The treaty, initially signed between the two countries on July 2 2012, covers the personal income tax and profit tax in FYR Macedonia and the corporate income tax and the individual income tax in Kazakhstan. As is usually the case, the treaty is mostly harmonised with the OECD model; however, certain specifics can be noted.
Building/construction sites as well as assembly or installation projects (including any related site activity of supervisory nature) lasting for more than six months will, according to the treaty, imply a permanent establishment (PE). Services, including consulting, provided via employees and related parties, in aggregate duration in excess of six months within a 12 month period are also considered PEs.
PEs are, in addition to the standard classifications, also deemed to include installations/structures for exploration of natural resources or related supervisory service, drilling rigs and natural resources exploration ships.
As far as withholding taxes are concerned, the treaty with Kazakhstan does not deviate significantly from the norm or offer any particular tax incentives at least from the FYR Macedonian perspective; dividends are taxed at the 5% or 15% rate (the preferential rate being applicable in cases with a minimum 25% capital participation). A standard 10% withholding tax rate on interest has been agreed on and the same rate is applicable to royalties.
Employment, pensions, and artists/sportsmen income articles of the treaty are fully harmonised with the OECD convention.
Regarding the elimination of double taxation, the treaty stipulates that both countries will allow deduction from taxes in the amount of tax paid on it in the other state.
Pending Kazakhstan's ratification, the treaty will enter into force as soon as the ratification is completed and will be applicable as of the beginning of the calendar year following the year of entry into force.