AFSA jointly with the State Revenue Committee of the Ministry of Finance of Kazakhstan has developed and endorsed the Guidance on the Rules on the substantial presence of the AIFC participants applying tax exemptions for the payment of corporate income tax, value added tax.
The Guidance aim to provide clear definition of three mandatory requirements, such as core income generating activities, adequate amount of operational expenses and adequate number of qualified employees. The document also defines the form of economic study of the project to be submitted by AIFC participants and the submission deadline.
The Guidance has undergone review and has been approved by the OECD’s Forum on harmful tax practices (FHTP). It provides detailed instructions on how to meet the requirements outlined in the Substantial Presence Rules. This Guidance is expected to provide greater certainty to AIFC participants in completing their tax returns and contribute to AIFC’s enhanced transparency and alignment with international standards.
AFSA and the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan adopted the Substantial Presence Rules in December 2021. 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 adopted the Substantial Presence Rules.
The OECD Forum on Harmful Tax Practices (FHTP) conducts reviews of preferential regimes since its creation in 1998 in order to determine if the regimes could be harmful to the tax base of other jurisdictions.
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 authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.
Over 2,200 firms from 78 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the 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. www.afsa.kz
The Astana International Financial Centre (AIFC) is an independent jurisdiction with a favourable legal and regulatory environment and a developed infrastructure for starting and doing business, attracting investment, creating jobs and developing Kazakhstan's economy. https://aifc.kz/
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