Taxes in Kazakhstan on salary from a foreign employer
Taxation of personal income is regulated by the Tax Code of the Republic of Kazakhstan (TC RK). Under the general taxation system, an individual income tax (PIT) is levied.
The procedure for paying PIT from income under an employment contract depends on three main factors:
- the status of the employer (whether the employer is recognized as a tax agent);
- places of performance of labor activity (on the territory of Kazakhstan or abroad);
- tax status (whether an individual - the recipient of income is recognized as a tax resident in the Republic of Kazakhstan).
Remuneration for the performance of labor duties in Kazakhstan is income from sources in Kazakhstan (clause 20, clause 1, article 644 of TC RK). And remuneration for performing work duties outside of Kazakhstan is income from sources outside of Kazakhstan. At the same time, the place of performance of labor duties is determined not at the location of the employer, but at the place of work of the employee himself, taking into account the terms of his employment contract (clause 3, clause 1, article 28 of the Labor Code of the Republic of Kazakhstan).
Recognition of wages as income from sources in Kazakhstan or income from sources outside of Kazakhstan affects the procedure for paying PIT, as well as the calculation of the amount of PIT.
As a general rule, regardless of the place of employment, the employer is recognized as a tax agent in relation to the income of employees (both tax residents and non-residents), if it has a branch or representative office in Kazakhstan. At the same time, a foreign organization that does not have a branch or representative office in Kazakhstan, but which, through its employees, performs work (renders services) in Kazakhstan for more than 183 days within 12 consecutive months, may also be recognized as a tax agent. In this case, a foreign organization is recognized as having a "permanent establishment" in Kazakhstan and is subject to tax registration (clause 2, article 220 of TC RK). In this case, the duties of a tax agent are performed by such a foreign employer in a manner similar to the one in force for an employer from Kazakhstan (Article 655 of TC RK).
If the employer is a foreign organization that is not tax registered in the Republic of Kazakhstan, then it is not recognized as a tax agent. In this case, the employee pays the PIT on his own (Article 351 of TC RK).
Procedure for declaring and paying tax
According to the PIT, two different tax periods are established: in the presence of a tax agent - a calendar month (Article 354 of TC RK); when paying tax by an individual on his own - a calendar year (361 of TC RK).
An employer-tax agent submits a tax return for each quarter (PIT reporting period for a tax agent) by the 15th day of the second month following the reporting period (Articles 355, 657 of TC RK).
The deadline for paying tax withheld by a tax agent from residents and non-residents is the same, but is set in different articles of TC RK. Namely, the employer pays the tax no later than the 25th day of the month following the month in which the income was paid.
When working for a foreign employer (when working not in a branch, representative office, or permanent establishment of the employer in Kazakhstan), the employee pays the individual income tax on his own (Article 351 of TC RK).
A tax agent has the right to pay PIT at his own expense, without withholding tax from the income of an employee - both a tax resident and a non-resident (clause 5 of article 351, clause 9 of article 655 of TC RK). Moreover, the amount of such tax will not be the income of the employee (clause 47, clause 2, article 319, clause 2, article 644 of TC RK).
If the employer is not a tax agent, then the employee independently submits a tax return for the calendar year (IT tax period for an individual who pays tax on his own) by March 31 of the next year. In this case, the payment of tax must be made within 10 calendar days after the deadline for submitting the declaration, that is, until April 10 inclusive (clause 1 of article 362 of TC RK).
There are special features of taxation for Kazakh officials and their spouses (Article 630 of TC RK).
Tax calculation
It is planned to reduce the tax base of an employee by the so-called. adjustments, in particular, for the following amounts of income from the employer (Article 353 of TC RK):
Employees under an employment contract in Kazakhstan do not pay social tax (Article 482 of TC RK).
The following describes the features of taxation of PIT wages depending on the tax status of an individual. A brief note on the criteria for a tax resident in Kazakhstan is also provided.
The procedure for paying PIT from income under an employment contract depends on three main factors:
- the status of the employer (whether the employer is recognized as a tax agent);
- places of performance of labor activity (on the territory of Kazakhstan or abroad);
- tax status (whether an individual - the recipient of income is recognized as a tax resident in the Republic of Kazakhstan).
Remuneration for the performance of labor duties in Kazakhstan is income from sources in Kazakhstan (clause 20, clause 1, article 644 of TC RK). And remuneration for performing work duties outside of Kazakhstan is income from sources outside of Kazakhstan. At the same time, the place of performance of labor duties is determined not at the location of the employer, but at the place of work of the employee himself, taking into account the terms of his employment contract (clause 3, clause 1, article 28 of the Labor Code of the Republic of Kazakhstan).
Recognition of wages as income from sources in Kazakhstan or income from sources outside of Kazakhstan affects the procedure for paying PIT, as well as the calculation of the amount of PIT.
As a general rule, regardless of the place of employment, the employer is recognized as a tax agent in relation to the income of employees (both tax residents and non-residents), if it has a branch or representative office in Kazakhstan. At the same time, a foreign organization that does not have a branch or representative office in Kazakhstan, but which, through its employees, performs work (renders services) in Kazakhstan for more than 183 days within 12 consecutive months, may also be recognized as a tax agent. In this case, a foreign organization is recognized as having a "permanent establishment" in Kazakhstan and is subject to tax registration (clause 2, article 220 of TC RK). In this case, the duties of a tax agent are performed by such a foreign employer in a manner similar to the one in force for an employer from Kazakhstan (Article 655 of TC RK).
If the employer is a foreign organization that is not tax registered in the Republic of Kazakhstan, then it is not recognized as a tax agent. In this case, the employee pays the PIT on his own (Article 351 of TC RK).
Procedure for declaring and paying tax
According to the PIT, two different tax periods are established: in the presence of a tax agent - a calendar month (Article 354 of TC RK); when paying tax by an individual on his own - a calendar year (361 of TC RK).
An employer-tax agent submits a tax return for each quarter (PIT reporting period for a tax agent) by the 15th day of the second month following the reporting period (Articles 355, 657 of TC RK).
The deadline for paying tax withheld by a tax agent from residents and non-residents is the same, but is set in different articles of TC RK. Namely, the employer pays the tax no later than the 25th day of the month following the month in which the income was paid.
When working for a foreign employer (when working not in a branch, representative office, or permanent establishment of the employer in Kazakhstan), the employee pays the individual income tax on his own (Article 351 of TC RK).
A tax agent has the right to pay PIT at his own expense, without withholding tax from the income of an employee - both a tax resident and a non-resident (clause 5 of article 351, clause 9 of article 655 of TC RK). Moreover, the amount of such tax will not be the income of the employee (clause 47, clause 2, article 319, clause 2, article 644 of TC RK).
If the employer is not a tax agent, then the employee independently submits a tax return for the calendar year (IT tax period for an individual who pays tax on his own) by March 31 of the next year. In this case, the payment of tax must be made within 10 calendar days after the deadline for submitting the declaration, that is, until April 10 inclusive (clause 1 of article 362 of TC RK).
There are special features of taxation for Kazakh officials and their spouses (Article 630 of TC RK).
Tax calculation
It is planned to reduce the tax base of an employee by the so-called. adjustments, in particular, for the following amounts of income from the employer (Article 353 of TC RK):
- payments by the employer to cover the medical expenses of the employee or the employer's expenses for voluntary insurance of the employee in case of illness, material assistance from the employer at the birth of a child, assistance for burial. The adjustment is applied on the basis of the employee's application, while the amount of adjustment for all these payments is limited to 94 MCI* (clause 18 clause 1 article 341 of TC RK);
- the employer's expenses for training on the terms of continuing to work with the employer for at least 3 years (clause 25, clause 1, article 341 of TC RK).
Employees under an employment contract in Kazakhstan do not pay social tax (Article 482 of TC RK).
The following describes the features of taxation of PIT wages depending on the tax status of an individual. A brief note on the criteria for a tax resident in Kazakhstan is also provided.
Criteria for a tax resident of Kazakhstan
As a general rule, individuals who actually stay in the Republic of Kazakhstan for at least 183 calendar days within 12 consecutive months are recognized as tax residents (Article 217 of TC RK). Departure from Kazakhstan for education or treatment, undergoing health-improving, preventive procedures does not affect the calculation of the period of stay in relation to persons who are citizens of Kazakhstan or have applied for admission to the citizenship of Kazakhstan or for permission to permanently reside (clause 5, clause 4, article 217 TC RK).
In addition, a tax resident of Kazakhstan is an individual whose center of vital interests is located in the Republic of Kazakhstan, namely, if the following conditions are simultaneously met:
1) an individual has citizenship of the Republic of Kazakhstan or a residence permit in the Republic of Kazakhstan (residence permit);
2) the spouse and (or) close relatives of an individual reside in the Republic of Kazakhstan;
3) the presence in the Republic of Kazakhstan of immovable property owned by the right of ownership or on other grounds to an individual and (or) spouse (s) and (or) his close relatives, available at any time for his residence and (or) for the residence of a spouse ( i) and (or) his close relatives.
In addition, a tax resident of Kazakhstan is an individual whose center of vital interests is located in the Republic of Kazakhstan, namely, if the following conditions are simultaneously met:
1) an individual has citizenship of the Republic of Kazakhstan or a residence permit in the Republic of Kazakhstan (residence permit);
2) the spouse and (or) close relatives of an individual reside in the Republic of Kazakhstan;
3) the presence in the Republic of Kazakhstan of immovable property owned by the right of ownership or on other grounds to an individual and (or) spouse (s) and (or) his close relatives, available at any time for his residence and (or) for the residence of a spouse ( i) and (or) his close relatives.
So, taking into account your actual tax status (the status of your employee), click on the appropriate button below to get detailed information on the procedure for paying PIT by a tax agent or employee, including when changing tax status (resident / non-resident) during the year.
You can also see the visual taxation scheme at the bottom of the page.
Taxation of wages of a tax resident of Kazakhstan
The salary received by a tax resident of Kazakhstan is taxed when carrying out labor activities both in Kazakhstan and outside Kazakhstan.
If you perform work duties while outside of Kazakhstan, then the salary will be taxed in Kazakhstan only if you are recognized as a tax resident of Kazakhstan.
The salary of tax residents of the Republic of Kazakhstan is taxed at a rate of 10% (clause 1, article 317, clause 1, article 320 of TC RK).
As a general rule, regardless of the place of employment, the calculation, deduction and transfer of PIT from the salary of a tax resident, as well as the submission of tax returns, is carried out by an employer who is recognized as a tax agent (clause 1, article 317 of TC RK).
At the same time, a foreign organization that does not have a branch or representative office in Kazakhstan, but which, through its employees, performs work (renders services) in Kazakhstan for more than 183 days within 12 consecutive months, can also be recognized as a tax agent. In this case, a foreign organization is recognized as having a "permanent establishment" in Kazakhstan (clause 2, article 220, article 350 of TC RK).
As noted above, salary adjustments may apply. After adjustments, the tax base of resident employees is reduced by tax deductions at the request of the employee, in particular, by the following tax deductions:
In addition, if the accrued income of a resident employee does not exceed 25 MCI, then in addition to adjustments and deductions, the tax base is additionally reduced by 90% (paragraphs 1-1 of article 353 of TC RK).
A foreign employer-tax agent submits a tax return for each quarter (PIT reporting period for a tax agent) by the 15th day of the second month following the reporting period (Article 355 of TC RK). Withheld tax on income paid in the current month, the employer - tax agent pays by the 25th day of the next month (clause 3 of article 351 of TC RK).
If a foreign employer is not registered in Kazakhstan and is not a tax agent, then the employee independently submits a tax return for the calendar year (PIT tax period for an individual who pays tax independently) by March 31 of the next year (Article 659 of TC RK). In this case, the payment of tax must be made within 10 calendar days after the deadline for submitting the declaration, that is, until April 10 inclusive (clause 1 of article 362 of TC RK).
If you perform work duties while outside of Kazakhstan, then the salary will be taxed in Kazakhstan only if you are recognized as a tax resident of Kazakhstan.
The salary of tax residents of the Republic of Kazakhstan is taxed at a rate of 10% (clause 1, article 317, clause 1, article 320 of TC RK).
As a general rule, regardless of the place of employment, the calculation, deduction and transfer of PIT from the salary of a tax resident, as well as the submission of tax returns, is carried out by an employer who is recognized as a tax agent (clause 1, article 317 of TC RK).
At the same time, a foreign organization that does not have a branch or representative office in Kazakhstan, but which, through its employees, performs work (renders services) in Kazakhstan for more than 183 days within 12 consecutive months, can also be recognized as a tax agent. In this case, a foreign organization is recognized as having a "permanent establishment" in Kazakhstan (clause 2, article 220, article 350 of TC RK).
As noted above, salary adjustments may apply. After adjustments, the tax base of resident employees is reduced by tax deductions at the request of the employee, in particular, by the following tax deductions:
- employee's expenses for compulsory (pension, medical) and voluntary insurance;
- the employee's expenses for medicine, while the amount of this deduction is limited to 94 MCI* (Articles 342, 348 of TC RK);
- standard deductions, including a deduction in the amount of 14 MCI, which is applied for each month (clause 1 of article 346 of TC RK).
In addition, if the accrued income of a resident employee does not exceed 25 MCI, then in addition to adjustments and deductions, the tax base is additionally reduced by 90% (paragraphs 1-1 of article 353 of TC RK).
A foreign employer-tax agent submits a tax return for each quarter (PIT reporting period for a tax agent) by the 15th day of the second month following the reporting period (Article 355 of TC RK). Withheld tax on income paid in the current month, the employer - tax agent pays by the 25th day of the next month (clause 3 of article 351 of TC RK).
If a foreign employer is not registered in Kazakhstan and is not a tax agent, then the employee independently submits a tax return for the calendar year (PIT tax period for an individual who pays tax independently) by March 31 of the next year (Article 659 of TC RK). In this case, the payment of tax must be made within 10 calendar days after the deadline for submitting the declaration, that is, until April 10 inclusive (clause 1 of article 362 of TC RK).
Taxation of wages of a tax non-resident of Kazakhstan
Income under an employment contract of a tax non-resident is subject to PIT only when carrying out labor activities in the Republic of Kazakhstan (clause 20, clause 1, article 644 of TC RK). The applicable tax rate depends on whether the employer is a tax agent.
A foreign organization is recognized as a tax agent
If a foreign employer is a tax agent (is registered in Kazakhstan at the place of a permanent establishment, representative office or branch), then the salary of a non-resident employee is taxed at a rate of 10% (clause 3 of article 655 of TC RK).
Calculation, withholding and transfer of individual income tax, as well as the submission of tax reporting is carried out by such an employer - a tax agent (clause 1 of article 317 of TC RK).
Tax non-residents can apply tax adjustments but cannot apply tax deductions.
An employer-tax agent submits a tax return for each quarter (PIT reporting period for a tax agent) by the 15th day of the second month following the reporting period (Article 657 of TC RK). The withheld tax on income paid in the current month, the employer pays by the 25th day of the next month (clause 5, article 655 of TC RK).
The salary of a foreigner sent to work in Kazakhstan under a staffing agreement may also be taxed at a rate of 10%, even if the direct employer of such a foreigner is not a tax agent (Article 656 of TC RK).
If a non-resident employee performs work duties outside of Kazakhstan, then his income will be taxed in Kazakhstan only if he is recognized as a tax resident of Kazakhstan.
A foreign organization is not recognized as a tax agent
If a foreign employer is not registered in Kazakhstan and is not a tax agent, then the salary of a non-resident employee working in Kazakhstan is taxed at a rate of 20% (Article 658 of TC RK). Such an employee independently submits a tax return for a calendar year (PIT tax period for an individual who pays tax on his own) by March 31 of the next year (Article 659 of TC RK). In this case, the payment of tax must be made within 10 calendar days after the deadline for submitting the declaration, that is, until April 10 inclusive (clause 3 of article 658 of TC RK).
A foreign organization is recognized as a tax agent
If a foreign employer is a tax agent (is registered in Kazakhstan at the place of a permanent establishment, representative office or branch), then the salary of a non-resident employee is taxed at a rate of 10% (clause 3 of article 655 of TC RK).
Calculation, withholding and transfer of individual income tax, as well as the submission of tax reporting is carried out by such an employer - a tax agent (clause 1 of article 317 of TC RK).
Tax non-residents can apply tax adjustments but cannot apply tax deductions.
An employer-tax agent submits a tax return for each quarter (PIT reporting period for a tax agent) by the 15th day of the second month following the reporting period (Article 657 of TC RK). The withheld tax on income paid in the current month, the employer pays by the 25th day of the next month (clause 5, article 655 of TC RK).
The salary of a foreigner sent to work in Kazakhstan under a staffing agreement may also be taxed at a rate of 10%, even if the direct employer of such a foreigner is not a tax agent (Article 656 of TC RK).
If a non-resident employee performs work duties outside of Kazakhstan, then his income will be taxed in Kazakhstan only if he is recognized as a tax resident of Kazakhstan.
A foreign organization is not recognized as a tax agent
If a foreign employer is not registered in Kazakhstan and is not a tax agent, then the salary of a non-resident employee working in Kazakhstan is taxed at a rate of 20% (Article 658 of TC RK). Such an employee independently submits a tax return for a calendar year (PIT tax period for an individual who pays tax on his own) by March 31 of the next year (Article 659 of TC RK). In this case, the payment of tax must be made within 10 calendar days after the deadline for submitting the declaration, that is, until April 10 inclusive (clause 3 of article 658 of TC RK).
Algorithm for paying PIT from income from a foreign employer
* regardless of the tax status of the employee (resident or non-resident)
**check tax liabilities in the country of tax residence
If tax status has changed during the year
As noted above, when withholding an PIT by a tax agent, the tax period is a calendar month. Therefore, the employer needs up-to-date information on the tax status of the employee every month. There are no special provisions on the procedure for recalculation and (or) tax refund in case of a change in the tax status of an employee.
In case of non-prompt receipt of information about a change in the tax status of an employee, tax agents may need to recalculate the amounts of calculated and/or withheld PIT. In particular, a recalculation will be required due to different procedures for applying tax deductions, different tax rates.
In this case, it may be necessary to withhold an additional amount of PIT or return an overdeducted PIT to the employee.
In case of payment of PIT by the employee independently, the tax period is a calendar year. Therefore, the employee declares income and pays tax based on their tax status in the relevant year.
In case of non-prompt receipt of information about a change in the tax status of an employee, tax agents may need to recalculate the amounts of calculated and/or withheld PIT. In particular, a recalculation will be required due to different procedures for applying tax deductions, different tax rates.
In this case, it may be necessary to withhold an additional amount of PIT or return an overdeducted PIT to the employee.
In case of payment of PIT by the employee independently, the tax period is a calendar year. Therefore, the employee declares income and pays tax based on their tax status in the relevant year.
FOR INFORMATION
* Monthly calculation index (MCI) - is established for each year by the budget law. In 2023, the MCI is 3,450 tenge. Accordingly, in 2023, the 14-fold MCI is 48,300 tenge, the 25-fold MCI is 86,250 tenge, and the 94-fold MCI is 324,300 tenge.
* Monthly calculation index (MCI) - is established for each year by the budget law. In 2023, the MCI is 3,450 tenge. Accordingly, in 2023, the 14-fold MCI is 48,300 tenge, the 25-fold MCI is 86,250 tenge, and the 94-fold MCI is 324,300 tenge.
IMPORTANT
In addition to the IIT, the income of employees who are citizens of Kazakhstan or persons permanently residing in Kazakhstan are subject to withholding and payment:
In addition to the IIT, the income of employees who are citizens of Kazakhstan or persons permanently residing in Kazakhstan are subject to withholding and payment:
- mandatory pension contributions in the amount of 10% (Law of the Republic of Kazakhstan dated June 21, 2013 No. 105-V “On pension provision in the Republic of Kazakhstan”);
- contributions to compulsory social health insurance in the amount of 2% (Law of the Republic of Kazakhstan dated November 16, 2015 No. 405-V “On compulsory social health insurance”).
In past years, the MCI was established:
- 2022 - 3,063 tenge;
- 2021 - 2 917 tenge.
Changes are not expected.
Using the buttons below, you can check whether the conditions for recognizing you as a tax resident in the country where you actually work remotely are met, and whether you have an obligation to pay tax on your salary in this country. Also find out whether Kazakhstan has a double taxation treaty (DTT) and its conditions in relation to wages.
Currency control in Kazakhstan
Transfer of wages and other payments in favor of an employee in accordance with an employment contract is possible to his account both in a Kazakhstani bank and in a bank account abroad. However, there may be restrictions in your country of citizenship - select the appropriate country here.
Information about the currency residency of the Republic of Kazakhstan can be found here.