Реферат: Налогообложение Резидентов и Неризидентов в Казахстане

contents

Introduction

1 THEORETICAL ASPECTS OFFISCAL POLICY: TAXATION

1.1 Fiscal policy 1.2 Taxation 1.2.1 MAJOR TAXES and DUTIES 2 Features of Residentsand Nonresidents taxation

2.1. Features of Resident

2.2Permanent establishment of a nonresident

2.3Nonresidents’ income from sources in theRepublic of Kazakhstan

2.4Procedure for the taxation of the incomeearned by nonresident legal entitiesdoing business without creating a permanent establishment in the Republic ofKazakhstan

2.4.1 Procedure and deadlines for the payment ofincome tax at the source of payment

2.4.2 Provisionsspecific to the calculation and payment of income tax on

capital gains from therealization of securities

2.5 Procedure for the taxation of theincome earned by nonresident legal entitiesdoing business through a permanent establishment

2.5.1 Procedure for taxation of the net income of a nonresidentlegal entity from doingbusiness through a permanent establishment

2.5.2 Procedure for taxation of the income of a nonresident legalentity in certain cases

2.6 Procedure for the taxation of the income of income ofnonresident individual

2.6.1Procedure for calculation and payment of the incometax on a nonresident individual whose activities lead to the creation of apermanent establishment

2.6.2Procedure for the taxationof a nonresident individual’s income in certain cases

2.6.3Procedure and deadlines forprepayment of the individual income tax

2.6.4Statement of anticipated individual income tax and individual income taxreturn

2.7 Specialprovisions regarding international agreements

2.7.1Proportionaldistribution of expenses method

2.7.2Direct deduction ofexpenses method

2.7.3Procedure for payment of the income tax on income earned by nonresidents fromactivity in the Republic of Kazakhstan not leading to the creation of a permanentestablishment

2.7.4Procedure for theapplication of an international agreement with respect to taxation of incomefrom providing transportation services in international shipping

2.7.5Procedure for theapplication of an international agreement with regard to the taxation ofdividends, interest, and royalties

2.7.6Procedure for theapplication of an international agreement with regard to the taxation of netincome from doing business through a permanent establishment

2.7.7Procedure for theapplication of an international agreement with regard to the taxation of otherincome from sources in the Republic of Kazakhstan

2.7.8Generalrequirements for the filing of a request to apply the provisions of aninternational agreement

Conclusion

Appendix A

Appendix B

THE LIST ofUSED SOURCES

Introduction

The taxes are anecessary part economic activity in a society from the moment of occurrence thestates. Development and change of the forms of the state system always lead totransformation of tax system. Taxes – is basic sources of incomes of the statein a modern civilized society. Besides this especially financial function,taxes are used for economic influence of the state on public manufacture, itsstructure, and on condition of scientific and technical progress.Among economic levers, through which the stateinfluences market economy, the important place belongs to the taxes. Inconditions of market economy any state widely uses tax policy as the regulatorof influence on the negative event in the market. The taxes, as well as all taxsystem, are the powerful tool of management of economy in terms of the market.The application of the taxes is one of economic methods of management andmaintenance of interrelation of nation-wide interests with commercial interestsof the businessmen and enterprises, independent from departmentalsubordination, patterns of ownership and legal form of the enterprise.

With the help of thetaxes determined the mutual relation of the businessmen, enterprises of allforms is the properties with the state and local budgets, with banks, and alsowith higher-level organizations. Through the taxes the foreign trade activitiesare adjusted, include the attraction of the foreign investments.

The tax system in Kazakhstan isbased on the Tax code enacted by the president’s Decree that has the force ofLaw on Taxes and other obligatory Payments to the Budget The taxes are thebasic source of formation of a profitable part of the budget of Republic ofKazakhstan. Not last role in it plays the taxes from the nonresidents.According to the legislation on Kazakhstan foreign citizens — residents in theRepublic of Kazakhstan (RK) are subject to individual income taxation on theirworldwide income. Foreign citizens — nonresidents are subject to taxation onlyon income received from Kazakhstan sources. The following types ofnonresidents’ income, among others, should be considered as received fromsources in Kazakhstan:

·

Income received from operationsin the RK under individual labor agreements (contracts) or under otheragreements of a civil-legal nature;

·

Directors fees and /or otherpayments received by members of aboard of a resident legal entity, regardlessof the place of the actual performance of their functions;

·

Fringe benefits received inconnection with their assignment to Kazakhstan its rates;

Payment and other conditions are regulated bythe chapters 7, 10, 12, 15, 18 and other of Law on Taxes and other obligatoryPayments to the Budget. Taxation of foreign citizens in the RK is alsoregulated by Conventions (agreements) on the avoidance of double taxation. Incase there is a Tax Convention signed between Kazakhstan and the other foreignstate, which may be applicable to a foreign employee, then the status of residencyis determined in compliance with this Convention. The Tax Conventions do notregulate procedure of filing and regularity of tax payments. However, based onthe status of residency of a foreign employee determined by the Tax Conventionsspecific reporting and taxation requirements stipulated by the Kazakhstan taxlegislation should be fulfilled with respect to residents or nonresidents inthe RK. In case the foreign employee is a resident of the other foreign state,then he/she should be considered as a nonresident for taxation purposes inKazakhstan. In this case the foreign employee should file a Certificate on theEstimated Personal In-come Tax and pay personal income tax through the monthlytransfer of advance payments. In case a foreign employee is considered as aresident of Kazakhstan, then the statutory rules do not contemplate filing ofthe Certificate on the Estimated Personal Income Tax and contemplate in-cometax payment once a year at the time of filing the income tax return from anindividual for a year.

1.

THEORETICAL ASPECTS OF FISCALPOLICY: TAXATION1.1 Fiscal policy

Fiscal (lat. fiscalis — state) policy(politics) — is the aggregate of financial measures of the state on regulationof the governmental incomes and expenditures. It changes significant dependingon put strategic tasks, as for example, anticrisis regulation, maintenance highemployment, struggle with inflation.

The modern fiscal policy definesbasic directions of use of financial resources of the state, means of financingand main sources of updating of treasury. Depending on concrete — historicalconditions in different countries such policy (politics) has its own features.At the same time in Developed Countries is used set of common measures. Itincludes straight and indirect financial methods of regulation of economy.

To straight ways concern the meansof budget regulation. By the means of the state budget are financed:

1)

expense on expanding ofreproduction;

2)

unproductive expenditures of thestate;

3)

development of an infrastructure,scientific researches and etc.:

4)

realization of structural policy(politics);

5)

the support of military producerscomplex etc.

With help of indirect methods stateinfluences on financial opportunity of the manufacturers of the goods andservices and on the demand sizes of customer. The important role here plays theSystem Taxation. Changing the rates of the taxes on various kinds of theincomes, giving tax privileges, reducing free minimum of the incomes etc.,state aspires to achieve probably steadier rates of economic Growth and toavoid sharp rises and falls of manufacture.

To number of the important indirectmethods assisting accumulation of the capital, is the policy (politics) of theaccelerated amortization. On the essence, the state exempts the businessmenfrom payment taxes with part of the profit, is artificial redistribute it inamortization fund. So, in Germany in the beginning 70 years on a number ofindustries on amortization it was authorized to write off till 20-30 of % ofcost of a fixed capital in one year. In Great Britain in first year ofintroduction in using of the new equipment it was possible to deduct in fund ofamortization 50 % of cost new instruments of manufacture.

However in these cases theamortization is written off in the sizes, that significant exceeding the validdeterioration basic capital, in consequences the raise of price on made withthe help of this equipment production. If accelerated amortization expandsfinancial opportunities of the businessmen, simultaneously it deteriorates thecondition of realization of production and reduces purchasing power ofpopulation.

Depending on character of use directand indirect financial methods distinguish two kinds of fiscal policy of thestate:

a)

Discretion

b) Non-discretion.

a) Discretion (lat. discrecio- working on itself discretion) the policy (politics) means the following. Thestate consciously regulates its expenditure and taxation with the purposes ofimprovements economic of situation of the country. At the same time governmenttakes into account the following checked up on practice functional dependencesbetween financial variable.

The first dependence: the growth of the state expenditures increasescumulative demand (consumption and investments). Thereof increase output andemployment of the population. Is important to take into account, that stateexpenditures influence on cumulative demand the same as to investments (work asthe animator of investment which has developed J. Keynes). The animator state expenditures MG shows, how much growstotal national product D GNP in result of increase of these expenditures DG:

D GNP =DG ' MG

It is natural, that at reduction ofstate expenses G reduces the volume of GNP.

Other functional dependence shows, thatincrease the sums of the taxes are reduced the personal available income ofhousehold. In this case are reduced demand and volume of production andemployment of a labor. And on the contrary: decrease (reduction) of the taxesconducts to increase of the consumer expenditures, production and employment.

The change of the taxation givesmultiply effect. However the multiplier of the taxes is less than themultiplier of the investments and state expenditures. Actually increase in unitof a gain of the investments (and state expenditures) is directly influenced onincrease in the volume of the GNP. At reduction of taxes, grows availableincome, however part it goes on the consumption, and stayed share is spent forthe savings.

Mentioned functional dependences areused in discretion policy (politics) of the state for influence on businesscycle. Certainly, this policy (politics) differs on different phases of acycle.

For example, at crisis the policy (politics) of economic growth will becarried out.

In interests of growth GNP the state expenditures are increased, thetaxes are reduced, and the growth of the expenditures is combined withreduction the taxes so that multiply effect on state expenses was more thanmultiply effect of the taxes. A result is reduction of recession ofmanufacture.

When there is an inflationary growthof manufacture (rise, induced by surplus of demand), the government will carryout policy (politics) that hold back business activity — reduces the stateexpenditures, increases the taxes. These measures are combined so that multiplyeffect of reduction of the expenditures was more, than multiplier of growth ofthe taxes. In result the cumulative demand is reduced and volume GNPaccordingly decreases.

b) The second kind of fiscalpolicy — non-discretion, or policy of the automatic (built — in) stabilizers.The automatic stabilizer — economic mechanism, which without assistance of thestate eliminates an adverse situation on different phases business cycle. Basicbuilt — in stabilizers are tax receipt and social payments that are carried outby the state.

On a phase of rise, naturally, theincomes of firms and population grow. But at the progressive taxation the sumsof the taxes increased even faster. In this period the unemployment is reduced,well being of needy families is improved. Hence, decrease the payments of theunemployment benefits and others social expenditures of the state. In a resultthe cumulative demand is reduced, and it constrains economic growth.]

Thetendency of transfer payment spending to rise during recessions and fall duringexpansions results from the bases on which people qualify to receive thesepayments. People qualify to receive welfare programs only if their income fallsbelow a certain level. They qualify for unemployment compensation by losingtheir jobs. When the economy expands, incomes and employment rise, and fewerpeople qualify for welfare or unemployment benefits. Spending for thoseprograms therefore tends to fall. When economic activity falls, incomes fall.people lose jobs, and more people qualify for aid, so spending for these programsrises.

Taxes affect the relationship between real GDPand personal disposable income they therefore affect consumption expenditures.They also influence investment decisions. Taxes imposed on firms affect theprofitability of investment decisions and therefore affect the levels ofinvestment firms will choose. Payroll taxes imposed on firms affect the costsof hiring workers; they therefore have -impact on employment and on the realwages earned by workers.

Exhibitbelow compares government revenues to government expenditures since I996. Wesee that government spending in Kazakhstan has systematically exceededrevenues, revealing an underlying fiscal deficit between 4 percent and almost 9percent of GDP, entailing substantial public sector borrowing requirements.Until 1994, fiscal deficit had essentially financed through monetary expansionby the Central bank, with a highly detrimental effect on the rate of inflationduring the period. Since then, the National Bank of Kazakhstan has adopted amore independent monetary policy, and fiscal deficits have basically financedeither by the proceeds from privatization of state assets or by borrowingforeign loans.

Sources:Statistics Agency of RK, 2001

On aphase of crisis tax receipts automatically fall and reduced the sum ofwithdrawals from the incomes of firms and households. Simultaneously growpayments of social character, including unemployment benefit.

At result the purchasing power of the population is increased, thathelps to overcoming recession of economy.

From mentioned above it is visible,how large place occupies taxation in financial regulation of macroeconomic. Sowe can conclude that the main direction of fiscal policy of the state isimproving the legislations and practice collection of tax.

Let's take example for the mostimportant version of the taxes – the income tax, which is established on theincomes of physical persons and on profit of firms. How the size of this tax isdefined (determined)?

First is counted the total income — sum of all incomes that are getting by the physical and legal entities fromdifferent sources. From the total income by the legislation it is usual it isauthorized deduct: 1) industrial, transport, the travelers and advertisingexpenditures; 2) various tax privileges (free minimum of the incomes; forexample, in USA in 1990 this minimum was 2050 dollars; the sums of thedonations, privilege for the pensioners, disable people etc.). Thus, taxedincome is a difference between the total income and the specified deductions.

It is important to establish optimumtax rate (size of the tax on unit of taxation). The following rates of the taxdiffer:

· hard, which are established on unit of object independently on itscost (for example, motor vehicle);

· proportional, i.e. uniform percent(interest) of payment of the taxesindependently on the sizes of the incomes;

· progressive, growing with increase of the incomes.

The practice shows, that at theextremely high rates of taxes discourages to work and to the innovation. Sharpincrease in 60-70-еyears in western countries of tax burden hasresulted the negative consequences. It has caused " Tax revolts ",wide evasion from the taxes, promoted outflow of the capitals and flight of theaddressees of the high personal incomes in the countries with one lower levelof the taxation.

As it is known, in 70’sneo-conservators have put forward the theory of Supply. Its authors haveestablished, that growth of the taxation renders adverse influence on dynamicsof manufacture and incomes. Increase of the taxes at the expense of increase oftheir rates on certain stage does not compensate reduction of receipts in thestate budget because of fast narrowing taxed incomes, and then it can beaccompanied also by reduction of total sums of the budget incomes. In a resultthe high taxes render constraining influence on the offer of the capital, workand savings.

Basic task of economic policyrepresentatives of the theory of Supply consider determining the optimum ratesof taxation and both tax privileges and payments. Decrease (reduction) of thetaxes is considered as a means capable to ensure Long-term economic growth andstruggle with inflation. It will strengthen aspiration to receive huge incomes,will render the stimulating influence will increase by growth of production.

1.2 Taxation

As required by the Constitution of Kazakhstan, within the tax systemof Kazakhstan, any taxes, levies, and other obligatory payments may beestablished only by the laws enacted by the Parliament of the Republic ofKazakhstan. Parliament may not delegate its constitutional powers to establishthe tax system, taxes or levies, and sanctions for tax violations to thegovernment or any other authority. Under the Constitution, laws in general andtax laws in particular enter into effect after the President signs them.

Tax legislation of the Republic of Kazakhstan consists of the TaxCode and Normative Legal Acts, and is regulated by International Agreements.Tax legislation is based on the principles of the mandatory nature of paymentof taxes and other mandatory payments to revenue, certainty and equity oftaxation, unity of the tax system and publicity of tax legislation. The TaxCode of the Republic of Kazakhstan establishes Kazakhstan taxes, levies, andgeneral tax principles. A tax takes largest share of budget revenues (AppendixA).

Companies formed in Kazakhstan under Kazakhstan law are taxed on world-wideincome. Income earned by a foreign company or person through a permanentestablishment in Kazakhstan is taxed in Kazakhstan. Branches of foreignentities are taxed on Kazakhstan source income (where services are performed,not where paid for). Income from a Kazakhstan source to a non-resident and notrelated to a permanent establishment, is taxed at the source of the payment,and further, on the total income without deductions, excluding labor that istaxed as personal income.

Double Tax TreatiesIn December 1996, a treaty on the Avoidance of Double Taxationbetween the United States and Kazakhstan came into force. A number of treatieson the avoidance of double taxation were ratified in 1998. This includesagreements with the following countries: the Czech Republic (November 1998),France (November 1998), Sweden (July 1998), Bulgaria (July 1998), Turkmenistan(July 1998), Georgia (July 1998), Republic of Korea (July 1998), Germany(November 1998), and Belgium (November 1998).

Kazakhstan hasdouble tax treaties with more than 20 countries, which generally follow theOECD Model Income Tax Convention.

Withholding Tax Rates for Treaty Countries

Dividends

Country of Recipient

Major Rate
(%)

Legislative Rate
(%)

Major Holding
(%)

Interest

(%)

Royalties
(%)

Azerbaijan

10

15

-

10

Belarus

15

-

10

15

Bulgaria

10

15

-

10

Canada

5

15

10

Czech Republic

10

15

-

10

Germany

5

15

25

10

10

Hungary

5

15

25

10

India

10

15

-

10

Iran

5

15

20

10

Italy

5

15

10

10

Kyrgyzstan

10

15

10

Lithuania

5

15

25

10

Mongolia

10

15

-

10

10

Netherlands

5

15

10

10

Pakistan

12.5

15

10

12.5

15

Poland

10

15

20

10

Russia

10

15

-

10

South Korea

10

15

10

10

Sweden

5

15

10

10

Turkey

10

15

-

10

10

Ukraine

5

15

25

10

10

United Kingdom

5

15

10

10

United States

5

15

10

10

Uzbekistan

10

15

-

10

10

* Belgium

5

15

10

10

Georgia

15

-

10

10

Iran

5

15

20

10

10

Mongolia

-

-

Rumania

10

-

10

10

Turkmenistan

10

15

-

10

10

France

5

15

10

10

Czech Republic

10

15

-

10

10

South Korea

5

15

10

10

a. Source:

Guide on Taxation and Investment in Kazakhstan in 2002, Deloitte & Touche

Notes:

*double taxation treaties with 9 countries listed below are ratified only by Kazakhstan.

Tax payment is based on the calendar year, with annual declarationsdue by end March of the following year (and tax payment within ten days ofdeclaration). Annual financial statements are due April 30 following thereporting year.

Kazakhstan Tax Code, enacted in April 1995, currently apple aninternational taxation model based on principles of equity, economic neutralityand simplicity. The Parliament approved amendments to the Tax Code by a lawdated July 16, 1999; the law was published and became effective August 3, 1999. Following amendments were made in 01 July2001 and the New Tax Code has become effective January 1, 2002. The Ministry of State Revenues issued taxinstructions clarifying the determination and payment of taxes. Residentpersons and local enterprises pay taxes on worldwide income; foreignenterprises and non-residents pay taxes only on income from local sources. Oneis a resident and tax-liable for both direct and indirect income in Kazakhstanif he/she has been physically present in Kazakhstan for 183 days in anyconsecutive 12-month period.

The penalty for violation of foreign currency regulationsconstitutes 20 percent of the transaction amount. There are no limitations onthe penalty amount to be charged.

All tax laws mustbe contained in the Tax Code, which covers taxation at all levels ofgovernment: central, oblast and local.

1.2.1. MAJOR TAXES and DUTIES

Enterprise Profits Tax is levied on legal entities at the rate of30%, but 20% in SEZs, and 10% on direct use of land as a sole production asset.All Kazakhstan and foreign legal entities doing business through a permanentestablishment must register with the tax authorities regardless of whether theywill pay taxes in Kazakhstan or not. Enterprise-related provisions in the TaxCode include: withholding on dividends and interest (15%); taxes on royalties,rentals and service fees; excise and local taxes, and land (10%), property andvehicle taxes; business registration fees, and fees to engage in selectedactivities. Branches of foreign enterprises operating in Kazakhstan pay a«branch profits tax» applied to their after-tax income. Most businessexpenses are deductible, including wages, but there are limits on deductibilityof reserves for bad debts (actual losses deductible), and research anddevelopment. Depreciation is based on pooled asset accounts. Losses can becarried forward for three years.

Individual Income Tax:Individuals resident inKazakhstan are subject to personal income taxation on their worldwideincome. Nonresident individuals are subject totaxation only on income from Kazakhstan sources. Marginal rates after asmall basic deduction, range from 5% to 30% with top rates applied to incomesover $33,700 per year. Most tax is withheld at the source of payment. The taxapplies to non-residents' income that is sourced in Kazakhstan only, and toresidents' income worldwide, including interest, dividends, capital gains andother income. Taxable income from a Kazakhstan source includes income receivedunder a contract for work or from provision of services, when performed inKazakhstan, regardless of where it is actually paid. Foreigners must registerwith local tax authorities and receive a Tax Registration Number within tendays of beginning work under contract in Kazakhstan, or when they becomeotherwise tax liable as a resident, or receive Kazakhstan sourced income at 500times a monthly computed basis (about $4,500/year). Foreigners paid abroad mustmake quarterly estimated payments of income tax and a yearly income taxdeclaration (due March 31st following the tax year). Foreigners paid locallywill have their individual income tax withheld at the source of payment andsent to the Budget by the employers.

Value Added Tax (VAT)applicable to all goods, work and services, including imports toKazakhstan. The VAT on imports is usually 16%, and applies to services andgoods. Credit for VAT paid on inputs, including Capital investment, is offsetagainst tax on sales. No VAT is paid on exports except to other CIS countries,where by agreement, exports are fully taxed and imports are not taxed (originprinciple).

The article provides that sales of textile, sewing, leather processing, and shoeindustry products will be zero-rated (0 percent VAT on sales) for residents ofKazakhstan for sales within Kazakhstan. This change represents an importantstimulus for the domestic light industry development.

Natural Resources Taxes include: bonuses paid for the right toresource exploration, royalties paid for the privilege of exploitation andexcess profits taxes paid when profits exceed amounts anticipated in settingroyalties. Tax rates are set by the Cabinet of Ministers and differ amongresources, and are unique to each location and taxpayer. Prohibited: specialbenefits including lock-in of profits tax rates at conclusion of a ProductionSharing Agreement (contract).

Securities Transaction Taxon new issues of non-government securities,including stocks and bonds: 0.5% of nominal value. Proceeds from secondarytransactions are taxed at 0.3%, and 0.1% for government securities. Issuer isliable for tax on initial issues; buyer is liable for tax on secondarytransactions.

UnifiedLand Taxis levied on peasantsand farmers who use private or leased land in their business. Thepayers of the unified land tax are exempt from corporate income tax, VAT onsales, land tax, transport tax, and property tax. The rate of the unified landtax is set at 0.1 percent of the appraised land value (determined by the LandCommittee).

Other Taxes: A fee for the use of the words «National,»«Kazakhstan,» «Republic,» and their derivativeshas been included into the list of taxes in the Tax Code, Business assets aretaxed at 0.5% yearly, and individual-owned real estate is taxed at 0.1%.Vehicles are taxed annually depending on vehicletype and engine size.

Double Taxation. A foreigner won't be taxed in Kazakhstan if:

he/she is present in the country for less than 183 days in a year and his/her income is paid by a non-resident of Kazakhstan and his/her income is not taken as a deduction in computing corporate income tax by a permanent establishment in Kazakhstan.

In not distinctcases, where the person is liable to taxation by law in his/her own country andin Kazakhstan, he/she is deemed to reside where he/he has a permanent home, orif he/she has a permanent home in both places, where his/her personal andeconomic relationships are centered, or in case this cannot be determined,where he/she currently lives and works («habitual abode»). Anindividual may offset income tax paid in Kazakhstan against tax owing inhis/her home country.

Additional Payments applicable to businesses

Pension Contributions:Employers must pay two categories of pension payment:

15%of payroll paid by companies monthly to the State Center for Pension Paymentsto be spent on existing pensioners and on state pensions for current employees; ?

10% of employees'gross salaries, not affecting the net pay, transferred for each employee to anaccumulation pension fund of that employee's choice.

Excise:Excise duty isimposed on taxable items produced in, or imported into, Kazakhstan as well ason certain types of activities. Excise duty is imposed on alcohol and tobaccoproducts, motor fuels, diesel, motor vehicles, salmon and sturgeon roe,firearms, crude oil and jewelry. Excise duty is also imposed on gamblingbusinesses and lotteries. Taxable Products(1) Alcohol

Excise duty is imposed on alcoholarticles covered by Harmonized System numbers 2204 (wine from fresh grapes),2205 (vermouth and other wines from fresh grapes flavored with plants oraromatic substances), 2206 (other fermented beverages), 2207 and 2208 (ethyl alcohol, spirits, liqueurs and otheralcoholic beverages). Excise duty foralcohol products is levied at various rates in KZT per liter.

(2) Tobacco

Excise duty isimposed on tobacco articles covered by Harmonized System numbers 2402 (cigars,cheroots and cigarettes), 2403 (other manufactured tobacco and tobaccosubstitutes, tobacco extracts and essences). Excise duty for tobacco products is levied at various rates in Euros per1000 items.

(3) Motor Fuels

Excise duty isimposed on certain motor fuels covered by Harmonized System number 2710(diesel, gasoline and jet engine fuels). Excise duty for motor fuels is levied at various rates in EURO per 1000kg.

(4) Motor Vehicles

Excise duty isimposed on motor vehicles covered by Harmonized System numbers 8703 (motor carsand other vehicles designed for the transportation of persons). Excise duty formotor vehicles is levied at various rates normally in EURO per vehicle’s enginebulk or customs value.

Such taxes as corporate income tax, value added tax, personal incometax, and excise taxes account for the largest portion of budget revenues(Appendix B).

2. Features of Residents andNonresidents taxation

2.1Features of Resident

Residents of the Republic ofKazakhstan are individuals who reside permanently in the Republic ofKazakhstan, or whose center of vital interests is located in the Republic ofKazakhstan. An individual shall be considered to reside permanently in theRepublic of Kazakhstan for the current tax period if he spends at least 183 calendardays in any consecutive 12-month period ending in the current tax period in theRepublic of Kazakhstan. An individual shall also be considered to residepermanently in the Republic of Kazakhstan for the current tax period if thenumber of days spent in the Republic of Kazakhstan in the current tax periodand the preceding two tax periods, determined by applying the followingcoefficients to each tax period, is equal to at least 183 calendar days:

1 – the number of days spent in the current tax period;

1/3 – the number of days spent in the tax period immediately precedingthe current tax period;

1/6 – the number of days spent in the tax period before the oneimmediately preceding the current tax period.

If an individual has lived in theRepublic of Kazakhstan in the current tax period for fewer than 30 calendardays, said individual shall not be considered to reside permanently in theRepublic of Kazakhstan. In addition,an individual shall be considered a nonresident for the period following thelast day spent in the Republic of Kazakhstan, unless said person becomes aresident in the year following the year in which the person’s stay in theRepublic of Kazakhstan ended.

An individual’s center of vitalinterests shall be considered to be located in the Republic of Kazakhstan ifthe following conditions are met simultaneously:

1) an individual is a citizen of the Republic of Kazakhstan or has apermit to reside in the Republic of Kazakhstan (residency permit);

2) an individual’s family and/or close relatives reside in the Republicof Kazakhstan;

3) real property owned by an individual and/or members of his family orheld by them on some other basis is located in the Republic of Kazakhstan, andthe individual has access to it at any time for use as a residence for himselfand/or members of his family.

Individuals who fall into thefollowing categories and who are citizens of the Republic of Kazakhstan or whohave filed an application for citizenship of the Republic of Kazakhstan or fora permit to reside permanently in the Republic of Kazakhstan without becoming acitizen of the Republic of Kazakhstan, shall be considered residentindividuals, regardless of the time spent in the Republic of Kazakhstan and anyother criteria provided below:

persons sent abroad on officialbusiness by government agencies, including employees of diplomatic and consularinstitutions and international organizations, as well as family members of saidindividuals;

crew members of means of transportbelonging to legal entities or citizens of the Republic of Kazakhstan, whichmake regular international trips;

military and civilian personnel atmilitary bases and those serving in military units, groups, contingents, orformations deployed outside the Republic of Kazakhstan;

persons working at facilitieslocated outside the Republic of Kazakhstan which are owned by the Republic ofKazakhstan or constituent territories of the Republic of Kazakhstan (includingon the basis of concession contracts);

students and persons undergoingon-the-job and practical training outside the Republic of Kazakhstan foreducational purposes or to gain practical experience, for the entire period ofinstruction or practical training;

teachers and scientific personnellocated outside the Republic of Kazakhstan for the purpose of teaching,consulting, or performing scientific work, for the entire period they areteaching or performing said work.

Also legal entities established inaccordance with the legislation of the Republic of Kazakhstan, and/or otherlegal entities whose effective headquarters (or actual administrative offices)are located in the Republic of Kazakhstan, shall also be considered residentsof the Republic of Kazakhstan. Effective headquarters (or actual administrativeoffices) shall be understood to mean the place where the principal managementtakes place and where strategic commercial decisions are made which arenecessary for the performance of a legal entity’s entrepreneurial activity.

2.2 Permanent establishment of a nonresident

A permanent establishment of a nonresident in the Republic ofKazakhstan shall be defined as a place of business through which thenonresident performs all or part of its entrepreneurial activity, includingactivity performed through an authorized person, and specifically:

1) any place of doing businessrelated to the production, processing, assembly, packaging, delivery, orrealization of goods, regardless of the duration of the activity;

2) any management office, branch,division, representative office, bureau, office, agency, factory, workshop,production shop, laboratory, store, or warehouse of a nonresident, regardlessof the duration of the activity;

3) any place of doing businessrelated to the extraction of natural resources, including the extraction ofhydrocarbons: an underground mine, a quarry, an oil and/or gas well, anopen-pit mine, land-based or offshore derricks and/or wells, regardless of theduration of the activity;

4) any place of doing business (including monitoring or supervisoryactivity) related to a pipeline, gas line, the exploration and/or developmentof natural resources, the installation, set-up, assembly, start-up, adjustment,and/or servicing of equipment, regardless of the duration of the activity;<