Potential Changes to Taxation of Dividends in Kazakhstan

Morgan Lewis
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Morgan Lewis

During an address to the Parliament’s Mazhilis on 11 January 2022, the president of Kazakhstan instructed the respective state bodies to “secure a strict monitoring, inspection, and control of all transactions and persons who unjustifiably diverts funds out of the country.” In conjunction with this address, as it follows from the government’s papers, Kazakhstan plans to revise the exemptions (incentives) related to the taxation of dividends, including dividends paid to non-residents.

At the moment, the magnitude of the proposed legislative revisions is unknown. It is possible that the revisions will affect the so-called three-year rule, i.e., a rule whereby an exemption from the taxation of dividends applies if the respective shares (participatory interest) were held for more than three years (with certain exceptions).

However, it cannot be ruled out that the revisions will be more substantial. For instance, they may affect the term “dividends,” the tax rates (the current standard rate applicable to non-residents is 15%), or the rules of application of the bilateral double tax treaties (as it applies to reduced dividend tax rates).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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