Amendments in restrictions for deductibility of intercompany services

On 12 December 2023, the President of the Republic of Kazakhstan signed Law No. 45-VIII "On Introduction of Amendments and Additions into the Code of the Republic of Kazakhstan "On Taxes and other Mandatory Payments to the budget", which, among other things, includes long-awaited amendments on intangible services purchased from non-residents - related parties. SCHNEIDER GROUP was directly involved in lobbying for these changes, participating in the German Economic Union in the Republic of Kazakhstan. Under these amendments, costs related to purchase of services from a non-resident related party, incorporated in a state with preferential taxation, are not subject to deduction.

Summary

Such expenses will not be deductible for CIT purposes only if the non-resident supplier is registered in a state with preferential taxation. The list of states is established by the Government of the RK. In other cases, Kazakhstani taxpayers are entitled to a full-sized deduction, in case of availability of supporting documents, and the focus of such expenses shall be on income generation.

The changes became effective retrospectively from 1 January 2023. Therefore, they should be considered when preparing the CIT return for 2023.