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Kazakhstan VAT obligations for foreign digital firms from January 2022

The law to extend Kazakhstan's VAT system to digital services and low value goods supplied by foreign providers came into effect on January 1, 2022.

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A new law extending the Kazakhstan VAT system to foreign-supplied digital services and low value goods came into effect on January 1, 2022.

In general, Kazakhstan followed the path of its Central Asian neighbour Uzbekistan. The Uzbek VAT obligations commenced for non-resident digital businesses on January 1, 2020.

One interesting aspect of the Kazakhstan VAT rules is that there is no requirement to file a VAT return. Typically, there is a requirement to file monthly, quarterly or an annual VAT return. The affected foreign digital businesses must still register for VAT, apply 12% VAT to online sales to customers based in Kazakhstan and then remit a payment to the tax authorities there. However, there is no VAT return to be filed.

Regional background

The region had not witnessed much movement until Uzbekistan's legislative change at the start of 2020 with only Azerbaijan, across the Caspian Sea, being the closest tax jurisdiction to have made any amendments to their tax code to bring foreign-supplied digital services into scope.

Rules in Azerbaijan for foreign suppliers of digital services to pay VAT at the place of consumption have been in place since January 2017. However, the burden of the collection is currently with the local card issuers.

A foreign digital service supplier with customers in Kazakhstan is now required to register for VAT.

Affected digital services would include (non-exhaustive list) the provision of the following services via the internet:

  • Computer programs
  • Advertising services
  • Services involving the posting of an offer to acquire (sell) goods (works or services) or property rights online
  • Technical, organizational, informational or other means to enable transactions between sellers and buyers
  • Maintenance of a commercial or personal presence online
  • Storage and processing of information online
  • Domain names and hosting services
  • Services for the administration of information systems and sites online
  • Maintenance of statistics on internet sites
  • Sales of e-books, graphics, or music

Acknowledgement: Thanks to Liya Akzhanova, of GRATA International, for her help in researching this article.

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