Is it true that pension savings are taxed? Why are we being forced to pay tax on my own retirement savings?
It should be noted that pension contributions when transferred to an individual pension account are not subject to income tax. Whereas pension payments relate to income that is subject to individual income tax at the source of payment.
According to the Tax Code of the Republic of Kazakhstan, withholding of individual income tax is carried out at the rate of 10% of all amounts of payments formed at the expense of mandatory pension contributions (OPV), mandatory occupational pension contributions (OPV) and voluntary pension contributions (DPV).
At the same time, the Code provides for a number of adjustments, so-called tax deductions, which are provided for in the taxation of pension payments. Let us explain that a tax deduction is an amount by which, if there are appropriate grounds, the tax base (income from which tax is paid) is reduced.
For example, at the onset of retirement age, such a tax deduction is a 14-fold monthly calculation index established by the law on the republican budget and valid on the date of accrual of income in the form of a pension payment, for each month for which the pension payment is made.
For those who have reached retirement age and receive payments in connection with departure for permanent residence outside the Republic of Kazakhstan, the amount that goes to deductions, that is, is not taxed, is 168 times the monthly calculation index.
In addition, there are certain categories of recipients to whom tax benefits are applied in the 882-fold amount of the MCI for a calendar year. These include, for example, veterans of military operations on the territory of other states, people with disabilities of groups I, II or III, one of the parents, guardians, guardians of a disabled child, one of the foster parents who took orphans and children left without parental care into a foster family and others.
If the depositor decides to use pension savings for alternative purposes – to improve housing conditions or treatment, then he can choose the method of withholding and transferring personal income tax from the amounts of lump-sum pension payments from the UAPF independently:
- at a time, no later than the day of the one-time pension payment;
- monthly in equal shares for no more than sixteen years according to the schedule established by the UAPF when receiving pension payments.