Alert: Pillar 2 in Kazakhstan
On 04 July 2024 a draft of the Ruling of the Government of the Republic of Kazakhstan ‘On signing of the Multilateral convention to facilitate the implementation of the pillar two subject to tax rule’[1] (‘Pillar 2’) was published.
Pillar 2 is one of the instruments of the Organisation for Economic Cooperation and Development (OECD) aimed at counteracting base erosion and profit shifting (BEPS). Pillar 2 was drafted in order to ensure that multinational corporations pay certain amount of tax in intra-group transactions in those jurisdictions where they operate.
Pillar 2 is applicable to the following types of income:
- interest;
- royalty;
- fee for use or right to use product or service distribution rights (except for fees which represent 8.5% or less mark-up on costs on granting of such rights);
- insurance or re-insurance premiums (except for premiums which represent 8.5% or less mark-up on costs on rendering of such services);
- financial guarantees fees or other financing fees (except for fees which represent 8.5% or less mark-up on costs on rendering of such services);
- rental or any other payment for the use of or right to use industrial, commercial or scientific equipment (except for the ships used for transportation of passengers or cargo in international traffic on a bareboat charter basis as well as fees which represent 8.5% or less mark-up on costs on rendering of such services);
- any income received as a remuneration for rendering of services (except for fees which represent 8.5% or less mark-up on costs on rendering of such services);
- any income received from a related person except for the following cases:
· a person’s gross income does not exceed EUR 250 000, if his gross domestic product does not exceed EUR 40 million in the current tax period;
· a person’s gross income does not exceed EUR 1 million, if his gross domestic product exceeds EUR 40 million in the current tax period.
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