Kazakhstan's new Tax Code (Code No. 214-VIII of 18 July 2025) entered into force on 1 January 2026, introducing significant changes that directly affect foreign-owned companies operating in or through Kazakhstan – including progressive personal income tax, a raised corporate income tax rate for specific sectors, and revised rules for non-residents. Understanding the procedural requirements, updated compliance timelines, and interaction with international frameworks such as Pillar Two is essential for any international business with a Kazakhstan footprint.
Legal Basis and Scope of the 2026 Reform
The new Tax Code, adopted as Code No. 214-VIII on 18 July 2025, replaced the prior tax legislation and took full effect on 1 January 2026. It was complemented by the Kazakhstan Digital Code (No. 255-VIII, signed 9 January 2026), which came into effect in July 2026 and governs digital services, crypto-asset reporting obligations, and related administrative procedures.
Together, these two instruments reshape the compliance landscape for foreign-owned legal entities, branches, and representative offices registered in Kazakhstan, including those operating within or adjacent to the Astana International Financial Centre (AIFC). Foreign investors relying on earlier tax planning assumptions should treat their existing structures as requiring a formal review against the new rules.
Key Changes Under the New Tax Code
Corporate Income Tax: Sector-Specific Rate Increase
For most companies, the corporate income tax (CIT) framework was restructured, but a materially important change applies to banks and gambling operators, which are now subject to a 25% CIT rate under the new Code. Foreign-owned holding or operating companies with Kazakhstani subsidiaries in those sectors must recalculate their effective tax positions accordingly.
For companies outside these specific sectors, the applicable CIT rate should be confirmed against the current Code provisions, as different rates and regimes may apply depending on activity type, special economic zone status, or AIFC membership. Where a double tax treaty is in force between Kazakhstan and the investor's home jurisdiction, treaty rates may modify withholding tax obligations – but domestic law changes can affect which treaty provisions remain practically available.
Progressive Personal Income Tax
The new Code introduces a progressive personal income tax (PIT) structure, replacing the previously flat rate. This is directly relevant to foreign-owned companies with expatriate or locally hired employees, to secondment arrangements, and to any compensation structures that include variable or deferred elements. Companies will need to revisit payroll procedures, withholding obligations, and employment contracts to ensure compliance.
Tax residency status of individual employees remains a threshold question: Kazakhstan's domestic rules determine residency, but treaty provisions may interact with them in ways that require careful analysis for each assignee. Foreign companies should not assume that prior payroll structures remain compliant under the progressive system.
Changes for Non-Residents
The revised rules for non-residents address permanent establishment thresholds, withholding tax on Kazakhstan-source income, and the documentation required to access treaty benefits. Foreign companies providing services into Kazakhstan, or receiving dividends, interest, or royalties from Kazakhstani counterparties, face updated procedural requirements for claiming reduced withholding tax rates under applicable treaties.
A key practical consequence is that the confirmation of tax residency – the document issued by a foreign tax authority that enables access to treaty rates – must now align with updated Kazakhstani administrative requirements. For AIFC residents, a draft amendment consulted in July 2026 proposes abolishing the fee currently charged for confirming their tax residency status; however, as of the date of this guide, that proposal has not been enacted into law and should not be relied upon for planning purposes.
If your company receives Kazakhstan-source income or has employees in Kazakhstan, the non-resident and PIT changes warrant prompt attention. Our team can assist with a structured compliance review: write to info@ferrazwhitmore.com or visit our contacts page.
Interaction with Pillar Two and International Frameworks
For multinational groups with a consolidated annual revenue above the Pillar Two threshold, Kazakhstan's position within the global minimum tax framework is a live question. The new Tax Code does not, of itself, implement Pillar Two rules – Kazakhstan's approach to the OECD's global minimum tax remains subject to national legislative developments that are still evolving. Groups operating through Kazakhstan entities should monitor whether a Qualified Domestic Minimum Top-up Tax (QDMTT) or similar mechanism is introduced, and factor that uncertainty into tax modelling.
Separately, the crypto-asset reporting obligations introduced through the Digital Code (No. 255-VIII) are substantively aligned with the international direction of travel represented by frameworks such as DAC8 in the European Union context. Foreign companies holding or transacting in crypto-assets through Kazakhstani entities should assess whether new reporting obligations apply to them under the Digital Code's July 2026 provisions.
AIFC and AFSA: Special Regime Considerations
Companies registered within the AIFC continue to benefit from a distinct legal and regulatory framework, with the AIFC Court and the Astana Financial Services Authority (AFSA) as key institutional counterparts. The IAC (International Arbitration Centre within AIFC) remains available for dispute resolution. The new Tax Code's interaction with AIFC special tax exemptions requires specific analysis, as the general Code provisions and AIFC-specific rules operate in parallel.
Foreign investors structuring Kazakhstan operations through the AIFC should verify the continued applicability of any tax holidays or exemptions under the post-2026 framework, and should not assume that pre-2026 rulings or confirmations remain valid without re-verification. The pending proposal regarding the residency confirmation fee for AIFC residents (discussed above) illustrates the active legislative environment around AIFC taxation.
For guidance on AIFC-specific structuring and compliance, our Kazakhstan tax law practice can assist with an assessment tailored to your entity's registration and activity profile.
Step-by-Step Compliance Procedure for Foreign-Owned Companies
Step 1: Entity and Activity Mapping
Identify all Kazakhstani legal entities, branches, representative offices, and permanent establishment risks within the group. Confirm each entity's CIT rate category, sector classification, and any special regime status (AIFC, special economic zone, etc.).
Step 2: Payroll and PIT Review
Audit current payroll structures against the progressive PIT schedule. Determine each employee's tax residency status and applicable withholding rates. Update payroll systems and internal procedures to reflect the new progressive bands before the next payroll cycle.
Step 3: Non-Resident Income and Withholding Tax Audit
Map all cross-border payments – dividends, interest, royalties, service fees – and confirm the applicable withholding tax rate under the new Code and any relevant double tax treaty. Ensure that tax residency certificates from counterparty jurisdictions are current and meet Kazakhstani administrative requirements.
Step 4: Crypto-Asset and Digital Services Review
Assess whether any group entity is subject to reporting obligations under the Digital Code (No. 255-VIII) that came into effect in July 2026. This applies to entities holding, trading, or providing services in relation to crypto-assets through Kazakhstani operations.
Step 5: Pillar Two Position Assessment
For groups above the relevant revenue threshold, model the impact of Kazakhstan's CIT rates on the group's global effective tax rate and assess exposure to top-up taxes in other jurisdictions. Monitor Kazakhstan's legislative developments on QDMTT implementation.
Step 6: Documentation and Filing Readiness
Ensure that transfer pricing documentation, treaty benefit claims, and CIT returns are prepared in accordance with the new Code's requirements and deadlines. Foreign companies with limited local administrative capacity should establish relationships with in-country support early in the compliance cycle.
Key Documents Required
- Tax residency certificates for all non-resident entities and individuals claiming treaty benefits, updated to meet current Kazakhstani requirements
- Corporate documents confirming the structure of foreign ownership and any special regime registrations (AIFC, SEZ)
- Payroll records and employment contracts reviewed against the progressive PIT schedule
- Transfer pricing documentation for intercompany transactions above applicable thresholds
- Crypto-asset transaction records, where applicable under the Digital Code
- Board resolutions or internal policies updated to reflect the revised CIT rates applicable to the entity's sector
Realistic Timelines
The new Tax Code has applied since 1 January 2026. The Digital Code provisions on crypto-assets and digital services became operative in July 2026. For companies that have not yet conducted a post-1 January 2026 compliance review, the priority actions – payroll restructuring, withholding tax documentation, and sector CIT rate confirmation – should be addressed without delay to avoid accumulating exposure.
Legislative developments remain active: the July 2026 draft amendments, including the AIFC residency fee proposal, are still at consultation stage. Companies should build monitoring of these developments into their compliance calendar and avoid structuring decisions on the basis of proposals that have not yet been enacted.
Common Errors by Foreign Clients
- Applying pre-2026 CIT rate assumptions to Kazakhstani banking or gambling subsidiaries, without adjusting for the 25% rate now in force
- Overlooking the progressive PIT change for expatriate and locally hired employees, resulting in under-withholding and potential penalties
- Treating draft legislative proposals as enacted law – particularly the AIFC residency fee abolition proposal, which remains under consultation
- Failing to update tax residency certificates for non-resident counterparties, leading to denial of treaty rates on withholding tax
- Underestimating Digital Code obligations for entities with crypto-asset holdings or digital service revenues in Kazakhstan
- Assuming AIFC special regime continuity without re-verifying that pre-2026 exemptions remain applicable under the new Code
Decision Checklist for International Investors
- Has the entity's CIT rate category been confirmed under the new Code, including sector classification?
- Have payroll systems been updated to apply the progressive PIT schedule from 1 January 2026?
- Are treaty benefit claims supported by current, compliant tax residency certificates?
- Has the entity's exposure under the Digital Code (effective July 2026) been assessed?
- For AIFC entities: has the continued validity of special regime exemptions been verified under the post-2026 framework?
- For multinational groups: has a Pillar Two impact assessment been conducted for Kazakhstan operations?
- Is a monitoring process in place for further legislative changes, including the draft July 2026 amendments?
For assistance with any of the steps above, our Kazakhstan corporate law team works alongside our tax specialists to support foreign investors through structural and compliance questions.
Ferraz & Whitmore assists foreign-owned companies with Kazakhstan tax compliance, AIFC structuring, and non-resident withholding tax matters. To discuss your specific situation, contact us at info@ferrazwhitmore.com or visit our contacts page.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.