Taxation of dividends: what changes come into force from next year?

     

             The State Revenue Committee spoke about changes in tax legislation on the taxation of dividends, which will come into force on January 1, 2023.

             The Law of the Republic of Kazakhstan dated July 11, 2022 No. 135-VII ZRK “On Amendments and Additions to the Code of the Republic of Kazakhstan “On Taxes and Other Obligatory Payments to the Budget” (Tax Code) and the Law of the Republic of Kazakhstan “On Enactment of the Code of the Republic of Kazakhstan” On Taxes and Other Obligatory Payments to the Budget” (Tax Code)” provides for the following changes in tax legislation regarding the taxation of dividends:

             legal entities

             - the current adjustment of the gross annual income (GAI) on CIT in terms of dividends was excluded;

            For reference: in case of payment of dividends by a legal entity that reduces the calculated corporate income tax by 100% for activities for which such a reduction is provided (subparagraph 2) of paragraph 2 of Article 241 of the Tax Code);

            - Dividends received on securities that are on the date of accrual of such dividends in the official list of stock exchanges (KASE, AIFC) are not excluded from the SRS and are taxed at the source of payment (subparagraph 4) of paragraph 2 of Article 241 of the Tax Code, subparagraph 5) of paragraph 1 of Article 307 of the Tax Code);

            - Dividends on securities placed on the KASE, AIFC stock exchanges are excluded from the SRS, if active trading was carried out on the stock exchange during the tax period (criteria are determined by the Government (subparagraph 4) of paragraph 2 of Article 241 of the Tax Code);

individuals

            - CIT adjustment is applied for income in the form of dividends received on securities that are on the date of accrual of such dividends in the official list of stock exchanges (KASE, AIFC), if active trading was carried out on the exchange during the tax period (criteria are determined by the Government (subparagraph 7) of paragraph 1 article 341 of the Tax Code);           

          - taxation of PIT at the source of payment at a single rate of 10%, the rate of 5% for income in the form of dividends is excluded (paragraph 2 of Article 320 of the Tax Code);           

          - the conditions for adjusting income in the form of dividends have been changed. An adjustment is provided for dividends received from a resident legal entity for a calendar year within the limits of 30,000 MCI (subparagraph 8) of paragraph 1 of Article 341 of the Tax Code).           

         For reference: conditions are excluded - ownership of shares or participation interests for more than three years, dividends are paid by a non-subsoil user, the share of a subsoil user in a person paying dividends is not more than 50%.            on dividends of non-residents           

      - exclusion of benefits in terms of the complete exemption of dividends of non-residents (legal entities and individuals) from taxation with a rate of 10%, subject to the conditions established by the Tax Code (paragraphs 4 and 5 of Article 646 of the Tax Code);          

      - privileges on dividends of non-residents (legal entities and individuals) on securities, which are on the day of sale in the official lists of the stock exchange (KASE, AIFC) are preserved. These benefits will apply only to regular trading (criteria are determined by the Government of the Republic of Kazakhstan).           

     The changes will enter into force on January 1, 2023.