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Kazakhstan's corporate income tax rate will be cut in half over the next three years after the country's president approved drafts of the new tax and budget codes.

The new rate of corporate income tax will come into force yearly, decreasing from 30% to 20%, 17.5% and 15% by 2011.

"A lower corporate tax rate will assist in the development of an attractive fiscal environment, which will stimulate the retention of income in Kazakhstan," said Zhanna Tamenova, head of tax and legal services at Ernst & Young, Kazakhstan.

"It will also encourage a more competitive business climate compared to other jurisdictions, especially neighbouring countries," Tamenova said. The corporate tax rate in Russia is at the moment lower at 24% and Kyrgystan has certain foreign investment incentives.

The president also announced that tax relief for small and medium sized businesses would continue. Terms for transfers of losses have been increased to 10 years from three years and small and medium-sized businesses will no longer have to make advanced corporate tax payments.

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