Under consideration in the Senate of the Parliament of the Republic of Kazakhstan, the draft Law "On amendments and additions to the Code of the Republic of Kazakhstan "On taxes and other mandatory payments to the budget" (the Tax Code) and the laws of the Republic of Kazakhstan on its introduction" outlines the following amendments and additions to the Tax Code, slated for implementation from January 1, 2025.
As is known, the Head of State instructed that the remaining category of citizens (pensioners, private sector employees, students, etc.) belonging to the fourth stage of declaration be exempt from universal declaration starting January 1, 2025, and that approaches to universal declaration be reviewed.
In this regard, as part of the optimization of the declaration procedure, individuals who receive income subject to withholding tax (salaries, pensions, scholarships, and insurance payments, etc.) will be exempt from submitting an annual declaration (form 270.00). Exceptions apply to civil servants and equated persons, their spouses, major participants in the financial sector, founders and heads of organizations, individuals engaged in private practice, and those with property or bank accounts abroad. Additionally, individuals who have received income taxable by themselves, or who purchased property exceeding 20,000 times the monthly calculation index (MCI) during the reporting period, will still be required to declare.
Considering the aforementioned approaches, which are changing the administration of tax deductions for individuals, it is planned to replace several existing tax deductions (in the amount of 14 MCI, for education, medicine, mortgage loan remuneration, and for large families) with a single basic deduction of 30 MCI per calendar month, totaling 360 MCI per calendar year. This deduction will be provided upon submission of an application for the application of tax deductions in any form.
These deductions will be available for application starting January 1, 2025, to all individuals receiving employee income, individual entrepreneurs applying the generally established taxation regime, as well as persons engaged in private practice (private notaries, lawyers, private bailiffs, and professional mediators).
Additionally, for individuals engaged in private practice, IIT rate has been reduced from 10% to 9%, in lieu of professional deductions. Monthly IIT payments are also provided for this category
An additional tax deduction is also being introduced for the amount of withheld social contributions for individuals who receive income under civil contracts, the subject of which is the performance of work (provision of services) – in the amount established by the legislation of the Republic of Kazakhstan on social protection.
These changes are being introduced to simplify the procedure for individuals to apply tax deductions. This eliminates the need for individuals to collect and store documents confirming tax deductions, as well as the annual submission of an income and property declaration reflecting all income received for a calendar year, along with the application of tax deductions and self-calculation of the actual amount of income tax payable to the budget. It also reduces the need for inspections by state revenue authorities regarding the legality of applying tax deductions.
Furthermore, due to the retrospective introduction of these standards, transitional provisions are included concerning the procedure for calculating personal income tax and applying tax deductions for the period from January 1, 2025, to the date the Law enters into force.