In December 2015 Astana International Financial Center (AIFC) was created by the Constitutional law of the Republic of Kazakhstan. The main
goal of AIFC is to provide financial services of
international level and
standards.
The
AIFC aims to assist in attracting
investment to the economy of
Kazakhstan, create an attractive environment for
investing in financial services, develop capital
market of Kazakhstan and ensure its integration with international capital
markets. AIFC operates under its own jurisdiction on the basis of its own acts, which can be based
on the principles, norms and precedents of the law of England and Wales and
(or) the standards of leading world financial centers. On the AIFC territory, certain preferences are
provided for registered companies
(private
owners)
in the form of free office space and exemption
from certain taxes of
Kazakhstan.
In particular, the following tax benefits are provided for AIFC
participants:
1)
CIT and VAT at AIFC for
financial services
Until January 1, 2066, they
are exempted from paying Corporate Income Tax (CIT)
and VAT received from the provision of the following financial
services in the
AIFC:
·
banking services of an
Islamic bank;
·
reinsurance and insurance
brokerage services;
·
services for investment
management of assets of investment funds, their accounting and storage, as well
as ensuring the issue, placement, circulation, redemption and redemption of
securities of investment funds;
·
brokerage and (or) dealer, underwriting services; and
·
other financial services
determined by the AIFC Act (hereinafter
financial services).
Thus, AIFC participants
providing the above services to both participants and non-AIFC participants are
exempt from CIT and VAT.
2) CIT and IIT in
the AIFC for legal, audit, accounting and consulting services
It is also worth noting that AIFC participants and their foreign
workers under an employment contract are
also
exempted from paying Individual Income Tax (IIT) and CIT on income received from
legal, auditing, accounting, consulting services provided to AIFC bodies, as well
as AIFC participants providing financial services
indicated above.
Thus AIFC participants providing legal, auditing, accounting, consulting services to AIFC agencies, as well as other AIFC participants rendering specified financial services are
also exempt from CIT.
It should be noted that income from
the services
by AIFC participant to
other AIFC participants which do not provide financial services or which are not AIFC participants are not exempt
from CIT.
3) Taxes on shares and dividends at AIFC
Individuals and companies are exempt from the payment of individual
and CIT on income from capital gain shares on stock exchanges i.e., the sale of shares or stakes in the authorized
capitals of the AIFC participants,
with dividends and interest on securities on the stock
exchanges, or out of the
stock exchange, with the dividends on shares or shares in the capital
of AIFC participants and from sources outside the Republic
of Kazakhstan, if individuals are investment residents of
the AIFC and are recognized as a resident of the Republic of
Kazakhstan for the purposes of the Tax Code.
4) Administration and tax revenue accounting and separate accounting of AIFC participants
In
accordance with the Rules of tax administration
and interaction of state revenue bodies with bodies
and AIFC participants on
taxation issues, AIFC participants are entitled to:
-
maintain records, including tax forms, and submit to the state revenue
authorities the necessary documents in English;
- on
paper: in person through the Expat center of AIFC ;
- by
registered mail with notification;
-
in electronic form;
-
carry out tax accounting in functional currency, specifically in accounting, if it remains unchanged during
the tax period;
-
determine the objects of taxation and objects related to taxation, and
calculate taxes and other obligatory payments to the budget in the functional
currency if it remains unchanged during the tax period, with the exception of
tax obligations, for which, in accordance with the Tax Code, fixed rates are
set in tenge.
AIFC
participant Tax Calculation Currency
If
the AIFC taxpayer calculates taxes and other obligatory payments
to the budget in a functional currency other than tenge, the amount of taxes
and other obligatory payments to the budget payable is determined at the market
currency exchange rate determined on the last business day preceding the date
of tax transfer to the
budget.
Tax
accounting policy
The AIFC participant applies
the tax accounting policy approved by one of the following methods (at the
choice of the AIFC participant):
1) AIFC participant independently,
taking into account the requirements of the Tax Code;
2)
Special Provision No.1 of AIFC providing
tax accounting policy for AIFC participants
receiving income from financial services, and for AIFC participants, providing legal, auditting, accounting,
consulting services for
AIFC authorities, as well as other AIFC participants rendering abovementioned financial services.
Separate
accounting of income by AIFC participants
According to the Rules of conducting by AIFC participants separate accounting of revenue,
subject to exemption from CIT and subject to taxation, as well as
costs to be deductible AIFC participant provides separate records of income tax for the reporting period:
1)
attribution to income:
- subject
to exemption from CIT - direct income;
- taxable
- other income;
2)
reflection of information on direct income and other income in tax
registers.
Direct
and other income
The Rules stipulate that direct income recognized as income:
1)
received from activities from the provision of financial services
in the AIFC in accordance with the agreements (contracts/deals) concluded by
the AIFC participant in the AIFC.
2)
derived from legal, auditting, accounting, consulting's services under agreements (contracts/deals) concluded by AIFC participants on the territory of AIFC with AIFC authorities and AIFC participants which provide financial services.
Under other
income, the Rules recognize
all income of the AIFC participants that is not recognized as direct income and is to be
included in the total annual income in accordance with the tax legislation of
the Republic of Kazakhstan.