Taxation Practice of Cloud Services
This article is dedicated to recent practice of the Kazakh tax authorities regarding the taxation of cloud services.
In 2024, a foreign company and a Kazakhstani company entered into a service agreement. Under this agreement, the foreign company provided the Kazakhstani company with access to cloud infrastructure and computing resources.
At the same time, the service agreement stated that the foreign company granted a free license to the Kazakhstani company solely for the purpose of using the foreign company’s services. The purpose of providing such a license was due to the fact that access to cloud infrastructure and computing resources, among other things, involves interaction with the foreign company’s intellectual property. Therefore, in order to legally enable the use of the foreign company’s services, it was necessary to grant the Kazakhstani company the corresponding rights.
In 2025, following a desk tax audit, the tax authority concluded that the relevant payments to the foreign supplier should be classified as royalties, rather than as payment for services rendered outside Kazakhstan.
