Doing business in Kazakhstan
Kazakhstan does not have social security as it is known in other countries.
A social tax is payable by employers. However, this tax is an additional direct tax imposed on employers that is not earmarked for the social benefit of employees.
Exemptions to social tax include the following:
- Compensation resulting from the liquidation of an organization or termination of the employer’s activities, or from personnel or staff-size reductions
- Compensation paid by an employer to employees for unused vacation
- Obligatory pension fund contributions
Employers are required to pay social tax at a flat rate of 11% of gross income, less the obligatory pension fund contributions for Kazakhstan citizens. The minimum taxable base for social tax per employee is the MMS.
Social tax must be remitted to the state budget on a monthly basis by the 25th day of the month following the tax period. Monthly social tax liability is reduced by the monthly amount of social insurance contributions.
For individual entrepreneurs (excluding entrepreneurs working under special tax regimes), private notaries and advocates (attorneys), the rate of social tax is two times the MCI (approximately US$24) for themselves and one MCI (approximately US$12) for each employee, if any.
Pension fund contributions
Obligatory pension fund contributions of 10% of the gross salaries of local employees must be withheld and remitted to the pension fund by the employer on a monthly basis.
Income received in excess of 75 times MMS (approximately US$9,750) per month is not subject to obligatory pension fund contributions. Obligatory pension fund contributions are deductible for personal income tax and social tax purposes.
Starting from 1 January 2014 the Kazakhstan Law on Pension Coverage envisions obligatory professional pension fund contributions payable at the expense of the employer at a flat rate of 5% on the gross salaries of employees of certain professions in health-hazardous working conditions (mainly mining and metallurgy).
Social insurance contributions
Social insurance contributions at a rate of 5% are payable by employers on income paid to employees. Income in excess of 10 times the MMS (approximately US$1,300) is not subject to social insurance contributions per month.
If income subject to social insurance contributions is less than MMS, the monthly base for social insurance contributions per employee should be MMS.
Individual entrepreneurs are also subject to social insurance contributions at a rate of 5%. This rate is applied to the MMS.