Exempted Pension Payments from EPSF Spared from IPN: Insightful Information Revealed
The Kazakhstan government has announced significant changes to the Tax Code, effective from January 1, 2026, that will exempt Unified Accumulative Pension Fund (UAPF) pension payments from Individual Income Tax (IIT).
Under the current Tax Code, IIT is withheld from all types of pension payments, including those funded by mandatory pension contributions (MPC), mandatory professional pension contributions (MPPC), and voluntary pension contributions (VPC). However, starting from 2026, this exemption will apply to all UAPF pension payments.
The exemption also extends to lump-sum housing/medical payments (LSP) from the UAPF. This means that recipients of these payments will no longer have to pay IIT on them.
It's important to note that this exemption does not apply to pension payments made to non-residents of Kazakhstan. The new Tax Code does not apply to such payments, and IIT will continue to be withheld at a rate of 10% at the source of payment for these payments and LSP from the UAPF.
Outstanding liabilities on LSP for housing/medical purposes, deferred until retirement, will be cancelled for Kazakhstan residents. This exemption does not extend to pension payments made to non-residents.
The current practice of transferring pension contributions to individual pension accounts before taxation remains in effect. This means that tax deductions for voluntary pension contributions, applied to taxable income at the source of payment, will be cancelled starting from 2026.
However, the norm that voluntary pension contributions transferred by a tax agent to the UAPF on behalf of an employee are not considered income for the employee (and thus not subject to IIT), and are deductible for the employer in calculating corporate income tax, will remain in effect. This means that both the employee and the employer will continue to benefit from tax incentives regarding voluntary pension contributions.
Adjustment sums and tax deductions are also taken into account under the current Tax Code. The new Tax Code does not affect these aspects.
The new Tax Code does not affect the exemption of pension payments from IIT starting from 2026. The affected individuals who are exempt from the planned tax law changes starting from 2026, and can receive their pension and lump-sum payments from the UAPF tax-free, are not specified in the provided search results.
In summary, the changes to the Tax Code in Kazakhstan will significantly benefit residents by exempting UAPF pension payments and LSP from IIT, starting from January 1, 2026. However, this exemption does not apply to pension payments made to non-residents of Kazakhstan.
