The AIFC has introduced the Rules on the Substantial Presence of the AIFC Participants Applying Tax Exemptions for the payment of Corporate Income Tax, Value Added Tax
The Astana International Financial Centre (AIFC) has introduced a new AIFC Act, the Rules on the Substantial Presence of the AIFC Participants Applying Tax Exemptions for the payment of Corporate Income Tax, Value Added Tax.
The Act was adopted by the Astana Financial Services Authority (AFSA) in coordination with the Ministry of Finance of the Republic of Kazakhstan.
According to the Rules, AIFC participants enjoying tax benefits for the payment of corporate income tax and value added tax must confirm their presence at the AIFC. This is corroborated by implementing requirements in relation to core income-generating activities in the AIFC, and by ensuring that the expenses incurred and the number of full-time employees involved are commensurate with the volume of activities.
Adoption of the Rules is an important step towards ensuring that the AIFC is compliant with global transparency standards for tax purposes and that the AIFC jurisdiction is not used for harmful tax practices.
In January 2017, Kazakhstan joined the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) under which it commits to comply with minimum four standards contained in OECD Action 5, including Harmful tax practices. To comply with this standard and prevent tax base erosion and profit shifting, the AIFC has implemented the “substantial presence” Rules in this new Act.
The Rules apply to certain Centre Participants who are exempt from corporate income tax and value added tax in accordance with the Constitutional Statute of the Republic of Kazakhstan dated 7 December 2015 “On the Astana International Financial Centre” and commence starting from the 1 January 2022.
You can find the newly introduced act here [Rules on the Substantial Presence of the AIFC Participants applying tax exemptions for the payment of CIT, VAT].
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The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorization, registration, recognition and supervision of financial firms and market institutions in the AIFC.
Over 1,100 companies from 60 countries are registered in AIFC. These companies provide banking, insurance, investment, professional and other services. The range of financial services offered at AIFC is comparable to the list of services available in long-established financial centers of the world, such as London, Hong Kong, Singapore, Dubai and others. AIFC participants from Central Asian states are mainly represented in the sectors that are unrelated to financial activities.
Astana International Financial Centre was established on the initiative of the First President of the Republic of Kazakhstan – Elbasy Nursultan Nazarbayev as part of the National Plan “100 steps to implement five institutional reforms”. On July 2, 2020, as part of the meeting of the AIFC Management Council, the Center’s Development Strategy was adopted until 2025. According to it, the vision of the AIFC is to become a leading international financial centre in the region, including Central Asia, the Caucasus, the EAEU countries, Western China, Mongolia and Eastern Europe.
The mission of AIFC is to promote the sustainable long-term development of the region. As the Head of State noted, K.Tokayev, “The AIFC with its unique capabilities can act as a universal platform connecting the countries of the region.” aifc.kz
