What Benefits Can ‘Google Tax’ Bring to Kazakhstan

Thanks to the so-called «Google tax» the state budget of Kazakhstan is going to receive an additional $4.6 million a year. Moreover, all foreign companies whose businesses rely on online platforms must pay value-added tax in Kazakhstan starting from January 1, 2022, according to the Ministry of National Economy.  

The value-added tax (VAT) for foreign companies is 12% from any product and service sold in the country. The new tax doesn’t apply to Kazakhstani taxpayers.

As Azamat Amrin, a vice minister of the national economy said, foreign companies aren’t required to register for taxation in Kazakhstan. 

«All they need is to just send a letter to the tax authorities and let them know that they are ready to pay VAT,» he said.

The ministry’s press service explained that taxation management is going to be based on data from banks. They will report to the government exact figures of transactions by foreign-based online companies. To ease that management, the ministry considers the introduction of a new notion Merchant ID or MID. This is a unique combination of symbols that are going to be part of a company’s account details to identify that company when it receives payments or money transfers through a regular payment system.

«This is an international practice. We have reviewed best practices adopted in different countries including Europe and our neighbors such as Russia and Belarus,» the ministry’s press service said. 

On November 25 the parliament of Kazakhstan passed a bunch of amendments to the Tax Code of the Republic of Kazakhstan. Once these amendments are signed into law by the president, the notion of «mobile payments» will be added to the code; a cargo vehicle tax will be decreased; exporters will be receiving VAT back; a Google tax will enter into force; imported car tax will increase, and minimum salary notion will be replaced by minimum calculation index.