During an address to the Parliament’s Mazhilis on 11 January 2022, the president of Kazakhstan instructed the respective state bodies to “secure a strict monitoring, inspection, and control of all transactions and persons who unjustifiably diverts funds out of the country.” In conjunction with this address, as it follows from the government’s papers, Kazakhstan plans to revise the exemptions (incentives) related to the taxation of dividends, including dividends paid to non-residents.
At the moment, the magnitude of the proposed legislative revisions is unknown. It is possible that the revisions will affect the so-called three-year rule, i.e., a rule whereby an exemption from the taxation of dividends applies if the respective shares (participatory interest) were held for more than three years (with certain exceptions).
However, it cannot be ruled out that the revisions will be more substantial. For instance, they may affect the term “dividends,” the tax rates (the current standard rate applicable to non-residents is 15%), or the rules of application of the bilateral double tax treaties (as it applies to reduced dividend tax rates).
Sharing insights and resources that help our clients prepare for and address evolving issues is a hallmark of Morgan Lewis. To that end, we maintain a resource center with access to tools and perspectives on timely topics driven by current events such as the global public health crisis, economic uncertainty, and geopolitical dynamics. Find resources on how to cope with the globe’s ever-changing business, social, and political landscape at Navigating the NEXT. to stay up to date on developments as they unfold. Subscribe now if you would like to receive a digest of new updates to these resources.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers: