Crypto mining hotspots: Kazakhstan’s crypto taxation and regulatory dynamics explained

Author: FinTax

1. Introduction

1.1 Country Overview

The Republic of Kazakhstan, referred to as Kazakhstan. Kazakhstan spans the Eurasian continent, with most of its territory located in Asia and a small part in Europe. It declared independence on December 16, 1991, bordering Russia, China, Kyrgyzstan, Uzbekistan, Turkmenistan and other countries, and across the Caspian Sea from Iran and Azerbaijan. It is the largest landlocked country in the world, consisting of 14 states and 3 municipalities. The national language of Kazakhstan is Kazakh. Kazakh and Russian are both official languages. The legal currency of Kazakhstan is the tenge. Kazakhstan is a country in Central Asia with rapid economic development, relatively stable political situation and relatively good social order. It is worth noting that as early as 2021, Kazakhstan's Bitcoin mining computing power has reached the third place in the world, and according to data from the Kazakhstan State Tax Committee, as of March 2025, there are already 75 mining companies officially registered in Kazakhstan.

1.2 Qualitative Analysis of Digital Assets

According to the definition of the Law of the Republic of Kazakhstan “On Digital Assets”, digital assets are property created in electronic digital form and assigned a digital code, including using cryptography and computer calculation tools, which is not a monetary unit of account and (or) legal tender, and is registered and protected by information immutability based on distributed data platform technologies.

According to the interpretative provisions of the Astana International Financial Center: Digital assets are digital representations of value with the following characteristics: (1) they can be traded digitally and used as (a) a medium of exchange; or (b) a unit of measurement; or (c) a means of savings; (2) they can be exchanged for legal tender but are not issued or guaranteed by the government of any jurisdiction; (3) they perform the above functions only based on the agreement of the digital asset user community; and (4) they should be distinguished from legal tender and electronic money.

To be consistent with the country’s regulations, this article will continue to use the term “digital assets”.

2. Crypto tax policy and its dynamics

2.1 Overview of the general tax system

Kazakhstan's tax regulations consist of the Kazakhstan Tax Code and the normative legal documents adopted in accordance with its provisions. Kazakhstan reformed its tax system in 2017 and formulated and issued a new version of the Tax Code, which came into effect in 2018. Other tax normative legal documents mainly include the Transfer Pricing Law and the Administrative Penalty Law. In addition, state agencies such as the Ministry of Finance and the State Revenue Committee have the right to issue tax normative documents within their powers, thereby further refining the implementation of specific provisions in the Tax Code and tax normative legal documents.

The taxation department of Kazakhstan is composed of the State Revenue Committee and local taxation authorities. The main responsibilities of the State Revenue Committee are to ensure the payment of taxes and provide guidance to finance, and to perform the management of taxation and customs matters. Local taxation authorities must have codes approved by the Kazakhstan government, including regional dispatched agencies of state, Astana and Almaty cities, district, city and district government agencies, and cross-regional branches of the State Revenue Committee. If a special economic zone is established, a taxation authority can be established in the special economic zone. The taxation department is under the leadership of the State Revenue Committee.

The current taxes and fees in Kazakhstan mainly include corporate income tax, personal income tax, value-added tax, consumption tax, social tax, land tax, vehicle tax, property tax, excess profit tax and other taxes and fees.

2.1.1 Corporate income tax

Resident enterprise. If a company is established in Kazakhstan under Kazakhstan law, or is established under foreign law but its actual management or effective management is located in Kazakhstan, then the company is a resident company. The scope of taxation is the annual total income it obtains worldwide. Unless otherwise specified, the corporate income tax rate in Kazakhstan is 20%.

Non-resident enterprises. According to Kazakhstan's tax law, non-resident enterprises are a concept corresponding to resident enterprises, that is, enterprises that are not "residents" are "non-resident enterprises". In addition, even if an enterprise is a resident taxpayer according to the Kazakhstan Tax Code, if the international tax treaty signed by Kazakhstan determines that the enterprise is a non-resident enterprise, the tax law provisions on non-resident enterprises shall apply to the enterprise. Non-resident enterprises are only required to pay corporate income tax in Kazakhstan on income from within Kazakhstan. If a non-resident enterprise conducts business in Kazakhstan through a permanent establishment, it is also required to pay corporate income tax in Kazakhstan on income from abroad but actually connected with the permanent establishment. Unless otherwise provided, the corporate income tax rate applicable to non-resident enterprises that do not constitute a permanent establishment is generally 20%. In addition, the net income of a permanent establishment of a non-resident legal entity (after deducting the 20% corporate income tax) is subject to a 15% branch profits tax, which can be reduced or exempted under the applicable double taxation avoidance agreement (DTT). Therefore, if there is no reduction for DTT, the effective tax rate on permanent establishment income of non-resident legal entities is equal to 32%.

2.1.2 Personal income tax

Resident taxpayers. Resident taxpayers for personal income tax are individuals who permanently reside in Kazakhstan and whose center of vital interests is in Kazakhstan. Permanent residence means staying in Kazakhstan for at least 183 days (including the day of arrival and departure) in any consecutive 12 months at the end of the current tax year. If an individual engages in investment activities in the international financial center "Astana", he is considered to be permanently resident if he stays in Kazakhstan for at least 90 days (including the day of arrival and departure) in any consecutive 12 months. The center of vital interests is a person in Kazakhstan who is a citizen of Kazakhstan or holds a Kazakhstan residence permit, whose spouse or close relatives reside in Kazakhstan, and who has a family and residence in Kazakhstan that is available to him, his spouse or relatives at any time. The scope of taxation is all income derived by the individual from within and outside Kazakhstan. The balance of all income of the taxpayer (excluding tax-exempt income and non-taxable income) after deducting pre-tax deductions is the taxable income, which is taxed at a rate of 10%.

Non-resident taxpayers. The Tax Code of Kazakhstan does not give a specific definition of non-resident taxpayers of personal income tax, but if they do not meet the above-mentioned requirements for resident taxpayers of personal income tax, they are non-resident taxpayers of personal income tax. Non-resident individuals are required to pay personal income tax on all income from Kazakhstan, and the tax rate is generally 20%. Except for special provisions, non-resident individuals are not allowed to deduct income from Kazakhstan before tax.

2.1.3 Value Added Tax

The Tax Code of Kazakhstan stipulates that VAT taxpayers include: 1) self-employed individuals, individual practitioners, resident enterprises (excluding state-owned institutions and state secondary education institutions) and non-resident enterprises that conduct business in Kazakhstan through branches that have registered for VAT in Kazakhstan. 2) Personnel who import goods into Kazakhstan in accordance with the provisions of the Customs Code of the Eurasian Economic Union Customs Union and the Customs Law of the Republic of Kazakhstan. 3) Foreign enterprises that provide electronic services to Kazakhstan. A 12% VAT rate applies to taxable turnover and taxable imports, and a zero VAT rate applies to some transactions.

2.2 Cryptocurrency tax policy

In June 2021, Kazakhstan President Kassym-Jomart Tokayev signed an amendment to the Tax Code on the taxation of digital asset mining, and from January 1, 2022, digital asset miners will be taxed on the electricity consumed during the mining process. From January 1, 2024, the tax rate for electricity used in digital asset mining will be unified at 2 tenge/kWh. When using own electricity or renewable energy that is not connected to the unified power system of Kazakhstan, the fee is calculated at a rate of 1 tenge/kWh. In the absence of a control device for measuring the power consumption of digital asset mining or a failure of the device, the power consumption is determined according to the maximum power load.

Companies engaged in the digital asset industry in Kazakhstan are also subject to corporate income tax at a rate of 20%. When calculating taxes, the company's annual total income needs to be adjusted in accordance with tax law regulations: the actual income from the sale of digital assets is not included in the annual total income, and the taxable income is determined by multiplying the number of digital assets obtained by the taxpayer and the value of digital assets announced daily by the Kazakhstan tax authorities or the Astana International Financial Center. Expenses not related to the income obtained, including digital asset mining expenses, are not deductible.

Individuals who sell digital assets in Kazakhstan should declare personal income tax on the income from property appreciation. The personal income tax rate for residents is 10%, and the tax rate for non-resident individuals is generally 20%.

According to Kazakhstan's VAT regulations, digital assets in a digital mining pool distributed among people engaged in digital asset mining activities are not taxable turnover for VAT. And the turnover from the sale of digital assets is exempt from VAT.

As of March 2025, there are 75 mining companies officially registered in Kazakhstan. According to the Kazakhstan State Tax Committee, in the past three years, various taxes from the activities of these companies totaled 17.7 billion tenge, including 11.6 billion tenge in taxes on digital asset mining. It is worth noting that the Tax Committee found irregularities in the 2024 tax audit, and a total of 4.9 billion tenge in additional taxes and fees were levied, including 2.3 billion tenge in digital asset mining taxes and 2.6 billion tenge in corporate income tax. In addition, it was found that some citizens who sold digital assets underreported their income, involving 4.3 billion tenge in personal income tax. These phenomena prompted the Kazakhstan State Tax Committee to further strengthen supervision and inspection of the entire process of digital assets.

3. Digital asset regulatory policies and trends

3.1 Digital Asset Regulatory Policy

Astana International Financial Center (AIFC) is an area in the city of Astana, whose boundaries are determined by the President, and in which a special legal system in the financial field is implemented. The concepts and types of digital assets, as well as the procedures and conditions for the issuance (excluding digital asset mining), placement, circulation, and storage of digital assets in AIFC are determined by the AIFC Act. AIFC's requirements for digital asset exchanges and their licensing procedures are also determined by the AIFC Act.

On January 1, 2018, the Astana Financial Services Authority (AFSA) was established. The Authority is an independent regulatory agency of the Astana International Financial Center, supervising the center's participants who carry out financial and auxiliary services and capital market activities within the Astana International Financial Center. It is also the regulatory agency for companies registered with the Authority that engage in non-financial services activities. The specific responsibilities of the Authority include: 1) drafting draft laws for the center's institutions regarding the supervision of the center's financial services and related activities, and submitting them to the institutions responsible for passing these laws for public discussion and approval; 2) passing bills related to the supervision of the center's financial services and related activities; 3) registering, certifying and issuing licenses to the center's participants; 4) maintaining a list of center participants; 5) monitoring and supervising the activities of center participants and taking regulatory measures against them;

In 2023, Kazakhstan passed the Digital Assets Law, which laid the legal foundation for the issuance and circulation of digital assets and the development of digital asset mining activities. The bill clarifies that the purpose of state regulation in the field of digital assets is to promote economic development and enhance competitiveness by carrying out digital asset issuance and circulation, digital asset mining activities in the Republic of Kazakhstan.

In general, Kazakhstan has an open and supportive policy stance towards digital assets. It continues to promote the improvement of the regulatory framework and adopts a regional pilot strategy of "first-mover advantage", encouraging technological trials and model innovation to promote the development of the digital economy.

3.2 Latest developments in digital asset regulation

Entering 2025, Kazakhstan has accelerated the pace of building a digital asset regulatory system and continued to promote the formulation and improvement of relevant laws and regulations. According to a series of speeches by the president at the expanded government meeting and the National Assembly, relevant departments responded quickly, actively formulated policy guidelines, and continued to disclose the progress of policy implementation to the public. While focusing on improving the regulatory framework, Kazakhstan also emphasizes the systematic construction of digital asset infrastructure, and vigorously deploys key areas such as digital tenge, trading service providers, and encrypted payments.

On January 27, 2025, the National Bank of Kazakhstan (NBK) announced the release of its annual report "Development of the National Digital Financial Infrastructure (NDFI)". According to the report, the focus of NDFI development in 2024 is to create new payment infrastructure components and improve existing systems to ensure secure and transparent interaction between market participants. In addition, as part of the second phase of the "Digital Tenge" project in 2024, new use cases for digital assets in public and crypto payments were tested, laying the foundation for their full integration into the national economy. 2025 is the last year of the phased launch of the national digital asset. The report plans the direction for the development of the "Digital Tenge" project in 2025: First, an appropriate regulatory and legal framework is needed to fully implement the national digital asset and promote its advantages. In 2025, it is planned to approve the legislative framework for information technology services based on the work in 2023 and 2024. Second, the basic scheme for cross-border payments of digital assets will be tested in the context of full integration with all participants in 2025.

On January 28, 2025, the President of Kazakhstan mentioned in an expanded government meeting that "In our country, such (digital) assets can only be legally traded on the AIFC Digital Asset Exchange. However, according to experts, only 5% of Kazakhstan's digital asset investors use the center's platform, and the rest work in the so-called "gray area". It is imperative to establish the infrastructure for the wider legal circulation of digital assets. Financial regulators should start to participate in the formulation of an appropriate legal framework. "In response to the president's call, the AIFC responded that all the president's instructions will be implemented within the framework of the AIFC's existing main and special powers system. In response to the call for financial regulators to start to participate in the formulation of an appropriate legal framework, the National Bank of Kazakhstan stated in response to media inquiries that they have begun to promote legislative amendments. The National Bank of Kazakhstan plans to create a standardized environment for the circulation of digital assets across the country, and hopes that this move will ensure the transparency of transactions and protect the interests of citizens. At the same time, it is not expected to use digital assets as a means of payment.

In addition to regulating digital assets, the National Bank of Kazakhstan also plans to introduce digital financial assets (DFA) into circulation, which will bring new opportunities for innovative financial instruments, including the tokenization of assets. In addition, the department further added that the detailed operating mechanism of the digital asset market and the circulation conditions of digital assets will be reflected in the new banking law.

On May 22, 2025, Berik Sholpankulov, Deputy Governor of the National Bank of the Republic of Kazakhstan, reported at a briefing on the development of the national digital financial infrastructure and the regulatory approach to digital assets. The report mentioned that, in accordance with the instructions of the President of Kazakhstan, the National Bank, together with relevant government agencies, has formulated a series of legislative amendments to lay the legal foundation for the circulation of digital assets. The amendments include two parts: first, the introduction of digital financial assets and the definition of their legal status. Second, the regulation of the trading of unsecured digital assets by issuing licenses to crypto exchange service providers. In parallel with the legislative initiatives, the National Bank is establishing a digital asset regulatory sandbox. Within this framework, market participants will be able to test a variety of innovative services and technologies. Yerlan Ashykbekov, Director of the Payment Systems Department of the National Bank of Kazakhstan, said that digital asset trading service providers will be officially introduced within the legal framework of Kazakhstan. These service providers will operate with a license and be regulated by the National Bank, and digital asset exchanges currently operating within the AIFC will continue to be regulated separately by the AIFC financial regulator.

In addition, in order to explore more possibilities of crypto payments, Kazakhstan has taken a series of measures. First, a groundbreaking pilot zone was established. On May 29, 2025, the President of Kazakhstan announced that "we plan to create an innovative pilot zone CryptoCity, where digital assets can be used to purchase goods, services, and even more." The second is to launch the "Crypto Card (криптокарты)" project. Crypto cards allow consumers to conduct non-cash transactions associated with licensed exchange custodial wallets. The solution provides the ability to integrate the circulation of digital assets safely and conveniently into the existing payment infrastructure. According to the mechanism of the "Crypto Card", when a customer sells a digital asset on the AIFC crypto market, the value can be instantly credited to the "Crypto Card" (a standard payment card connected to the customer's bank account) when paying the transaction, and real currency will be used for payment after the instant sale of the crypto asset.

It is worth noting that during the meeting, it was also revealed that market participants will implement a number of pilot projects in the field of digital assets under the coordination of the National Bank, including: 1) Issuing stablecoins backed by national currencies (including digital tenge) for settlement transactions of digital assets; 2) Tokenization of financial assets and real estate and issuance of security tokens; 3) Organizing accounting and storage systems for underlying collateral of digital financial assets; 4) Organizing crypto asset exchange business and crypto asset storage services.

4. Conclusion

Kazakhstan's progress in the field of digital assets reflects its open attitude and strong support for this industry. It has continuously taken measures to improve the regulatory system of digital assets and called for moderate deregulation at the policy level to stimulate innovation and development in the industry and shape a digital asset ecosystem that is both compliant and competitive on a global scale, demonstrating its strategic ambition to build a digital financial hub in Central Asia. At the same time, Kazakhstan is committed to building a modern digital asset infrastructure to ensure that digital assets can be effectively integrated into the national economic structure. These measures not only lay a solid foundation for the stable growth of the digital asset industry in the future, but also provide strong support for Kazakhstan to occupy a place in the global digital economy. With the gradual implementation of the legal and regulatory framework and infrastructure for digital asset innovation, Kazakhstan is expected to become a leader in the field of digital assets in Central Asia, further promoting the diversification of its economy and enhancing its international competitiveness.