Kazakhstan + UAE: The Dual Structure in 2026 — Tax, Treaty, Permanent Establishment and the Currency Perimeter

A Kazakhstan + UAE dual structure pairs an operating company in Kazakhstan — handling the local market, staff and counterparties — with a UAE company holding the international perimeter: intellectual property, export contracts, shareholdings or financing. It rests on three pillars: a double tax convention in force, the absence of the UAE from Kazakhstan’s list of states with preferential taxation, and the gap between 20% corporate income tax in Kazakhstan and 9% corporate tax in the UAE.

The United Arab Emirates do not appear in the list of states with preferential taxation approved by Order No. 492 of the Minister of Finance of the Republic of Kazakhstan of 12 September 2025, in force from 1 January 2026. That single fact separates this structure from arrangements with an offshore element, and it is what makes the structure work.

The comparison worth making before choosing the second jurisdiction. Hong Kong and Macao are on that list, within the entry for the People’s Republic of China covering only the territories of the special administrative regions. For a Kazakhstan payer that means a higher withholding rate on payments to Hong Kong and a denial of the corresponding deduction. Kazakhstan + UAE and Kazakhstan + Hong Kong sit on opposite sides of that line under Kazakhstan tax law.

What follows sets out how the structure is assembled, where it breaks, and which three exposures — permanent establishment, place of effective management, and controlled foreign company rules — can wipe out its economics.

1. The Legal Framework: Two Systems and One Treaty

The Kazakhstan side

•     The Code on Taxes and Other Obligatory Payments to the Budget — Law No. 214-VIII of 18 July 2025, in force from 1 January 2026, replacing the Tax Code of 25 December 2017. Registration of non-residents sits in Articles 95 and 96; interaction between tax authorities and banks in Article 55.

•     Order No. 492 of the Minister of Finance of 12 September 2025 approving the list of states with preferential taxation, in force from 1 January 2026. It repealed Order No. 142 of 8 February 2018 (registered under No. 16404), which had itself repealed Order No. 595 of 29 December 2014. The chain runs: Government Resolution No. 1318 of 31 December 2008 → Order No. 595 of 2014 → Order No. 142 of 2018 → Order No. 492 of 2025.

•     The Law on Currency Regulation and Currency Control of 2 July 2018, with the Rules on Currency Operations and on Monitoring Currency Operations approved by National Bank Management Board resolutions of 30 March 2019.

The UAE side

•     Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses — issued 3 October 2022, published 10 October 2022, applicable to Tax Periods from 1 June 2023.

•     Cabinet Decision No. 100 of 2023 and Ministerial Decisions No. 229 and 230 of 2025 — the Qualifying Free Zone Person regime. The Ministerial Decisions were issued on 28 August 2025, apply retroactively from 1 June 2023 and repealed Ministerial Decision No. 265 of 2023.

•     Cabinet Decision No. 85 of 2022 — determination of UAE tax residency, the basis on which the Federal Tax Authority issues a tax residency certificate.

The treaty

The Convention between the Governments of the Republic of Kazakhstan and the United Arab Emirates for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income was signed in Abu Dhabi on 22 December 2008, ratified by Law of the Republic of Kazakhstan No. 134-V of 4 October 2013, and entered into force on 27 November 2013.

The dates of signature, ratification and entry into force are almost five years apart — a common pattern with treaties, and one that matters when analysing historical periods. For taxes withheld at source the Convention applies to amounts paid or credited from 1 January of the year following entry into force, that is from 1 January 2014; for other taxes, to taxable periods beginning on the same date.

The Convention is not read on its own. It is modified by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). A consolidated text of the MLI and the Convention exists and is what reflects the operative rules — including the principal purpose test. Citing the 2008 text without the MLI overlay gives an incomplete picture.

2. Why the UAE’s Status on the Kazakhstan List Decides Everything

Under Article 20 of the Tax Code a state is treated as a state with preferential taxation if it meets either of two conditions: its profit tax rate is below 10 per cent, or it has laws on the confidentiality of financial information or laws allowing secrecy over the beneficial owner of property or income, or over the participants, founders and shareholders of a company.

The second test — confidentiality — does not apply to a state or territory with which Kazakhstan has a treaty providing for exchange of information between competent authorities on tax matters, except for states and territories that do not in fact provide such exchange.

Article 20 defines the failure to exchange through two concrete markers: the Kazakhstan authority has received a written refusal from the foreign competent authority to supply information covered by the treaty, or the requested information has not been supplied for more than two years after the request was sent. This is a recorded fact rather than a matter of judgement.

What changes if the counterparty is on the list

•     Dividends paid by a Kazakhstan LLP to a recipient in a preferential-tax state are subject to corporate income tax withheld at source at 20 per cent instead of the base rate of 15 per cent.

•     Other Kazakhstan-source income is likewise taxed at the higher rate.

The deduction rule was relaxed in 2026 — an important correction to a widely repeated statement. The former blanket denial has changed: the new Tax Code allows a deduction for the cost of services acquired from a related non-resident registered in a preferential-tax state, capped at 3 per cent of taxable income. The claim that "payments to such persons are not deductible at all" describes the previous version and is inaccurate from 1 January 2026.

The UAE’s maximum corporate tax rate of 15% exceeds the 10% threshold, and a convention containing exchange-of-information provisions is in force between Kazakhstan and the UAE. Neither preferential-taxation test is met, and the United Arab Emirates do not appear in the list in force from 1 January 2026.

How the content of the list was verified. The adilet.zan.kz portal blocks automated access, so the content of the list approved by Order No. 492 was checked against published reproductions of the order: in these, no United Arab Emirates entry appears between "New Zealand" and "Republic of Palau", where it stood as item 41 in the 2008 version. Before acting on a specific transaction, open the text of the order directly on adilet.zan.kz.

This is a status that can change, and it must be checked as at the transaction date. The list has been revised in 2008, 2014, 2018, 2020, 2022 and 2025. Under Government Resolution No. 1318 of 31 December 2008 the United Arab Emirates were on it — "only in respect of the territory of the city of Dubai". That entry is absent from the current version. A structure built on today’s status requires an annual check of the list, not a one-off check at set-up.

3. Three Working Configurations

The dual structure is not one arrangement but three, with different economics and different risk profiles. The choice follows where value is actually created.

Configuration 1. Holding

The UAE company holds participation interests in a Kazakhstan LLP. The LLP’s profit is taxed in Kazakhstan, distributed as dividends with withholding at source, and is then not taxed in the UAE, which levies no tax on distributions to shareholders. This suits consolidation of several assets and exit planning through a sale of interests at UAE level.

Configuration 2. Operating and export

The Kazakhstan LLP handles production or procurement while the UAE company acts as the trading or distribution arm on external markets. Profit is split between the two jurisdictions by functions, assets and risks. This is the configuration most exposed to tax scrutiny: it depends directly on transfer pricing and on whether the UAE leg performs a real function.

Configuration 3. Intellectual property and financing

The UAE company owns rights in software, trademarks or technology and licenses them to the Kazakhstan company, or provides it with financing. Royalties and interest flow out of Kazakhstan with withholding within the limits set by the Convention.

The Convention caps the tax charged in the source state on royalties at ten per cent of the gross amount of the royalties. The caps on dividends and interest should be checked against the consolidated Convention text as modified by the MLI: they depend on the ownership structure and on the beneficial owner status of the recipient.

Which configuration fails first

The configurations differ in durability, and the difference is driven not by the rate but by how easily a tax authority can challenge the function of the UAE leg.

•     Holding — the most durable. Holding participation interests is a function in itself and does not need to be evidenced through staff and operating processes. The live questions are beneficial ownership on dividend payments and the principal purpose test.

•     Operating and export — the most exposed. It requires simultaneously evidencing functions and risks on the UAE side, defending the profit split under transfer pricing rules, and not creating a permanent establishment in Kazakhstan through the actions of staff.

•     Intellectual property — in between. Durability turns on where the rights were created or acquired and who bears the cost of developing them. A formal transfer of rights to the UAE without moving the development and risk-management functions is challenged on the same grounds as the operating configuration.

4. The Kazakhstan Leg: Which Taxes Arise

The general rate of corporate income tax in Kazakhstan is unchanged at 20 per cent for 2026. The new Tax Code did, however, introduce differentiated rates by activity: 25 per cent for banks (other than lending to business) and gaming, 5 per cent in 2026 and 10 per cent from 2027 for social-sector organisations, and 3 per cent for agricultural producers.

From 1 January 2026 the base VAT rate rose from 12 to 16 per cent, reduced rates of 5 and 10 per cent were introduced for certain categories, and the mandatory registration threshold fell from 20,000 to 10,000 monthly calculation indices. The tax application is filed no later than five working days after the threshold is exceeded.

Dividends to the UAE company

The base rate of withholding tax on dividends paid to a non-resident is 15 per cent. For recipients in preferential-tax states the rate is 20 per cent. From 2026 a reduced rate of 5 per cent applies to investors holding at least 25 per cent of the charter capital. A convention may reduce the rate further — provided the recipient has evidenced tax residency and is the beneficial owner of the income.

The three-year exemption on dividends and capital gains has been abolished, changing the economics of the holding configuration. Under the previous Tax Code, dividends and capital gains were exempt from withholding where the participation interest or shares had been held for more than three years. That exemption was abolished from 1 January 2026, raising the burden on non-residents’ passive income. Some calculators and reference services still show the three-year exemption — that describes the previous version and is out of date for 2026.

From 2026 a 10 per cent rate also applies to interest on loans, credits and debt securities paid to a non-resident. This bears directly on the configuration in which the UAE company finances the Kazakhstan leg.

The treaty rate does not apply automatically. A Kazakhstan withholding agent applies the Tax Code rate if it does not hold proper evidence of the recipient’s residency. The document must be provided before payment, meet legalisation or apostille requirements and carry a notarised translation. An error here shifts the tax burden onto the Kazakhstan company in its capacity as withholding agent.

Rates and thresholds on both sides

Parameter	Kazakhstan	UAE
General corporate tax rate	20%	9% on taxable income above AED 375,000; 0% below
Differentiated rates	25% for banks (other than business lending) and gaming; 5% in 2026 and 10% from 2027 for the social sector; 3% for agricultural producers	Not applicable
Preferential rate	AIFC participant preferences, by activity	0% on Qualifying Free Zone Person qualifying income, subject to conditions
Withholding on dividends to non-residents	15% base; 20% for preferential-tax states; 5% where at least 25% of charter capital is held	None on distributions to shareholders
Withholding on interest	10% from 2026	None
Convention cap on source-state royalties	10%	10%
VAT rate and threshold	16% from 1 January 2026 (previously 12%), with reduced rates of 5% and 10%; threshold 10,000 monthly calculation indices instead of 20,000	5%; threshold AED 375,000 of taxable supplies
Temporary small business relief	Special tax regimes under the Tax Code	Small Business Relief up to AED 3,000,000 revenue, periods to 31 December 2026
Currency contract registration number	Above USD 500,000 for capital movement; above USD 50,000 for export and import	Not applicable

Withholding rates for other categories of non-resident income — services, interest, capital gains on a disposal of participation interests — sit in separate Tax Code provisions and differ by income type. They must be checked against the version in force for the specific payment rather than inferred from the dividend rate.

VAT on services from a non-resident: the cost that gets left out

Where a Kazakhstan company buys services or works from the UAE company and the place of supply is Kazakhstan, the obligation to assess and pay value added tax falls on the Kazakhstan buyer. This is not a deduction from the supplier’s payment but a self-assessed charge on top of the contract amount.

The charge on the acquisition of works and services from a non-resident applies regardless of whether the non-resident is registered in Kazakhstan or has a permanent establishment there. What determines it is the place of supply, established by Tax Code rules for the relevant type of work or service.

Why this matters specifically for a dual structure. Management, consultancy, marketing and licence payments from the Kazakhstan company to the UAE company are a standard feature of the design. Where the place of supply is Kazakhstan, each such payment carries value added tax assessed by the Kazakhstan side. Model it separately from withholding tax: it is not covered by the Convention, because double tax treaties do not extend to indirect taxes.

The AIFC alternative

The Astana International Financial Centre is a separate legal regime inside Kazakhstan with its own regulation, English law and specific tax preferences for participants. In a dual structure the AIFC is sometimes considered as a replacement for the UAE leg and sometimes as a third element. The tax outcome depends on the participant’s activity and on the preferences in force at the date of registration, and requires separate verification.

5. The UAE Leg: 9%, 0% and When Zero Actually Applies

A UAE resident juridical person is subject to corporate tax at 0 per cent on taxable income up to AED 375,000 and 9 per cent above that, computed on net profit after deductible expenditure.

The 0 per cent rate for a Qualifying Free Zone Person applies not to the whole of a free zone company’s activity but only to qualifying income. Income from transactions with persons outside the free zones qualifies only under a closed list of Qualifying Activities, and ownership or exploitation of immovable property outside a free zone is an Excluded Activity. The status requires substance, audited financial statements and compliance with the de minimis test.

Small Business Relief is closing now. The relief under Article 21 of the Corporate Tax Law and Ministerial Decision No. 73 of 2023 allows a resident taxpayer with revenue up to AED 3,000,000 to be treated as having no taxable income, but applies only to Tax Periods ending on or before 31 December 2026. For a calendar-year company the period ending 31 December 2026 is the last in which the election can be made. The relief is unavailable to Qualifying Free Zone Persons: free zone status and Small Business Relief are mutually exclusive.

6. Evidencing Residency on Both Sides

The structure rests on two documents, and both are issued by tax administrations rather than registrars.

•     The UAE tax residency certificate. Issued by the UAE Federal Tax Authority on the basis of Cabinet Decision No. 85 of 2022. It is what the Kazakhstan withholding agent needs in order to apply reduced treaty rates.

•     Kazakhstan residency confirmation. Required where income moves in the opposite direction and the UAE side must apply the Convention.

A UAE tax residency certificate is issued for a defined tax period and is not open-ended. To support a reduced rate it must cover the period in which the payment is made, so for recurring payments obtaining it becomes an annual exercise rather than a one-off step at set-up.

The residency document must reach the withholding agent before the income is paid. Producing it afterwards does not remove the agent’s obligation to withhold at the Tax Code rate; recovering over-withheld tax is a separate procedure with its own deadlines and documentary requirements.

A residency certificate evidences entitlement to the Convention but does not answer the principal purpose test. Under the MLI a treaty benefit is denied where it is reasonable to conclude that obtaining that benefit was one of the principal purposes of an arrangement or transaction, unless granting the benefit is shown to be in accordance with the object and purpose of the treaty.

7. Permanent Establishment: The Structure’s Principal Exposure

A permanent establishment is the mechanism by which a foreign company becomes taxable in the source state as though it operated there through a separate entity. For a dual structure it is the main scenario in which the UAE leg ceases to be "external" and falls within Kazakhstan tax.

What creates one in practice

•     A fixed place of business in Kazakhstan through which the UAE company carries on business wholly or partly.

•     A dependent agent — a person acting in Kazakhstan on behalf of the UAE company with authority to conclude contracts, or playing the principal role in concluding them.

•     Provision of services by the UAE company in Kazakhstan beyond the period set by the Convention.

The most common factual scenario is staff. Where people physically in Kazakhstan negotiate, agree terms and in substance shape the UAE company’s deals, the dependent agent question arises regardless of whose payroll they sit on. Formally employing them through the Kazakhstan LLP while they work in the UAE company’s interest does not solve the problem — it compounds it, adding a related-party pricing question to the permanent establishment exposure.

8. Place of Effective Management: The Exposure Discovered Late

A Kazakhstan tax resident is not only an entity created under Kazakhstan law but also an entity created under the law of a foreign state whose place of effective management — the location of its actual governing body — is in Kazakhstan.

The practical consequence: a UAE company whose decisions are all taken by people physically in Almaty or Astana may be treated as a Kazakhstan tax resident. It would then pay Kazakhstan corporate income tax on worldwide income rather than on Kazakhstan-source income alone, and the entire economics of the structure collapses.

Where the place of effective management is found to be in Kazakhstan, the foreign entity must file a tax application for registration with the tax authority. That ground for registration sits in the Tax Code alongside opening a bank account and operating through a permanent establishment.

What is actually examined. Where board meetings and shareholder meetings are held, where key contracts are signed, where decisions on asset disposal and hiring are taken, where primary documents and accounting records sit, and where the means of access to the bank account are issued and actually used. A UAE-resident director who takes no decisions does not satisfy the effective management test.

9. Controlled Foreign Company Rules

CFC rules are addressed not to the structure itself but to its Kazakhstan beneficiaries — Kazakhstan residents holding interests in foreign companies.

The mechanism is that, in defined circumstances, the profit of a foreign company is included in the taxable income of its Kazakhstan controlling person and taxed in Kazakhstan even where no dividend has been distributed. The control tests, thresholds and exemptions sit in the Tax Code and should be checked against the version in force: CFC rules are among the most frequently amended parts of Kazakhstan tax law.

The practical sequence here runs opposite to the usual one: controlled foreign company rules are tested before the structure is built rather than after, because they determine who should hold the UAE company. Changing the ownership after the structure is running carries tax consequences on both sides, whereas choosing the right ownership configuration at the outset does not.

The new Tax Code also contains a quantitative filter: where the financial profit of a controlled foreign company or its permanent establishment is below 195 times the monthly calculation index in force on the first day of the tax period, the company is not treated as a controlled foreign company — provided it is not registered in a preferential-tax state.

The UAE’s absence from the preferential list does not switch off the CFC question. The list of preferential-tax states and the CFC rules are two separate mechanisms with different tests. The first operates on withholding rates and deductions at the level of the Kazakhstan payer; the second on the taxation of the Kazakhstan participant in a foreign company. A conclusion about one does not carry over to the other.

10. The Currency Perimeter and Banking

Kazakhstan currency law does not restrict settlements with a UAE company but imposes procedural duties on the Kazakhstan side — and those duties determine payment speed.

Threshold	What it applies to	What is triggered
Above USD 500,000 equivalent	Capital-movement currency contracts between residents and non-residents: financial loans, investments, securities and derivative transactions, joint activity, acquisition of real estate and intellectual property rights, trust management, gratuitous transfer	A contract registration number is required. Contracts stating no amount as at signature or entry into force are equally caught
Above USD 50,000 equivalent	Export or import currency contracts	Repatriation compliance is monitored by authorised banks and territorial branches of the National Bank; such contracts require registration. No registration number is needed for contracts not involving movement of goods across the Kazakhstan border
From USD 50,000 equivalent	All currency operations carried out, including on client instructions	Authorised banks notify the National Bank through regular reporting
Up to USD 10,000 equivalent	Transfers by an individual under a currency operation	Permitted without opening or using an account with an authorised bank, in the cases set out in the Law on Currency Regulation and Currency Control

The duty to register capital-movement currency contracts rests on Kazakhstan residents, not on the UAE side. The UAE company bears the consequence indirectly: the bank will not process the payment until the Kazakhstan counterparty completes its procedures.

A currency obligation also blocks account closure. The Rules on opening, maintaining and closing customer bank accounts, approved by National Bank Management Board Resolution No. 207 of 31 August 2016, prohibit closing an account while obligations remain outstanding under a currency contract providing for export or import. An unclosed export or import transaction keeps the Kazakhstan leg — and its reporting — alive.

11. Substance: What Must Actually Exist in the UAE

Substance here is not about passing a formal test but about withstanding three tests at once: the MLI principal purpose test, the Kazakhstan place-of-effective-management test, and the beneficial ownership test when applying reduced treaty rates.

The minimum that makes sense

•     A director physically present in the UAE who takes decisions, with documented participation in meetings and contracts signed in the UAE.

•     Premises proportionate to the activity rather than a registration address; for free zone status, compliance with the core income-generating activity requirement.

•     Its own bank account, with access not concentrated in the hands of people located in Kazakhstan.

•     Independent accounting and reporting; audited financial statements for a Qualifying Free Zone Person.

•     Contractual documentation reflecting the UAE leg’s real functions, and transfer pricing documentation for transactions with the related Kazakhstan company.

UAE economic substance and Qualifying Free Zone Person status are not the same thing. The core income-generating activity requirement governs the zero rate inside the UAE. The Kazakhstan tests — effective management, permanent establishment and beneficial ownership — are assessed under Kazakhstan law and the Convention, independently of the company’s UAE status.

12. Kazakhstan + UAE, Kazakhstan + Hong Kong, and No Second Leg

Parameter	Kazakhstan + UAE	Kazakhstan + Hong Kong	Kazakhstan only
Status of the second jurisdiction on the Kazakhstan preferential list	Not on the list in force from 1 January 2026	On the list within the PRC entry covering the special administrative regions	Not applicable
Withholding on dividends from Kazakhstan	Base 15%; reduction possible under the Convention on evidence of residency	Raised to 20% as a preferential-tax state	Not applicable
Deductibility of payments to the second leg	Available on general terms	Not available	Not applicable
Double tax convention with Kazakhstan in force	Yes, since 27 November 2013, as modified by the MLI	To be checked separately; a treaty does not displace the list status	Not applicable
Corporate tax in the second jurisdiction	0% to AED 375,000, then 9%; 0% on QFZP qualifying income	8.25% on the first HKD 2m, 16.5% above; 0% on offshore profit where the source is evidenced	CIT 20%
Tax on distributions out of the second jurisdiction	None	None	Not applicable
Principal exposure	Permanent establishment and place of effective management	The same, plus the tax consequences of the list status	No external perimeter for export operations
Administrative load	Two sets of accounts, transfer pricing, currency control	The same, plus evidencing offshore profit status	One set of accounts

The Hong Kong column is comparative context. Hong Kong corporate tax rates and the offshore profit regime were verified separately, and the conclusion on Hong Kong’s list status follows from the entry "People’s Republic of China (only in respect of the territories of the special administrative regions of Macao and Hong Kong)". Whether a particular convention and consequence applies to a particular transaction requires separate verification.

13. Common Mistakes

Mistake 1. Running the UAE company from Kazakhstan

Decisions are taken in Almaty, contracts signed there, bank access sits with the Kazakhstan beneficiary, and the UAE director performs a representative role. That is the direct route to a finding of effective management in Kazakhstan. The cost: the UAE company becomes a Kazakhstan tax resident taxed on worldwide income, inverting the entire tax logic of the structure.

Mistake 2. Applying the treaty rate without evidence of residency

The Kazakhstan withholding agent applies the Tax Code rate where, at the payment date, it holds no proper residency document meeting legalisation and translation requirements. The cost: assessed tax, interest and penalties fall on the Kazakhstan company as withholding agent, not on the recipient abroad.

Mistake 3. Creating a UAE leg without a function

The UAE company is inserted into the payment chain but performs no functions, bears no risks and holds no assets proportionate to the margin it receives. Such an arrangement is exposed simultaneously under the MLI principal purpose test, transfer pricing rules and the beneficial ownership concept. The cost: reallocation of profit with assessments in Kazakhstan and retrospective denial of reduced treaty rates.

Mistake 4. Assuming free zone status answers Kazakhstan questions

Qualifying Free Zone Person status sets the rate in the UAE and says nothing about whether a permanent establishment arises in Kazakhstan or where effective management sits. The cost: the expense of maintaining free zone status, audit and substance evidence is incurred while the Kazakhstan exposure remains untouched.

Mistake 5. Not checking the preferential list annually

The list is approved by ministerial order and has been revised six times since 2008. In the 2008 version the UAE was on it in respect of Dubai. The cost: a change in the list moves the withholding rate from 15 to 20 per cent and removes the Kazakhstan company’s deduction for payments to the UAE leg — with the structure and contracts unchanged.

Mistake 6. Ignoring currency procedures when structuring the deal

A loan or investment agreement between the UAE company and a Kazakhstan resident above USD 500,000 requires a capital-movement contract registration number, and an "amount to be agreed in addenda" construction does not escape it. The cost: the bank halts the payment pending the registration number while commercial deadlines run.

14. Who the Structure Suits

Good fit

•     Exporters with a real external market. Where buyers sit outside Kazakhstan and the UAE leg performs a genuine sales function, the profit split between the two jurisdictions is defensible.

•     Groups with several Kazakhstan assets. The holding configuration simplifies consolidation and exit planning through a sale of interests at UAE level.

•     Owners of intellectual property. Where rights are genuinely held and developed in the UAE, the licensing model works within the ten per cent royalty cap.

•     Those who have already moved personal residency. The structure is coherent where the beneficiary actually lives and works in the UAE rather than merely owning a company there.

Poor fit

•     Businesses wholly inside Kazakhstan. Where clients, suppliers and staff are all in Kazakhstan, the second leg adds cost and exposure without adding function.

•     Anyone unwilling to place management in the UAE. Without real decision-making in the UAE the structure fails the effective management test.

•     Low-turnover projects. Two sets of accounts, audit, transfer pricing and currency support carry a fixed cost that consumes the tax benefit at modest turnover.

•     Structures seeking confidentiality. Both jurisdictions participate in automatic exchange of financial information, and the Convention contains exchange-of-information provisions.

15. Step-by-Step Build

1.  Establish where value is actually created and choose the configuration: holding, operating and export, or intellectual property and financing.

2.  Check the UAE’s status in the version of the preferential-tax list in force at the decision date.

3.  Read the Convention in its consolidated form as modified by the MLI, including the principal purpose test and the caps by income type.

4.  Model the tax load on both sides: 20 per cent corporate income tax in Kazakhstan, withholding on distribution, and UAE corporate tax of 9 per cent above AED 375,000 or 0 per cent on qualifying income.

5.  Assess permanent establishment exposure: where the staff sit, who negotiates, and who in substance shapes the UAE company’s deals.

6.  Design the governance of the UAE company so that decisions are taken in the UAE, and evidence it through minutes, the place of contract signature and the arrangements for bank access.

7.  Test the controlled foreign company rules against the Kazakhstan beneficiaries under the Tax Code version in force.

8.  Incorporate in the UAE, choosing between mainland and free zone according to whether Qualifying Free Zone Person status is needed and achievable for the intended income.

9.  Obtain the UAE tax residency certificate and arrange its legalisation and translation for the Kazakhstan withholding agent.

10.     Prepare transfer pricing documentation before intra-group settlements begin, not after the first audit.

11.     Agree the currency perimeter: identify which contracts need a registration number and allocate responsibilities with the Kazakhstan side.

12.     Institute an annual review: the preferential list, the Convention as modified, QFZP status, and the VAT and currency control thresholds.

16. Frequently Asked Questions

Is the UAE on Kazakhstan’s list of states with preferential taxation?

No. The United Arab Emirates do not appear in the list approved by Order No. 492 of the Minister of Finance of 12 September 2025, in force from 1 January 2026. In the earlier version — Government Resolution No. 1318 of 31 December 2008 — the UAE appeared only in respect of the territory of the city of Dubai.

Is there a double tax treaty between Kazakhstan and the UAE?

Yes. The Convention was signed in Abu Dhabi on 22 December 2008, ratified by Law of the Republic of Kazakhstan No. 134-V of 4 October 2013, and entered into force on 27 November 2013. For taxes withheld at source it applies to amounts paid from 1 January of the year following entry into force.

What rate applies to dividends from a Kazakhstan LLP to a UAE company?

The base withholding rate on dividends to a non-resident is 15 per cent; for recipients in preferential-tax states it is 20 per cent, but the UAE is not on that list. A reduced treaty rate applies only on evidence of the recipient’s tax residency and beneficial ownership.

What is the royalty cap under the Convention?

Tax charged in the source state on royalties may not exceed ten per cent of the gross amount of the royalties.

Can a UAE company be treated as a Kazakhstan tax resident?

Yes. A Kazakhstan tax resident includes an entity created under foreign law whose place of effective management — the location of its actual governing body — is in Kazakhstan. Such a company is taxed in Kazakhstan on worldwide income.

Does a UAE free zone company automatically get a zero rate?

No. The 0 per cent rate applies only to the qualifying income of a Qualifying Free Zone Person under Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 229 of 2025, and requires substance, audited financial statements and compliance with the de minimis test. Non-qualifying income is taxed at 9 per cent.

What currency thresholds apply between the Kazakhstan and UAE companies?

Capital-movement contracts above USD 500,000 require a registration number. Export and import contracts above USD 50,000 fall under repatriation control. Authorised banks report all currency operations from USD 50,000 to the National Bank.

17. Key Takeaways

•     The UAE is absent from the list of preferential-tax states in force from 1 January 2026 (MoF Order No. 492 of 12 September 2025).

•     Hong Kong and Macao are on that list within the PRC entry — the key difference between Kazakhstan + UAE and Kazakhstan + Hong Kong.

•     The Kazakhstan–UAE Convention was signed on 22 December 2008, entered into force on 27 November 2013 and is modified by the MLI, including the principal purpose test.

•     The source-state royalty cap is ten per cent.

•     The base withholding rate on dividends to non-residents is 15 per cent; 20 per cent for preferential-tax states.

•     Corporate income tax in Kazakhstan is 20 per cent; UAE corporate tax is 0 per cent to AED 375,000 and 9 per cent above.

•     UAE Small Business Relief is available only for Tax Periods ending on or before 31 December 2026 and is incompatible with QFZP status.

•     Three exposures can wipe out the structure: permanent establishment, place of effective management and the controlled foreign company rules.

•     Kazakhstan currency thresholds: above USD 500,000 for capital movement, above USD 50,000 for export and import, from USD 50,000 for bank reporting.

18. Summary

A Kazakhstan + UAE dual structure pairs a Kazakhstan operating company with a UAE company holding the international perimeter. It rests on three facts. First, the United Arab Emirates do not appear in the list of states with preferential taxation approved by Order No. 492 of the Minister of Finance of the Republic of Kazakhstan of 12 September 2025 and in force from 1 January 2026 — whereas Hong Kong and Macao do appear, within the entry for the People’s Republic of China. Second, a double tax convention is in force between Kazakhstan and the UAE: signed in Abu Dhabi on 22 December 2008, ratified by Law of the Republic of Kazakhstan No. 134-V of 4 October 2013 and in force from 27 November 2013; it is modified by the MLI and carries a principal purpose test, and the source-state cap on royalties is ten per cent. Third, corporate income tax in Kazakhstan is 20 per cent while UAE corporate tax is 0 per cent on taxable income up to AED 375,000 and 9 per cent above, with a possible zero rate on the qualifying income of a Qualifying Free Zone Person under Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 229 of 2025. The base Kazakhstan withholding rate on dividends to non-residents is 15 per cent and 20 per cent for recipients in preferential-tax states, and a reduced treaty rate applies only where the recipient’s tax residency is evidenced before payment. Three exposures can wipe out the economics: a permanent establishment of the UAE company in Kazakhstan; a finding that the UAE company’s place of effective management is in Kazakhstan, taxing its worldwide income there; and the application of controlled foreign company rules to the Kazakhstan beneficiaries. Kazakhstan currency control adds procedural thresholds: a contract registration number for capital-movement contracts above USD 500,000, repatriation control for export and import contracts above USD 50,000, and bank reporting to the National Bank on currency operations from USD 50,000. UAE Small Business Relief under Ministerial Decision No. 73 of 2023 is available only for Tax Periods ending on or before 31 December 2026 and is incompatible with Qualifying Free Zone Person status.

19. Sources

Tier 1 — primary sources and regulator guidance

•     State Revenue Committee of Kazakhstan — List of states with preferential taxation: recognition criteria

•     State Revenue Committee of Kazakhstan — Double tax conventions concluded by the Republic of Kazakhstan

•     Law of the Republic of Kazakhstan No. 134-V of 4 October 2013 ratifying the Kazakhstan–UAE Convention and its Protocol — Adilet

•     Order No. 142 of the Minister of Finance of 8 February 2018 approving the list of states with preferential taxation (repealed from 1 January 2026) — Adilet

•     Government Resolution No. 1318 of 31 December 2008 — the version of the list that included the UAE in respect of Dubai

•     Tax Code of the Republic of Kazakhstan (Law No. 214-VIII of 18 July 2025) — Adilet

•     Rules on Currency Operations in the Republic of Kazakhstan — Adilet

•     National Bank of Kazakhstan — Currency operations: thresholds and contract registration

•     Cabinet Decision No. 100 of 2023 on Determining Qualifying Income for the Qualifying Free Zone Person — UAE Legislation

•     Ministerial Decision No. 229 of 2025 Regarding Qualifying Activities and Excluded Activities (PDF, mof.gov.ae)

•     UAE Ministry of Finance — Decision on Small Business Relief for Corporate Tax Purposes (press release, 6 April 2023)

Tier 2 — professional commentary

•     GRATA International — Specifics of application of double taxation treaties in Kazakhstan

•     EY Kazakhstan — Changes in the list of countries with preferential tax regimes

Related UPPERSETUP analysis

•     Hong Kong + UAE: Dual Structure for International Business 2026

•     How to Set Up a Company in the UAE in 2026: Mainland, Free Zone, Offshore, Taxes, Banking

•     DIFC 2026: Jurisdiction, Structures, Regulators and Taxes

Planning a Kazakhstan–UAE structure? UPPERSETUP supports projects across the UAE, Kazakhstan and Hong Kong: matching the configuration to the actual business model, assessing permanent establishment and effective management exposure, incorporating both companies, obtaining the residency certificate and setting up the currency and banking perimeter. Discuss your project with UPPERSETUP

Disclaimer

This material is provided for informational purposes only and does not constitute legal, tax, financial, investment or consulting advice. Before making any decision, obtain individual professional advice reflecting your specific circumstances, jurisdiction, company status and current regulatory requirements. Information is current as of August 2026.