x

The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: Kazakhstan Second Round Review (2018)

This report for Kazakhstan has been published on 16 Jul 2018. You can browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


loading...


Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Ownership information on foreign companies having their place of effective management in Kazakhstan is not consistently available.  Kazakhstan should ensure that ownership information on foreign companies with sufficient nexus with Kazakhstan is available in all cases. 
Kazakhstan’s law does not require that identification of partners in a foreign partnership that carries on business in Kazakhstan or has income, deductions or credits for tax purposes in Kazakhstan is in all cases available in Kazakhstan.  Kazakhstan should ensure that information identifying the partners in a foreign partnership that carries on business in Kazakhstan or has income, deductions or credits for tax purposes in Kazakhstan, is available to its competent authority. 
Obligation to identify beneficial owners is contained in the AML law and not all relevant entities (including partnerships established in the AIFC) with the exception of joint stock companies created under Kazakhstan's law are required to engage an AML obligated person. It is nevertheless noted that the scope of AML obligated persons includes relevant professionals such as notaries, lawyers, accountants and auditors and in practice the majority of entities established under Kazakhstan's law engages an AML obligated service provider (e.g. through opening a bank account).   Kazakhstan should ensure that beneficial owners of all relevant entities are required to be identified in line with the standard. 
Kazakhstan's law requires the availability of information identifying the settlor, trustee and beneficiaries of a trust with a Kazakhstan resident trustee or administered in Kazakhstan. However, it does not require the identification of any other individual with ultimate effective control over the trust. In addition, the availability of beneficial ownership information on trusts created or administered in the AIFC or with a trustee resident therein is unclear as the definition of beneficial owners of a trust is not set out in the law.   Kazakhstan should ensure that beneficial ownership information in respect of trusts is available in line with the standard.  
All companies registered in the AIFC have to submit the identity of their beneficial owners to the Registrar. However, the applicable rules do not define the concept of beneficial ownership and measures by which beneficial owner is required to be identified.   Kazakhstan should take further steps to ensure that beneficial owners of companies registered in the AIFC are required to be identified in line with the standard. 
Phase 2 Rating Factors Recommendations
Partially Compliant.  Although notaries, lawyers, accountants and auditors are subject to certain supervision by the Ministry of Justice and their professional organisations, adequate measures are not taken to ensure that adequate, accurate and up to date beneficial ownership information is available with these professionals in practice.   Kazakhstan should strengthen the supervision of notaries, lawyers, accountants and auditors so that it is ensured that beneficial ownership information is available with these professionals in line with the standard. 
The legal and regulatory framework for the establishment and operation of entities and arrangements in the AIFC is very recent. Accordingly, effective implementation of rules ensuring the availability of legal and beneficial ownership information in the AIFC remains to be tested.   Kazakhstan should monitor the availability of ownership information in respect of entities and arrangements established under the AIFC laws or carrying out business therein and take measures, as necessary, to ensure that legal and beneficial ownership information is available in respect of these entities and arrangements in line with the standard. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Although Kazakhstan' law contains retention requirements under the accounting law and tax law for relevant entities and arrangements to keep accounting information for at least five years, no consistent rules exist to ensure that all accounting information and underlying documents in particular will remain available after an entity or arrangement ceases to exist. This is a concern also in respect of entities registered in the AIFC.   Kazakhstan should ensure that all accounting information, including underlying documents, is required to be available for at least five years from the end of the period to which it relates, regardless whether the entity or arrangement ceases to exist.  
There are no accounting obligations in the AIFC to ensure that special purpose companies keep accounting records in line with the standard.   Kazakhstan should ensure that special purpose companies registered in the AIFC are required to keep accounting information in line with the standard.  
Phase 2 Rating Factors Recommendations
Partially Compliant.  The accounting obligations under AIFC acts are recent and there is very limited experience with their application and supervision in practice. Further, some AIFC rules are still in the process of drafting and adjustments.   Kazakhstan should monitor the availability of accounting information in the AIFC and take further measures, as necessary, so that accounting information is available in line with the standard in respect of entities and arrangements established under AIFC acts or carrying business therein. 
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   The definition of the beneficial owner does not provide for the identification of beneficial owners of account-holders who are legal arrangements such as trusts. Consequently, beneficial owners of trusts or other legal arrangements which open an account with a bank in Kazakhstan are not required to be identified in line with the standard.   Kazakhstan should ensure the availability of beneficial ownership information in respect of legal arrangements account-holders.  
The definition of beneficial owners of account-holders required to be identified by banks registered in the AIFC appears in line with the standard. However, it remains unclear to what extent this definition is binding and therefore enforceable as it is not contained in the AIFC legal acts.   Kazakhstan should take further measures to ensure that banks in the AIFC are required to identify beneficial owners of all account-holders in line with the standard. 
Phase 2 Rating Factors Recommendations
Largely Compliant.  According to the AIFC Constitutional Statute, it is possible to set up a bank in AIFC. Although the applicable rules and measures seem to ensure that the relevant banking information will be generally available, they were put in place only recently and some are still not finalised.   Kazakhstan is recommended to monitor the availability of banking information with banks operating in AIFC so that banking information on all account-holders is available in line with the standard. 
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Kazakhstan's law does not ensure that all types of relevant banking information, including beneficial ownership information on account-holders, are accessible to the competent authority for EOI purposes.   Kazakhstan is recommended to clarify its law so that all types of banking information requested pursuant to a valid EOI request can be obtained in line with the standard. 
Although Kazakhstan has taken certain measures to limit the scope of protection of information held by notaries, the protection of information held by lawyers and notaries provided under Kazakhstan’s law remains too wide as it covers all information received by them in connection with their professional activities. This is a concern in particular when beneficial ownership information is requested.  Kazakhstan should take further measures to ensure that the protection of information held by lawyers and notaries is consistent with the standard. 
Phase 2 Rating Factors Recommendations
Partially Compliant.  Kazakhstan has recently introduced new provisions to ensure that (i) it can obtain banking information in line with the standard, (ii) its access powers can be used regardless of domestic tax interest and (iii) enforcement provisions apply where information requested for EOI purposes is not provided. However, these rules are not yet sufficiently tested in practice.   Kazakhstan should monitor the practical application of new provisions of the Tax Code and Law on Banks and, if necessary, take further measures to ensure that the requested information is obtained and provided in line with the standard. 
Persons operating in AIFC can be subject to a tax audit allowing the competent authority to access information for EOI purposes. However, these rules are very recent, some of them are still being developed and they have not yet been tested.   Kazakhstan should monitor access to information available in AIFC so that the competent authority has the power to obtain and provide all relevant information requested pursuant to a valid EOI request and this power is efficiently exercised in practice. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  Kazakhstan has recently introduced new domestic provisions to ensure that it can provide the requested information in line with the standard under its EOI agreements. However, these rules are not yet sufficiently tested in practice.  Kazakhstan should monitor that the new rules are properly implemented in practice to allow EOI in line with the standard under all its EOI agreements. 
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.  The general confidentiality rules and procedures applied by the tax authority are sufficienty robust. Generally the same procedures concerning exchanged information apply at the central level of the tax authority as well as at the regional level. However, only limited measures are in place to ensure consistent application of confidentiality rules specific to exchange of information at the regional level.  Kazakhstan should put in place appropriate measures to ensure that all information exchanged at the regional level is kept confidential in line with the standard. 
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Kazakhstan’s EOI agreements do not define the term “professional secret” and the scope of the term under its domestic law is wider than permitted by the international standard. The concern is further heightened by the fact that beneficial ownership information is in many occasions held by these persons, and professional secrecy might hinder the competent authority’s access to the information.  It is recommended that Kazakhstan limits the scope of “professional secret” in its domestic law so as to be in line with the standard for exchange of information.  
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.   This element involves issues of practice. Accordingly no determination on the legal and regulatory framework has been made.   
Phase 2 Rating Factors Recommendations
Largely Compliant.  During the review period Kazakhstan’s exchange of information at the regional level did not ensure efficient exchange of information in all cases as reported by a few peers. In order to address this, Kazakhstan adopted a new EOI procedure in February 2018. Kazakhstan has also taken several steps to improve coordination with its EOI partners. However, as these measures are recent their impact on EOI practice remains to be seen.  Kazakhstan should monitor the implementation of the recently taken measures so that exchange of information is carried out in an effective manner in all cases.  
Kazakhstan did not provide status updates to its treaty partners in the majority of the cases that were pending more than 90 days.   Kazakhstan should ensure that it provides status updates in all cases to which it is not able to reply within 90 days.