In more detail

Corporate income tax rate

The general rate of corporate income tax will remain at 20%.

However, from 2026, the corporate income tax rate for banks and gambling companies will increase to 25%.

Corporate income tax deductions

From 2026, no corporate income tax deductions may be claimed for payments to taxpayers using the beneficial tax regime of a simplified tax return.

The declared purpose of this change is to combat unjustified business fragmentation. However, the side effect would be that legitimate small and medium-sized businesses will be adversely affected too. This change has resulted in criticism from the business community.

VAT rate

From 2026, the general VAT rate will be increased from 12% to 16%.

Medical services and medicines were previously exempt. Now, they will be subject to VAT at a rate of 5% from 2026 and 10% from 2027 (except those that are part of the state’s free-of-charge medical assistance and mandatory medical security, which will continue to be exempt).

Finally, the VAT registration threshold will be reduced by 50% and will now be KZT 41,480,000 during a calendar year.

Personal income tax rates

Previously, there was a flat 10% rate of personal income tax in Kazakhstan.

The New Tax Code introduces a progressive scale of tax rates, as detailed below:

1. Annual income of up to KZT 35,258,000 will be subject to a rate of 10% and income exceeding this threshold will be taxed at 15%.
2. Dividends in the amount of up to KZT 954,040,000 will be subject to a rate of 5% and anything exceeding this threshold will be taxed at 15%.
3. Independent contractors with an annual income of up to KZT 954,040,000 will enjoy a reduced 10% rate. Anything exceeding this amount will be taxed at 15%.

International taxation

The New Tax Code introduced a number of changes to international taxation rules, including the following:

1. Capital gains tax exemption

Previously, with limited exceptions (which primarily related to oil and gas production and mining), foreign shareholders of local companies were exempt from income tax on the capital gain upon selling their shares if they owned the shares for more than three years. The New Tax Code removes this exemption.

2. Withholding tax for corporate dividends

The New Tax Code reduces the withholding tax rate on dividends distributed by local companies to foreign shareholders from 15% to 5% on the condition that the amount of dividends does not exceed KZT 954,040,000. Any excess will continue to be taxed at 15%.

3. Interest

The New Tax Code reduces the withholding tax rate on interest paid by local borrowers to foreign lenders from 15% to 10%. Because 10% is the typical rate provided in most double tax treaties, this change effectively makes the use of tax treaties in relation to interest payments unnecessary.

4. Treaty clearance procedures

Previously, to apply tax treaty benefits to payments in favor of related entities from countries whose double tax treaty with Kazakhstan has been amended by the OECD MLI,² the recipient of payments needed to demonstrate that it was subject to corporate income tax in its home country at an effective rate of at least 15%.

There was an argument that this condition contradicted double tax treaties and, for this reason, it was unjustified. The New Tax Code removes this condition.

For further information and to discuss what the above developments might mean for you, please get in touch with your usual Baker McKenzie contact.

1 Tax Code of the Republic of Kazakhstan dated 18 July 2025 No. 214-VIII ZRK.

2 Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.