Who Is a Tax Resident and Why the Status Matters
A tax resident is a person whose tax status is determined under the rules of the Tax Code of the Republic of Kazakhstan. An accountant should not determine this status based solely on citizenship, address, IIN, or the place where money is paid. The actual circumstances must be assessed against the criteria of the Code and the income recipient’s documents: the applicable taxation rules and the obligations of the person paying the income depend on the outcome.
An individual is recognized as a resident of Kazakhstan if they permanently reside in the country or have their center of vital interests in Kazakhstan (Article 222 of the Tax Code of the RK). These are independent grounds: to determine the status, the duration of stay is checked first, followed, where applicable, by the set of conditions relating to the center of vital interests.
Permanent residence means an individual’s presence in Kazakhstan for at least 183 calendar days, including the days of arrival and departure, within any consecutive twelve-month period ending in the relevant tax period. A separate criterion applies to an AIFC investment resident: at least 90 calendar days, subject to compliance with the conditions established by AIFC legislation (Article 222 of the Tax Code of the RK).
The center of vital interests is deemed to be located in Kazakhstan if three conditions are met simultaneously: the individual has citizenship of Kazakhstan, a residence permit, or the right to reside; their spouse and/or close relatives, if any, reside in Kazakhstan; and the country has residential real estate available for occupancy that is owned by the individual, their spouse and/or their close relatives or held by them on other grounds (Article 222 of the Tax Code of the RK).
In addition, Article 222 provides for separate categories of individuals who are recognized as residents regardless of the duration of their residence in Kazakhstan and the other criteria of this article. Therefore, when verifying status, it is necessary to consider not only the number of days and the center of vital interests, but also any special grounds applicable to the particular person.
Separate criteria apply to a legal entity. A legal entity incorporated under the laws of Kazakhstan, as well as a legal entity incorporated under the laws of a foreign state if its place of effective management is in Kazakhstan, is recognized as a resident. Such place is deemed to be the place where the actual governing body, such as the board of directors or a similar body, holds its meetings, exercises management and/or control, and makes decisions necessary for the organization’s business activities (Article 223 of the Tax Code of the RK).
Resident and Non-Resident: Which Tax Rules to Apply
An individual’s status cannot be determined solely by their citizenship. Citizenship of Kazakhstan is one of the conditions for determining the center of vital interests, but the other conditions established by Article 222 of the Tax Code of the RK must also be met simultaneously for this ground to apply. A foreign citizen may also be a resident if they meet the criteria stipulated by the Code.
Before calculating tax, the accountant must establish at least three circumstances:
- whether the recipient is an individual or a legal entity;
- which actual circumstances confirm their status as a resident or non-resident;
- what specific income is being paid and which provisions govern this payment.
The mere possession of an IIN, a bank account in Kazakhstan, or an agreement with a Kazakhstani company does not confirm compliance with the criteria for permanent residence or the center of vital interests. Likewise, an individual’s foreign citizenship or an organization’s registration abroad does not provide a definitive answer: the criteria of Article 222 apply to an individual, while for an organization, the place of effective management under Article 223 of the Tax Code of the RK must also be considered.
Special attention must be paid to foreign legal entities transferring their place of effective management to Kazakhstan. If a non-resident legal entity makes such a decision, its permanent establishment operating without opening a structural subdivision must transfer its rights and obligations to that legal entity under a deed of transfer (Article 78 of the Tax Code of the RK).
A non-resident legal entity must notify the tax authority at the location of the permanent establishment of the transfer of rights and obligations within three business days following the date on which the tax application for registration is submitted. The permanent establishment, in turn, must submit an application for the termination of activities through the permanent establishment, liquidation tax returns, and a deed of transfer within fifteen calendar days from the date the organization is registered as a foreign resident legal entity (Article 78 of the Tax Code of the RK).
Fulfillment of the tax obligation of the permanent establishment that transferred the rights and obligations is assigned to the foreign resident legal entity. The transfer does not change the deadlines for the successor to fulfill the tax obligation to pay taxes and payments to the budget (Article 78 of the Tax Code of the RK). Therefore, the accountant must ensure the timely transfer of information on tax returns, calculations, and upcoming payments.
Tax Residency Certificate and the Work of a Tax Agent
A residency document is used to confirm the declared tax status in cases where the applicable taxation procedure depends on that status. The accountant must compare the contents of the document with the period in which the income was received, the recipient’s details, and the actual circumstances relevant under the Tax Code.
For an individual, the criteria of Article 222 of the Tax Code of the RK remain the basis for verification. Days are counted within any consecutive twelve-month period ending in the tax period under review, with the days of arrival and departure included in the calculation. If the status is determined based on the center of vital interests, all three stipulated conditions must be met simultaneously.
For a legal entity, the country of incorporation and the place of effective management must be verified. If a foreign organization states that this place is in Kazakhstan, the relevant factor is the place where the actual governing body holds its meeting, exercises management and/or control, and makes decisions necessary for business activities (Article 223 of the Tax Code of the RK).
The concepts of “tax resident” and “tax agent” must not be confused. Residency describes a person’s tax status. For the purposes of taxing the income of a resident individual, a tax agent is a person that pays income to the individual and is specified in Article 361 of the Tax Code of the RK. Such persons include, in particular, an individual entrepreneur, a person engaged in private practice, a resident legal entity, and a non-resident legal entity operating in Kazakhstan through a permanent establishment or, in the case stipulated by the Code, through a structural subdivision (Article 361 of the Tax Code of the RK).
An individual who is not registered as an individual entrepreneur or a person engaged in private practice is not recognized as a tax agent under the rules of Article 361. The same rule applies to a registered entrepreneur or a person engaged in private practice if the relevant relationships are unrelated to their business activities or private practice (Article 361 of the Tax Code of the RK).
How an Accountant Should Verify Tax Residency
A practical verification can conveniently be conducted in the following sequence:
- Identify the income recipient and record their identification details.
- Establish whether the recipient is an individual or a legal entity, since their residency criteria differ.
- For an individual, verify their presence in Kazakhstan during the relevant consecutive twelve-month period, including the days of arrival and departure.
- If the status is determined based on the center of vital interests, verify that all conditions regarding citizenship or the right to reside, the residence of the spouse and/or close relatives, and the availability of residential real estate are met simultaneously.
- Verify whether the individual belongs to a special category of residents to which the duration of residence and other general criteria do not apply.
- For a legal entity, establish the country of incorporation and the place where the actual governing body holds meetings at which decisions necessary for its activities are made.
- Determine the type of income, the source of payment, and whether the payer has tax agent status under the relevant rules of the Code.
- Retain the documents and calculations on which the conclusion regarding the person’s status was based.
If the information provided does not confirm a specific criterion, the tax treatment based on that criterion cannot be applied solely on the recipient’s word. The conclusion must follow from the established circumstances: the period of stay, the combination of indicators of the center of vital interests, or the organization’s place of effective management.
Particular care should be taken in situations where a person’s place of residence, family circumstances, residential property available for occupancy, or the place where a foreign organization’s management decisions are made changed during the tax period. For counting days, it is the consecutive twelve-month period stipulated by Article 222 that matters, while for a legal entity, it is the actual place of management under the rules of Article 223 of the Tax Code of the RK.
Frequently Asked Questions
Is a tax resident a citizen of Kazakhstan? — Not necessarily. Citizenship of Kazakhstan is one of the three conditions for the center of vital interests that must apply simultaneously, but an individual’s residency may also be determined based on permanent residence. A foreign citizen may also meet the criteria for residency (Article 222 of the Tax Code of the RK).
How is an individual’s tax residency determined? — Under the general criterion, a person must be present in Kazakhstan for at least 183 calendar days, including the days of arrival and departure, within any consecutive twelve-month period ending in the relevant tax period. A separate criterion of 90 calendar days applies to an AIFC investment resident, subject to compliance with the conditions stipulated for them. Another ground is having the center of vital interests in Kazakhstan (Article 222 of the Tax Code of the RK).
Is an IIN or registration at an address in Kazakhstan sufficient? — This information alone does not replace the criteria for permanent residence or the combination of conditions relating to the center of vital interests. The status is determined based on the circumstances listed in Article 222 of the Tax Code of the RK.
What is a tax residency certificate needed for? — It provides documentary confirmation of the person’s declared status when the applicable tax treatment depends on it. The accountant compares the document with the income recipient, the relevant period, and the actual circumstances.
How does a tax agent differ from a resident? — Residency is the tax status of an individual or a legal entity. A tax agent is a person that pays income and is recognized as such under the rules of the Code. The list of tax agents for the purposes of the relevant section is established by Article 361 of the Tax Code of the RK.
When is a foreign legal entity recognized as a resident? — If it was incorporated under the laws of a foreign state but its place of effective management is in Kazakhstan. To determine this place, the place where the actual governing body holds its meeting, exercises management and/or control, and makes decisions necessary for business activities is taken into account (Article 223 of the Tax Code of the RK).