Certificate of residence issues in Kazakhstan

Pitfalls with the certificate of residence

Many non-residents use the tax convention and provide a certificate of residence, to avoid the double-payment of the corporate income tax. The certificate of residence is needed to get exemption from the corporate income tax in Kazakhstan.

However there are cases when the Kazakh tax authorities still charge additional corporate income tax, even if the certificate of residence was provided. The reason for this could be the errors and flaws in the certificate of residence.

Risks for the Kazakh companies

When a foreign company does not issue its certificate of residence properly, Kazakh companies have to pay the corporate income tax for a non-resident, since the exemption under the convention applies only if there is a properly issued certificate of residence .

For example, a Kazakh company paid 100 thousand Euros to a non-resident. At the same time, the Kazakh company applied for the exemption from the corporate income tax under the tax convention and requested a certificate of residence.

However, a year later it turned out that the certificate of residence was issued with flaws. As a result, the Kazakh company had to pay 20 thousand Euro tax for the non-resident.

Казахстанская компания могла бы сэкономить 20 тыс. Евро, если бы компания тщательнее проверила сертификат резидентства.

Frequent errors in the certificates of residence

• Certificate is signed by the wrong person;

• Certificate does not have an apostille/is not legalized;

• Certificate is issued on a different date;

• And other numerous errors.

Recommendations to eliminate risks

In order to avoid problems with non-resident regarding the corporate income tax in Kazakhstan, we recommend to specify in the contract:

• that services are provided outside of Kazakhstan;

• that the company firstly pays the 80%, and the remaining 20% will be paid after the non-resident provides the properly apostilled or legalized certificate of residence, which will be approved by the lawyers of the law firm.

Secondly, in order to avoid problems with the tax authority, we recommend:

• to check the certificates of residence with lawyers, who have experience in tax law.

Our lawyers have extensive experience in tax and fiscal matters and could check the draft contracts with non-residents, as well as the certificates of residence.