Article 2: Taxes covered
At the time of signature of the Convention, the following
specific taxes are included within the meaning of Article
2(3)(b):
(i) the profits and income taxes specified in Chapter I and V of
the law "On the Taxation of Enterprises, Associations and
Organisations", as amended on 25th December 1991, 30th June 1992
and 22nd December 1992; and
(ii) the income tax provided under the law "On the Income
Tax on Citizens of the Republic of Kazakhstan, Foreign Citizens and
Stateless Persons", as amended on 22nd December 1992.
Article 3(1)(e): Definition of a person
The Contracting States understand that, for the purposes of
this Convention a European Economic Interest Grouping (EEIG) is not
regarded as a resident of a Contracting State. However, a resident
of a Contracting State may claim relief under the terms of this
Convention in respect of its share of the income of a EEIG. Where a
EEIG has a permanent establishment in a Contracting State that
permanent establishment shall be regarded as a permanent
establishment in that Contracting State of each participant in the
EEIG and income effectively connected to that permanent
establishment shall be regarded as effectively connected to a
permanent establishment which the participant possesses in that
Contracting State to the extent that the participant shares in that
income.
Article 7: Business profits
The Contracting States understand that only properly
allocated actual expenses incurred by the permanent establishment
of the resident, its Head Office or any of its other offices shall
be allowed as deductions. No deduction shall be allowed merely
because such amounts are paid or accrued by the permanent
establishment to the Head Office of the resident or any of its
other offices. For example, no deduction shall be permitted in
respect of royalties, fees or other similar payments in return for
the use of patents or other rights, or by way of commission for
specific services performed, or for management, or by way of
interest on monies lent to the permanent establishment, unless such
amounts are incurred by the Head Office or any of its other
offices, in which case there may be deducted those expenses which
are incurred for the purposes of the permanent establishment.
Article 11: Interest
The Contracting States understand that "interest" includes
any amount paid for the use of monies over time such as payments
made under annuity contracts to the extent that such payments
constitute a financial return on one or more initial payments or
investments.
Article 12: Royalties
The Contracting States understand that where the beneficial
owner of royalties as defined in subparagraph (b) of paragraph 4 of
this Article makes an election, under paragraph 3 of this Article,
any interest payable which is attributable to the right or property
for which the royalty was received shall be deemed to have a source
in the Contracting State in which the payment arises. Any such
interest payment will be subject to the provisions of Article 11 of
this Convention. An election made under paragraph 3 of this Article
shall be made to the competent authority of the Contracting State
in which the leasing payment is deemed to have its source.
Articles 11: Interest and 12: Royalties
The Contracting States agree that where Kazakhstan agrees to
a lower rate of tax than 10% in paragraph 2 of Article 11 or in
paragraph 2 of Article 12 in any Convention between Kazakhstan and
a third State which is a member of the Organisation for Economic
Co- operation and Development, and that Convention enters into
force either before or after the date of entry into force of this
Convention, the competent authority of Kazakhstan shall notify the
competent authority of the United Kingdom of the terms of the
relevant paragraph in the Convention with that third State
immediately after the entry into force of that Convention and such
lower rate of tax shall be substituted for 10% in paragraph 2 of
Article 11 or paragraph 2 of Article 12, as the case may be, of
this Convention with effect from the date of entry into force of
that Convention, or of this Convention, whichever is the later.
Article 13: Capital gains
The Contracting States understand that gains from the
alienation of moveable property subject to an election under
paragraph 3 of Article 12 will be subject to paragraph 5 of Article
13.
Article 22: Elimination of double taxation
Kazakhstan confirms that in computing the taxes on profits
and income under current law, an entity that is a resident of
Kazakhstan, and a joint venture with more than 30% participation by
residents of the United Kingdom or an entity which is wholly owned
by residents of the United Kingdom, or a permanent establishment of
an enterprise of the United Kingdom (subject to the provisions of
Article 7), is permitted deductions for actual wages paid and for
interest expenses, whether or not paid to a bank and without regard
to the term of the debt. The deduction may not exceed the
limitation under Kazakh tax law, as long as the limitation is not
less than an arm's length rate, including in the case of interest a
reasonable risk premium.
Withholding tax
Each Contracting State shall endeavour to establish
procedures to enable taxpayers to receive income dealt with under
Articles 10, 11 and 12 without the imposition of withholding taxes
where the Convention provides for taxation only in the State of
residence. Where the Convention provides for taxation in the State
where the income arises each State shall endeavour to establish
procedures to enable taxpayers to receive income under deduction of
tax at the rate provided for in the Convention. Where a claim is
made by a taxpayer, tax withheld at source in a Contracting State
at the rate provided for under domestic law shall be repaid in a
timely manner where that tax is withheld at a rate in excess of
that provided for under the terms of the Convention.
Article 25: Non-discrimination
For the purposes of this Convention, the Contracting States
agree that Kazakhstan shall be entitled to continue to charge the
five per cent. rate differential which, at the time of entry into
force of this Convention, exists as a matter of Kazakh law between
the taxes imposed on residents of the United Kingdom and
enterprises of Kazakhstan, for a period of five years following 1
January 1993, and that thereafter the taxes imposed on residents of
the United Kingdom under the laws of Kazakhstan shall be charged at
the same rate as the taxes imposed on Kazakh enterprises.
Article 29: Entry into force
The Contracting States understand that where any legal rules,
applicable on or after 16th December 1991, would have afforded any
greater relief from tax than is due under this Convention, any such
rules as aforesaid shall continue to have effect:
beginning, in either case, before the entry into force of the Convention.
