How to pay taxes when trading cryptocurrency in Kazakhstan and sleep tight

Founding Father of the United States Benjamin Franklin wrote: “In this world nothing can be said to be certain, except death and taxes.” The whole history of mankind so far confirms his words.

The cryptocurrency market is gradually entering the legal field in all civilized countries. Kazakhstan does not lag behind the global trend and even takes one of the leading places. This is confirmed by the FinTech Lab pilot project based on the Astana International Financial Center (AIFC), within which the ATAIX Eurasia exchange was the first to start its work on the market on August 8, 2022. Another important factor is legislative initiatives that are designed to bring the crypto industry out of the gray field, secure all market participants and increase budget revenues.

On February 6, 2023, President of Kazakhstan Kassym-Jomart Tokayev signed Law No. 193-VII “On Digital Assets in the Republic of Kazakhstan”, which will come into force on April 1, 2023, we mentioned this earlier in our news channel in Telegram. And on January 1, 2024, amendments to Article 331 of the Tax Code of the Republic of Kazakhstan will come into force, which will allow individuals to pay personal income tax (PIT) from the increase in value when selling digital assets.

How to legally buy and sell cryptocurrency in Kazakhstan

In order for your cryptocurrency transactions to be absolutely legal (unlike p2p transactions), and for you not to have any difficulties in confirming your assets, we recommend that you use licensed cryptocurrency exchanges.

P2P transactions (peer-to-peer or person-to-person) are monetary transactions between two individuals when funds are transferred from one personal account to another.

According to Article 33-1 of the Law "On Informatization", a digital asset is not a means of payment, and the issue and circulation of unsecured digital assets in the territory of the Republic of Kazakhstan are prohibited, with the exception of the special economic zone of the Astana International Financial Center.

The issue of legalization is especially relevant for exchange transactions for deposits and withdrawals of fiat funds through the banking system.

Fiat (or fiduciary) money is money, the nominal value of which is established and guaranteed by the state, they are used as a means of payment based on state laws (for example, tenge, US dollar or euro).

At the moment, the following banks of Kazakhstan are participating in the FinTech Lab pilot project from the AIFC:

• Halyk Bank 

• Altyn Bank 

• Bereke Bank 

• Nurbank

• CenterCredit

• Freedom Bank 

• Eurasian Bank 

• Zaman Bank 

Fiat-crypto-fiat transactions between licensed exchanges and banks participating in the project have been successfully carried out for more than seven months and their volume is constantly growing.

In rare cases, when a bank has questions about the origin of funds, it can request documents confirming income - PIT (personal income tax) certificate, which, among other things, can be obtained free of charge on the e-government website www.egov.kz. You can find more information on how to get certificate of income here.

In addition, ATAIX Eurasia, if necessary, can provide you with documented evidence of any transaction on our platform. Such a document is called an exchange certificate, it certifies the fact of the conclusion of the purchase and sale of a digital asset, as well as the fact of registration and accounting by the exchange of this transaction.

How does an individual pay taxes today

The tax legislation of the Republic of Kazakhstan today does not regulate the procedure for taxing the income of individuals from the sale of Digital Assets.

Such changes will come into force only from 01.01.2024.

While the concept of “Digital Asset” is not included in Article 331 of the Tax Code of the Republic of Kazakhstan (this article regulates the taxation of income from the increase in value from the sale of property), the object of taxation is not the positive difference between the price of the sale of property and the price of its acquisition, but the full cost of the sale of property (crypto asset). In other words, when you sell cryptocurrency, the entire proceeds from the transaction are taxed. Although it can be reduced by tax deductions, it is best to consult with your accountant.

At the same time, the rate of personal income tax (PIT) is 10%.

You must file a Declaration on Personal Income Tax (Form 240.00) for the fiscal year on your income that is subject to PIT.

The declaration for the reporting year must be submitted in the year following the reporting year by 31 March.

Thus, in order to pay the tax, you need to:

1) During the reporting financial year, sell cryptocurrency and receive income that is subject to personal income tax (PIT);

2) Submit a declaration in form 240 for the reporting year by March 31 of the next year;

3) At the end of the year, pay 10% of the PIT from the income received.

Example 1

During the year, you sold 100 000 tenge worth of cryptocurrency on the exchange. If we neglect the withdrawal fee and tax deductions, then the tax will be equal to:

Income = 100 000 tenge;

Tax = 100000 * 10% = 10000 (tenge).

How individuals will pay tax from January 1, 2024

Starting from January 1, 2024, amendments to Article 331 of the Tax Code of the Republic of Kazakhstan will come into force, according to which, PIT is paid only if there is an income from the increase in value from the sale of digital assets. That is, the payment and declaration algorithm remains the same, but now the tax base will not be income but income growth. Which, of course, is much more profitable for a crypto investor.

Example 2

During the year, you purchased digital assets in the amount of 100 000 tenge, at the end of the year their value increased to 150 000 tenge. You have sold assets and withdrawn them to your bank account.

In this case, the object of taxation is the increase in income (in this example, without taking into account the withdrawal commission):

Income increase = 150 000 – 100 000 = 50 000 (tenge);

Tax = 50000 * 10% = 5000 (tenge).

In the event that the value of the assets fell at the time of sale, and there was no increase in income, then the tax is not paid.

Moreover, the crypto-exchange and the bank do not act as tax agents and the responsibility for paying the tax lies with the crypto-investor.

In order to simplify the process of accounting for transactions on the exchange for our users as much as possible, ATAIX Eurasia is developing a special functionality for exporting transaction history and automatically filling out form 240.

If you still have questions about the implementation of cryptocurrency transactions in the legal field, write to our customer support service, we will be happy to help you solve even the most convoluted problems!