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In a significant move, Kazakhstan is set to enforce a new Tax Code from January 1, 2026, altering the rules for taxing physical persons' income. Signed by President Kassym-Jomart Tokayev on July 18, 2025, the new Tax Code and the accompanying tax legislation amendments aim to balance the tax burden between wage funds and Value Added Tax (VAT), while also introducing progressive income tax rates and adjustments to social contributions.
Personal Income Tax Rate
Employment income for resident and nonresident physical persons will continue to be taxed at a flat rate of 10% for residents and a higher rate for nonresidents on other income (20%). Dividends and capital gains will remain subject to 5% tax for residents and 15% for nonresidents. Residents will still be taxed on worldwide income, and tax filing will remain individual, with no joint filing permitted.
Social Deductions
Taxpayers can continue to deduct obligatory pension fund contributions and medical expenses within certain limits from their taxable income, effectively reducing their personal income tax burden. However, several social deductions such as those for treatment, education, and mortgage payments will be abolished.
Employer Social Contributions
The new Tax Code reforms aim to reduce the employer social contribution burden as VAT is increased. Although exact figures for employer social contributions have not been specified, it is expected that social contribution rates for employers will increase from 2026.
Disability Deductions
Deductions for employees with disabilities in Group I and II will increase from 882 MCI in 2026 to 5,000 MCI. This change is aimed at reducing speculative deals while considering the interests of owners who purchased property before the changes were introduced in the Tax Code.
Individual Property Tax (IPT)
The changes in the IPT are aimed at supporting citizens with low and middle incomes, increasing the taxation of citizens with high incomes, and simplifying the taxation process for tax agents. The minimum ownership period for exemption from IPT when selling residential real estate is increased to more than two years.
Progressive Individual Income Tax Scale
A progressive individual income tax scale is being introduced, with incomes up to 8,500 MCI taxed at 10%, and excess amounts taxed at a rate of 15%.
Mechanism for Offsetting Contributions
A mechanism for offsetting paid contributions has been added, preventing duplication and protecting employees from excessive deductions. The base for mandatory medical insurance contributions will be capped at 20 times the minimum wage (MW) starting from 2026.
Mandatory Pension Contribution Rate
The mandatory pension contribution rate will rise from 1.5% to 2.5%. The maximum base for calculating medical contributions paid by the employer for an employee will be increased to 40 times the MW.
Transitional Provisions
Transitional provisions apply to property obtained in ownership before January 1, 2026, where the old order (exemption from tax after more than one year of ownership) still applies.
Social Contributions for Workers with Group III Disabilities, Parents of Children with Disabilities, and Other Categories of Citizens
The deductions for workers with Group III disabilities, as well as for parents of children with disabilities and other categories of citizens, will remain the same.
In summary, while the 2026 Tax Code increases VAT rates substantially, taxation on individual incomes is expected to remain at flat personal income tax rates with continued standard deductions for social contributions. Important social deduction allowances like pension and medical contributions remain deductible for individuals. The government signals intent to reduce employer social contribution burden as VAT is increased, but precise new employer social contribution rates have not been specified in the available sources. For exact updated social contribution rates or detailed social deduction limits for 2026, consult Kazakhstan's official Tax Code legal texts or government releases beyond July 2025.
Personal finance decisions could be impacted by the upcoming changes in the taxation of personal income in Kazakhstan, as the new Tax Code maintains flat personal income tax rates (10% for residents and higher for nonresidents). However, in the realm of business finance, employers are likely to face increasing social contribution rates from 2026 due to a planned reduction in the employer social contribution burden as Value Added Tax (VAT) is increased.
