Kazakhstan Publishes List Of Countries With 'Preferential' Tax Regimes

by Ulrika Lomas, Tax-News.com, Brussels

28 January 2009

In accordance with the new transfer pricing rules approved last year, and brought into effect earlier this year, the government of Kazakhstan has published a list of countries deemed to have 'preferential' tax regimes.

Explaining the reasoning behind the list, which was published following its approval under Government Resolution No. 1318, the Kazakhstan-based operation of Big Four accounting firm, Ernst & Young revealed that:

"The Kazakhstan transfer pricing legislation establishes specific rules for transactions with participants registered in countries with preferential tax regimes. Namely, Point 9 of Article 13 of the Law on Transfer Pricing dated July 5, 2008 does not allow application of price differential to transactions with participants registered in countries with preferential tax regimes."

"Furthermore, according to Point 5 of Article 10 of the Law on Transfer Pricing, market price for transactions with participants registered in countries with preferential tax regimes shall be determined as an average value indicated in the information sources."

"There is a restriction on sources of information that can be used to determine market prices for transactions with participants registered in countries with preferential tax regimes."

The firm went on to explain that the only sources of information that can be used for the aforementioned transactions are:

• Officially recognized sources of information on market prices; and
• Sources of information on exchange quotations.

The list of countries with preferential tax regimes includes 63 countries, although according to E&Y, some of those included on the list have valid double tax treaties with Kazakhstan.

Kazakhstan also this year overhauled its taxation regime, introducing a new tax code which came into force on January 1. Among other significant changes, the new tax code put in motion a planned reduction of the 30% rate of corporate income tax by half to 15% by 2011, cutting the rate to 20% for 2009.

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