The new Tax Code of the Republic of Kazakhstan abolishes the withholding of individual income tax from pension payments from the Unified Accumulative Pension Fund for residents of the Republic of Kazakhstan.

Current questions about the UAPF

What portion of a pension is currently taxed and what portion is not in Kazakhstan?
In Kazakhstan, pension payments from the state budget are tax-exempt, while payments from the Unified Accumulative Pension Fund (UAPF) are taxable. According to the current Tax Code, pension payments from the UAPF are considered income subject to individual income tax (IIT) at a rate of 10% at source. This means that pension contributions are transferred to individual pension accounts before taxation. IIT is withheld from payments. IIT is withheld collectively from all types of pension payments formed from mandatory pension contributions (MPCs), mandatory professional pension contributions (MPPCs), and voluntary pension contributions (VPCs). Adjustments and tax deductions are also taken into account. However, this situation will only last until the end of 2025. As a reminder, the new Tax Code will come into effect on January 1, 2026, and according to it, personal income tax will no longer be withheld from pension payments from the Unified Accumulative Pension Fund (UAPF).
What changes have been made to the new Tax Code of the Republic of Kazakhstan regarding individual income tax (IIT) on pension payments?
According to the new Tax Code of the Republic of Kazakhstan, starting January 1, 2026, individual income tax (IIT) will no longer be withheld from all types of pension payments, including lump sum pension payments (LPP) for housing and/or medical treatment, except in cases where the recipient is not a resident of the Republic of Kazakhstan. The changes also include the cancellation, effective January 1, 2026, of accrued IIT payments from LPPs for housing/medicine, deferred until pension payments are received according to schedule.

Will IIT withheld before January 1, 2026, be refunded? The provisions of the new Tax Code do not provide for the refund of previously withheld personal income tax. To clarify, the current Tax Code requires that personal income tax be withheld when using lump sum pension payments for housing/medicine. The recipient has two options for withholding: immediately upon receipt of the unified payment or deferred until retirement. Due to the introduction of the new Tax Code on January 1, 2026, if a contributor has paid the personal income tax earlier, it will not be refunded, and the obligation for the deferred personal income tax will be written off. Please note that the calculation, withholding, and payment of personal income tax on pension payments and the unified payment from the Unified Pension Fund will continue as usual until December 31, 2025.
If a recipient has reached retirement age and is paying the personal income tax, will the personal income tax withholding continue from January 1, 2026? The provisions of the new Tax Code provide for the exemption of income in the form of pension payments and lump-sum pension payments from the Unified Pension Fund (UAPF) from individual income tax, effective January 1, 2026, with the exception of pension payments from the UAPF made to non-residents of the Republic of Kazakhstan.

How will the rule regarding tax deductions for voluntary pension contributions change?
The changes include the abolition of tax deductions for voluntary pension contributions made to one's own account, effective January 1, 2026. However, like other types of payments from the UAPF, payments from the LDP will be exempt from the personal income tax. However, the rule that voluntary pension contributions transferred by a tax agent to the UAPF for the benefit of an employee are not considered personal income (and therefore are not subject to the personal income tax) will remain in effect, while such expenses are deductible for the employer when calculating corporate income tax. This means that in this case, both the employee and the employer receive tax benefits.