This LawFlash summarizes the taxation of royalties in accordance with the new Tax Code of Kazakhstan that will come into effect in January 2026.
DEFINITION OF ROYALTY
The definition of “royalty” has been slightly modified in the new Tax Code. Specifically, a payment for updates of software related to correction of errors or upgrades not associated with the software development should not be considered a royalty.
TAXATION
The tax rate also depends on the recipient of income:
- For resident legal entities (Article 357): 20% (general rate)
- For resident individuals (Article 363(1)): 10% (with an increase to 15% if the statutory threshold value is exceeded)
- For non-resident legal entities (Article 682.1(5)): 15% (20% for residents of countries with preferential tax treatment)
- For non-resident individuals (Article 682.1(5)): 15% (20% for residents of countries with preferential tax treatment)
The tax collection mechanism depends on the recipient of income:
- Resident legal entities include income from royalties into an aggregate annual income (Article 237.2)
- Resident individuals pay tax on income from royalties independently (Article 371.1 and Article 405.1)
- For non-residents, the tax is withheld by the tax agent (Article 679.1(15), Article 683 and Article 692)
EXCEPTIONS
The Tax Code provides for a few exemptions and exclusions from the royalties tax, such as the following:
- Tax exemption for payments made to non-residents by Astana Hub participants (Article 681(13))
- Reduction of tax rate under an applicable double tax treaties (Article 706.1)