Navigating the complexities of employment taxation is a critical aspect of operating in any country, and Kazakhstan is no exception. The Kazakh tax system imposes specific obligations on employers regarding payroll taxes and social contributions, as well as requirements for withholding income tax from employee salaries. Understanding these regulations is essential for compliance and smooth business operations when employing individuals within the country.
Both local and foreign companies employing staff in Kazakhstan must adhere to the established tax framework. This includes correctly calculating and remitting various taxes and contributions to the relevant state funds and tax authorities. Compliance ensures legal operation and avoids potential penalties or disputes.
Employer Social Security and Payroll Tax Obligations
Employers in Kazakhstan are responsible for several types of social contributions and taxes based on their employees' remuneration. These contributions fund various social programs, including pensions, social insurance, and health insurance.
Key employer obligations include:
- Social Tax: A tax levied on the employer based on employee salaries, with certain deductions allowed.
- Social Contributions: Contributions made by the employer to the State Social Insurance Fund.
- Mandatory Pension Contributions (MPC): While primarily an employee deduction, employers are responsible for withholding and remitting these contributions.
- Mandatory Social Health Insurance Contributions (MSHI Contributions): Contributions made by the employer to the Social Health Insurance Fund.
The rates for these contributions are subject to change and may have thresholds or caps. For 2025, the standard rates are expected to be:
| Contribution Type | Employer Rate | Basis | Notes |
|---|---|---|---|
| Social Tax | 9.5% | Gross salary less MPC | Subject to minimum/maximum thresholds |
| Social Contributions | 3.2% | Gross salary less MPC | Subject to minimum/maximum thresholds |
| MSHI Contributions | 3.0% | Gross salary | Subject to maximum threshold |
| Mandatory Pension (Employer) | 1.5% | Gross salary | New contribution starting 2024, continues |
Note: Specific thresholds (minimum/maximum calculation bases) apply and are typically linked to the Monthly Calculation Index (MCI) and Minimum Wage (MW) set annually by the government.
Income Tax Withholding Requirements
Employers are mandated to act as tax agents for their employees regarding Personal Income Tax (PIT). This involves calculating, withholding, and remitting PIT from employee salaries and other taxable benefits before payment.
The standard PIT rate for residents is a flat rate applied to taxable income. Non-residents may be subject to different rates depending on their residency status and the nature of the income.
For 2025, the standard PIT rate is expected to remain at 10% for residents on their taxable income.
Taxable income is generally calculated as gross salary and other benefits, less certain deductions and allowances permitted by the tax code. The employer performs this calculation monthly based on the employee's submitted information and applicable tax laws.
Employee Tax Deductions and Allowances
Employees in Kazakhstan are entitled to certain deductions and allowances that reduce their taxable income, thereby lowering their PIT liability. Employers must consider these when calculating the monthly PIT withholding.
Common deductions and allowances include:
- Standard Deduction: A basic monthly deduction available to all employees. This amount is typically linked to the Monthly Calculation Index (MCI).
- Deduction for Mandatory Pension Contributions (MPC): The amount contributed by the employee to their pension fund is deductible from their gross income for PIT purposes. The employee MPC rate is 10% of gross salary.
- Deduction for Mandatory Social Health Insurance Contributions (MSHI Contributions): The amount contributed by the employee to the health insurance fund is deductible. The employee MSHI contribution rate is 2% of gross salary.
- Other Deductions: Specific deductions may be available for certain expenses, such as voluntary pension contributions, medical expenses, or education expenses, subject to conditions and limits.
Employers require employees to provide necessary documentation to apply these deductions correctly.
Tax Compliance and Reporting Deadlines
Employers in Kazakhstan have specific deadlines for filing tax reports and paying taxes and contributions. Adhering to these deadlines is crucial for compliance.
Key reporting and payment obligations include:
- Monthly Reporting: Employers typically file monthly reports detailing calculated and withheld PIT, as well as social contributions and taxes. The deadline for filing is usually the 15th day of the month following the reporting month.
- Monthly Payment: Payment of withheld PIT, social tax, social contributions, MPC, and MSHI contributions is generally due by the 25th day of the month following the reporting month.
- Quarterly Reporting: A consolidated tax report covering PIT and social payments is filed quarterly. The deadline is typically the 15th day of the second month following the reporting quarter.
- Annual Reporting: An annual declaration summarizing income paid and taxes withheld for each employee is also required. The deadline is usually March 31st of the year following the reporting year.
Specific forms and procedures are prescribed by the tax authorities for these filings and payments.
Special Tax Considerations for Foreign Workers and Companies
Foreign individuals working in Kazakhstan and foreign companies employing staff locally face specific tax considerations.
- Tax Residency: An individual's tax obligations in Kazakhstan depend heavily on their tax residency status. Generally, an individual is considered a resident if they spend 183 or more calendar days in Kazakhstan within any consecutive twelve-month period ending in the current tax period. Residents are taxed on their worldwide income, while non-residents are taxed only on their income sourced in Kazakhstan.
- Non-Resident Taxation: Non-resident employees are subject to PIT on their Kazakhstan-sourced income, typically at the same 10% rate, but they may not be eligible for the same range of deductions and allowances as residents. Employers must correctly determine the residency status of foreign employees for accurate tax withholding.
- Social Contributions for Foreigners: The obligation to pay social tax, social contributions, and MSHI contributions for foreign employees depends on their residency status and whether Kazakhstan has relevant social security agreements with their home country. Mandatory Pension Contributions are generally required for foreign residents with permanent residency permits or specific work permits.
- Permanent Establishment (PE): Foreign companies employing staff in Kazakhstan may inadvertently create a Permanent Establishment (PE), triggering corporate income tax obligations in Kazakhstan. The activities performed by employees can be a key factor in determining if a PE exists under Kazakhstan's tax code and relevant double tax treaties.
Understanding these nuances is vital for foreign entities to ensure full tax compliance when operating and employing individuals in Kazakhstan.
