Investment tax incentives have been subject to an updated framework under the new Tax Code, effective from 1 January 2026.
One of the key objectives of investment tax incentives is to create more favorable conditions for investment, modernization of production facilities, and business expansion.
Investment tax incentives enable taxpayers to recognize certain investment costs as deductible expenses when determining taxable income, thereby reducing their tax burden.
Eligibility for Investment Tax Incentives
Investment tax incentives are applied at the taxpayer’s discretion and consist in deducting expenses included in the initial cost of an incentive-eligible asset.
The right to apply investment tax incentives is granted to legal entities of the Republic of Kazakhstan, except for legal entities meeting one or more of the following criteria:
1) the taxpayer is a participant of Astana Hub;
2) the taxpayer is a participant of the Astana International Financial Centre (AIFC);
3) the taxpayer is engaged in the production and/or sale of all types of alcohol, alcoholic beverages, or tobacco products;
4) the taxpayer applies the special tax regime provided for by Section 16 of the Tax Code.
At the same time, the list of assets eligible for investment tax incentives has been expanded.
Eligible assets include assets that meet the requirements established by tax legislation, including:
- buildings;
- structures;
- machinery;
- equipment;
- software.
Thus, the new mechanism covers not only traditional capital investments in buildings, structures, machinery and equipment, but also costs associated with digitalization and the implementation of software.
However, the mere inclusion of an asset in the above list does not in itself result in an automatic entitlement to an investment tax incentive. Such assets must, throughout the control period, simultaneously meet the conditions established by paragraph 3 of Article 283 of the Tax Code.
For the purposes of applying investment tax incentives, the control period is a period covering at least three tax periods following the tax period in which the date of recognition of the incentive-eligible asset falls.
Application of Investment Tax Incentives
The taxpayer independently chooses the method for applying investment tax incentives in accordance with the rules established by the Tax Code.
Investment tax incentives may be applied using one of the following methods:
1) the deduction method after recognition of the asset;
2) the deduction method before recognition of the asset.
Under the deduction method after recognition of the asset, the initial cost of the incentive-eligible asset is deducted in the tax period in which the date of recognition of the asset falls.
Under the deduction method before recognition of the asset, expenses included in the initial cost of the asset are deducted in the tax period in which such expenses are actually incurred.
Tax Accounting for Incentive-Eligible Assets
For tax accounting purposes, incentive-eligible assets are accounted for separately from fixed assets in accordance with the procedure established by the Tax Code.
Incentive-eligible assets are accounted for separately for each asset in respect of which an investment tax incentive has been applied.
The initial cost of an incentive-eligible asset is determined taking into account the expenses prescribed by tax legislation.
Such expenses include, in particular, costs of acquisition, production, construction, installation and commissioning of the asset, as well as other costs that increase its value in accordance with International Financial Reporting Standards (IFRS) and the legislation of the Republic of Kazakhstan on accounting and financial reporting.
At the same time, the Tax Code establishes a list of expenses that are not included in the initial cost of an incentive-eligible asset.