Thin capitalisation rule in Kazakhstan

Thin capitalisation rule is articulated by the Article 246 of the Tax code and deductible threshold is calculated according to the following formula:

(A+E) + (AE/AL) * (k) * (B+C+D), where

A – sum of interest, excluding the sums of B, C, D, E;

B – sum of interest which is due to related party, excluding the sum of E;

C – sum of interest which due to parties located in the low tax jurisdiction, excluding the sum of B;

D – sum of interest which is due to unrelated lender under the loans secured or guaranteed by the related party in cases where such security or guarantee is executed, excluding the sum of C;

E – sum of interest which is due for the loans provided by the Kazakhstan credit partnerships;

k – maximum coefficient (7 for financial organisations and 4 for other entities);

AE (average annual equity) – average annual sum of equity (is equal to average arithmetical sum of equity on the end of each month of the tax period);

AL (average annual liabilities) – average sum of liabilities (equal to average arithmetical maximal sum of liabilities on the end of each month of the tax period. Excluding the following liabilities: taxes, employee revenues, unearned revenues, except related party unearned revenues, interests and fees, dividends).