Authors:Aigerim Massatbayeva,
Legal consultant
Gulim Amrayeva, accountant, tax consultant
Deciding on the organizational and legal form of legalization of a foreign business in Kazakhstan, most often, the choice is between registering a limited liability company and a branch (representative office) of a foreign legal entity in Kazakhstan.
In this article is considered the features of registering a branch (representative office) of a foreign company in Kazakhstan, highlights the features of taxation and accounting, compared to an LLP with a foreign participation.
What is a concept of a branch and representative office?
A branch is a separate subdivision of a legal entity located outside its location and performing all or part of its functions, including representative functions.[1]
A representative office is a separate subdivision of a legal entity located outside its location and implementing the protection and representation of the interests of the legal entity, performing transactions and other legal actions on its behalf, with the exception of cases stipulated by legislative acts of the Republic of Kazakhstan.
Branches and representative offices are not legal entities. They are endowed with the property of the legal entity that created them and act on the basis of the provisions approved by it.[2]
Heads (directors) of branches and representative offices are appointed by the authorized body of the legal entity and act on the basis of the power of attorney.[3]
Thus, a branch has more functions and advantages for introducing commercial activities, while the registration procedure is almost identical.
Working visa for the director of a branch (representative office) of a foreign company
A branch (representative office) director may be either a foreign citizen or a citizen of Kazakhstan. In practice, questions arise: what category of visa should a branch director receive? C5 or C3? Since the director is an employee of the branch (representative office) then the Labor Code of Kazakhstan applies to him, i.e. a branch director should receive a multiple-entry work visa of category C3 for a period of one year, with the right to annual extension.[4]
Work permit for the employment of foreign labor for the director of a branch (representative office)
A work permit for a foreign national director of a foreign company is not required [5]. It is sufficient to obtain a C3 work visa with the right to annual extension.
Payment of wages in foreign currency to foreign employees
Labor relations with foreign employees are formalized in accordance with the Labor Code of Kazakhstan, including employees working remotely from abroad. Salaries are set and paid in the national currency- tenge, at least once a month no later than the first ten days of the following month. [6]Thus, wages are set in the employment contract and are paid only in tenge. In practice, tenge can be converted into foreign currency online in the employee's multicurrency card application.
BIN for a foreign company registering a branch (representative office)
A common practical question before registering a branch is whether it is necessary to obtain a BIN for a foreign company in advance? There is no requirement to obtain a BIN for a foreign company, it is also technically possible to register a branch without obtaining a BIN for the parent company. When registering a branch, it will be automatically assigned a BIN of the branch.
The procedure for registering a branch (representative office) of a foreign company
To register a branch (representative office) at the Public Service Center at the location of the branch (representative office), the following package of documents should be provided:
- Application for registration in the approved form;
- Regulations on the (branch) representative office, in 3 copies in Kazakh and Russian, which must be approved by an authorized person of the foreign company, notarized and apostilled.
The branch regulations must contain:[7]
- Name of the branch;
- location (legal address);
- subject of the branch's activities;
- the management procedure and competence of the head of the branch (representative office);
- name, location (legal address), subject of activity, data on state registration of the legal entity creating the branch (representative office).
- Power of attorney issued by a foreign company to the head (director) of the branch (representative office);
- The decision (or an extract from the Decision) of a foreign company on the establishment of a branch (representative office), notarized and apostilled, with a translation into Russian and Kazakh;
- A legalized (apostilled) extract from the trade register or another legalized (apostilled) document certifying that the given foreign company opening a branch ( representative office) in the Republic of Kazakhstan is a legal entity under the laws of its country, with a translation into Russian and Kazakh;
- copies of notarized and apostilled, with translation into Russian and Kazakh, constituent documents (charter and memorandum of association, certificate and state registration) of the foreign company creating the branch (representative office);
- A receipt or payment order confirming payment of the fee to the budget for the registration of a branch (representative office). The amount of the fee depends on whether the foreign company opening the representative office (branch) is a small, medium or large business entity in accordance with the criteria established by the legislation of the Republic of Kazakhstan, and is:
- for foreign companies classified as small business entities - 2 MCI (i.e. 7,864 tenge);
- for foreign companies classified as medium and large businesses - 6.5 MCI (i.e. 25,558 tenge).
* MCI is a monthly calculation index, equal to 3932 tenge in 2025 (approximately 8 US dollars).
- A power of attorney from the parent company to register a branch (representative office) with an authorized body, if the registration documents will be submitted by a representative. The power of attorney must be notarized, apostilled (legalized) and translated into Russian and Kazakh.
In addition, the branch director must obtain an IIN before registering the branch (representative office).
The procedure for registration of representative offices (branches) includes verification by the registering authority of the compliance of documents submitted for registration with the legislative acts of the Republic of Kazakhstan.
If the submitted documents comply with the requirements then authorized body within 1 (one) business day carries out the registration of the representative office (branch) and issues a "Certificate of registration of the representative office (branch)". During the accounting registration process, the registering authority simultaneously registers the representative office (branch) with the tax authorities of the Republic of Kazakhstan.
The certificate of registration of a representative office (branch) contains information about the date of its issue, business identification number (BIN), date of registration, name and location of the representative office (branch), name of the foreign company that created the representative office (branch).
After the registration of the representative office (branch), the director can order of a seal manufacturing and open a bank account for the representative office (branch).
Opening a bank account for a branch (representative office) of a foreign company in Kazakhstan.
To open a bank account, you must provide the following documents:
- A completed compliance questionnaire;
- Certificate of registration of a branch (representative office);
- A notarized copy of the Regulations on the (branch) representative office;
- A notarized copy of the power of attorney issued by a foreign company to the head (director) of the branch (representative office);
- A notarized copy of the Resolution (or an extract from the Decision) of a foreign company on the establishment of a branch (representative office);
- A legalized (apostilled) extract from the trade register or another legalized (apostilled) document certifying that the given foreign company opening a branch (representative office) in the Republic of Kazakhstan is a legal entity under the laws of its country, with a translation into Russian or Kazakh;
- Copies of notarized and apostilled documents (charter and memorandum of association, certificate of state registration, certificate of tax registration) of a foreign company creating a branch (representative office) with a translation into Russian or Kazakh of the constituent documents;
- Copies of notarized and apostilled documents disclosing the beneficial owner of a foreign company (passport/documents confirming the absence of a beneficial owner and other documents relevant to the business structure), with translation into Russian or Kazakh.Beneficial owner - an individual who ultimately directly or indirectly (through third parties) owns (has a predominant participation of more than 25% in the capital) a client - a legal entity or has the ability to control the actions of a future client of the bank.[8]
- In practice, depending on the bank, additional documents may be requested.
Comparative table of taxation and features of accounting and tax records of an LLP, representative and branch.
|
Parameter |
Branch of a foreign company |
Representative office of a foreign company |
LLP with foreign participation |
|
Legal status |
A structural subdivision of a foreign company that carries out part of its functions in the Republic of Kazakhstan. |
A structural subdivision of a foreign company that represents its interests and does not carry out commercial activities. |
A legal entity registered in the Republic of Kazakhstan with the participation of foreign individuals or legal entities. |
|
Registration |
Registration with the justice authorities of the Republic of Kazakhstan with assignment of a BIN. |
Registration with the justice authorities of the Republic of Kazakhstan with assignment of a BIN. |
State registration with the justice authorities of the Republic of Kazakhstan with assignment of a BIN. |
|
Taxation |
Subject to corporate income tax (CIT) at a rate of 20% on income received from activities in the Republic of Kazakhstan.[9] |
Not subject to corporate income tax if there is no commercial activity. |
Subject to corporate income tax at a rate of 20% on the total annual income.[10] |
|
Taxation regimes |
Generally regime[11]
|
Generally regime[12]
|
Special tax regimes, generally regime under certain conditions .[13]
|
|
Income tax benefits |
Not provided.[14]
|
Not provided[15]
|
Possible depending on the type of activity.[16]
|
|
Net Income Tax |
Additionally, a tax on net income is paid at a rate of 15% after payment of corporate income tax.[17]
|
Not applicable |
When distributing dividends to foreign participants, a tax is withheld at the source of payment at a rate of 15% (in other cases 10%-20%).[18] |
|
Value Added Tax (VAT) |
Must be registered as a VAT payer if the turnover threshold of 20,000 MCI is exceeded.[19]
|
Not a VAT payer if there is no taxable turnover.[20]
|
Must be registered as a VAT payer if the turnover threshold of 20,000 MCI is exceeded.[21]
|
|
Transport tax, property tax, land tax and others |
Taxable if there is a taxable object. |
Taxable if there is a taxable object. |
Taxable if there is a taxable object. |
|
Individual income tax, social security tax, social payments |
Taxed depending on the category of the employee and the availability of benefits |
Taxed depending on the category of the employee and the availability of benefits |
Taxed depending on the category of the employee and the availability of benefits |
|
Availability of cash register |
Mandatory for monetary settlements with individuals.[22]
|
Mandatory for monetary settlements with individuals.[23]
|
Mandatory for monetary settlements with individuals.[24]
|
|
Accounting |
Conducted in accordance with the legislation of the Republic of Kazakhstan and IFRS.[25] |
Conducted in accordance with the legislation of the Republic of Kazakhstan and IFRS.[26]
|
Conducted in accordance with the legislation of the Republic of Kazakhstan and IFRS.[27]
|
|
Responsibility |
The foreign company bears full responsibility for the obligations of the branch. |
The foreign company bears full responsibility for the obligations of the representative office. |
An LLC is liable within the limits of its property; participants are not liable for the obligations of the LLC.[28] |
|
Liquidation |
It is carried out by closing a branch by decision of a foreign company with notification of the authorities of the Republic of Kazakhstan. |
It is carried out by closing a representative office by decision of a foreign company with notification of the authorities of the Republic of Kazakhstan. |
It is carried out in accordance with the procedure provided for by the legislation of the Republic of Kazakhstan for legal entities. |
All conclusions and proposals reflected in this article are advisory urposes and do not entail obligations for any specific actions by a third party. The information is current at the time of publication. If you have any questions, please contact (contacts: +77715804141, Masatbaeva.a@qazlegalconsult.kz).
[1]Clause 1, Article 43 of the Civil Code of the Republic of Kazakhstan dated December 27, 1994.
[2]Clause 2 of Article 43 of the Civil Code of the Republic of Kazakhstan dated December 27, 1994.
[3]Clause 5 of Article of the Civil Code of the Republic of Kazakhstan dated December 27, 1994.
[4]Appendix 1 of the "Rules for issuing invitations, coordinating invitations for entry of foreigners and stateless persons into the Republic of Kazakhstan, issuing, canceling, restoring visas of the Republic of Kazakhstan, as well as extending and reducing their validity periods" approved by the Joint Order of the Acting Minister of Foreign Affairs of the Republic of Kazakhstan dated November 24, 2016 No. 11-1-2/555 and the Minister of Internal Affairs of the Republic of Kazakhstan dated November 28, 2016 No. 1100. Registered in the Ministry of Justice of the Republic of Kazakhstan on December 15, 2016 No. 14531.
[5]Clause 16 of the Resolution of the Government of the Republic of Kazakhstan dated November 24, 2023 No. 1041
"On determining the list of persons who do not require permits from local executive bodies to attract foreign labor to carry out labor activities."
[6]Art. 113 of the Labor Code of the Republic of Kazakhstan dated November 23, 2015 No. 414-V ЗРК.
[7]Art. 8 of the Law of the Republic of Kazakhstan dated April 17, 1995 No. 2198.
"On state registration of legal entities and registration of branches and representative offices."
[8] Art. 1 of the "Rules for the submission of information on beneficial owners by clients (their representatives) at the request of the subject of financial monitoring", approved by the Order of the Chairman of the Agency of the Republic of Kazakhstan for Financial Monitoring dated September 26, 2022 No. 35. Registered with the Ministry of Justice of the Republic of Kazakhstan on September 28, 2022 No. 29882.
[9]Article 226 of the Tax Code, Article 313 of the Tax Code, paragraph 2 of Article 651 of the Tax Code.
[10]Article 226 of the Tax Code, Article 313 of the Tax Code, paragraph 2 of Article 651 of the Tax Code.
[11]Clause 4 of Article 683 of the Tax Code
[12]Clause 4 of Article 683 of the Tax Code
[13]Clause 4 of Article 683 of the Tax Code.
[14]Article 708 of the Tax Code.
[15]Article 708 of the Tax Code.
[16]Article 293 of the Tax Code.
[17]Article 652 of the Tax Code.
[18]Article 646 of the Tax Code.
[19]Article 82 of the Tax Code.
[20]Article 82 of the Tax Code.
[21]Article 82 of the Tax Code.
[22]Article 167 of the Tax Code.
[23]Article 167 of the Tax Code.
[24]Article 167 of the Tax Code.
[25]Article 16 of the Law of the Republic of Kazakhstan dated February 28, 2007 N 234 "On accounting and financial reporting".
[26]Article 16 of the Law of the Republic of Kazakhstan dated February 28, 2007 N 234 "On accounting and financial reporting".
[27]Article 16 of the Law of the Republic of Kazakhstan dated February 28, 2007 N 234 "On accounting and financial reporting".
[28]Article 3 Law of the Republic of Kazakhstan dated April 22, 1998 No. 220-I “On limited and additional liability partnerships”.
