Tax questions often come up for people choosing savings insurance, a pension annuity or a corporate programme for employees. Below is a general overview of the topics worth considering. Specific rates, limits and conditions are set by tax legislation and are reviewed regularly, so we deliberately do not quote any figures.
Which document governs taxes
The main source is the Tax Code of the Republic of Kazakhstan. It determines which income of individuals is subject to individual income tax, which deductions and adjustments are available and how employer expenses are treated. Clarifications issued by the authorised government bodies also matter.
Payouts to individuals
Insurance payouts under life insurance contracts may be taxed differently depending on the type of contract, who paid the premiums and the reason for the payout. For example, the treatment of a payout for an insured event, of the amount received at the end of a savings contract and of the surrender value on early termination may differ. In some cases the insurer itself acts as the tax agent: it withholds tax when making the payout if the law requires it.
Premiums paid by individuals
Legislation may provide tax advantages for people who pay premiums themselves under certain types of contracts — in particular, those related to retirement provision. Whether you can use such advantages usually depends on the contract term and on meeting other requirements. Before counting on a tax benefit, check whether it applies to your contract.
Premiums paid by the employer
If a company pays insurance premiums for its employees, two questions arise: whether these expenses can be deducted when calculating corporate income tax and whether the premiums count as the employee’s income. The answer depends on the type of insurance, the terms of the contract and the current version of the Tax Code. Such programmes should be agreed in advance with an accountant or tax adviser.
Pension annuity
Payments under a pension annuity, like other pension payments, have their own tax treatment. The taxation procedure may depend on the source of funds — mandatory or voluntary pension savings or the person’s own money. It is worth clarifying this in advance, before choosing a programme.
Practical recommendations
- Keep the contract, receipts for premium payments and documents on payouts.
- Ask the insurer whether it withholds tax on payouts and how.
- For large amounts and corporate programmes, consult a tax specialist.
- Check the current version of the legislation both on the date the contract is concluded and on the date of payout.
This material is for reference only and is not tax advice. Tax rules change, so check the current version of the legislation in official sources before making decisions.
A Dynasty consultant will help you understand the terms of life insurance contracts and prepare questions for your accountant, and you can calculate an approximate policy cost in the calculator.