Development of the tax legislation to maximally ensure the simplicity and
interpretation thereof.
However it does not mean the total transformation of whole tax system of the country.Economic basis, incorporated to the legislation since 1995, statutory principles of the taxation
remain stable.  Thus, the basic principles of  taxation, such as equality and clarity will be presented in
the Draft Law under development.
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