is determined by subtracting deductible expenses and deductions on fixed assets from gross income). Income of nonresident entities derived from carrying on business in Kazakhstan through a permanent establishment is subject to taxation under the same rules as income of Kazakhstan residents. Nonresident entities are subject to taxation on income received from Kazakhstan sources. Incomes from Kazakhstan sources, except income in the form of dividend (15%), remunerations (the interest) (15%), insurance payments (10%), telecommunication or transport services in international network or transportation between RK and the other state (5%), taxed on corresponding to rate, are taxed by tax beside the source of the payment at rate 20 percents. As we can see nonresidents pay at less tax rates as residents. So nonresident taxation have important meaning to Kazakhstan. It means that if government will not clearly realize this problem, government may find miss a big amount of money in budget, that may needed for other thing; defense, education, social security etc. In the cases then foreigners or local company/ person decide use Nonresident taxation legislation to reduce its tax burden. Government should clearly determine the conception of Residency and Nonresidential, to avoid abuse in determination of residency. Clearly determine taxed incomes of nonresidents through permanent establishment. Determine list of the taxable incomes of nonresidents.

Clear and stable taxes let to improve investment climate in Republic, also it lead to development of entrepreneurship in Kazakhstan, because now many domestic companies receive, commonly, services from foreign companies in applying new technologies, training of staff, reclamation of new types of services, expanding markets for goods and services.

Conclusion

Since independence the legal system of the country has undergone considerable reforms. The new constitution and a number of new constitutional laws on state system and governmental bodies of Kazakhstan have been passed. Amendments were introduced to the Civil, Criminal and Tax Codes, trade and investment regulations and other legal acts regulating the major aspects of the country life.

Taxes – is basic sources of incomes of the state so the dominant motivation for taxation in any counties is to finance public administration and the public provision of economic and social service. Second motivations are the redistribution of income and correction of market imperfections. But also tax creates distortions in the economy that reduce the real income of taxpayers by more than amount of revenue that is transferred to the government. This occurs when taxpayers either modify their behavior in an attempt to reduce their tax burdens or spend resources in evading taxes. Taxes are used for economic influence of the state on public manufacture, its structure, and on condition of scientific and technical progress. By tax government may discourage domestic production and foreign investments. So government should balanced between public provision of economic and social service, and level of taxation. The appropriate level of taxation depends on a country’s desired role for the state, the efficiency and equity of its public spending, and the efficiency and equity of its tax structure and administration. The Government of Kazakhstan is clearly aware of this and continues to make steady progress in developing its tax system to fit the realities of modern business in the global economy.

Consideration of Nonresident taxation is important because this tax may use as a loophole for avoiding or decreasing tax burden of taxpayers. Level of tax payments is critical to the economic development of Kazakhstan as sovereign state.

So it can decrease level of tax collection and level of social expenditures. Lead to social instability in society.

Appendix A

Sources: Statistics Agency of RK, 2001

Sources : Statistics Agency of RK, 2001

Appendix B

Sources : Statistics Agency of RK, 2001

The tax revenue in the consolidated budget has shown a rising trend in the last two years. The performance of domestic taxes (particularly VAT and Excises) has been improving.

Income Tax from Legal Entaties	Income Tax from Physical Persons	VAT	Excises	Land Tax	Ownership Tax	Social Tax	Property Tax
1999	54759	35329	89030	18956	4644	24537	70463	15210
2000	163529	51016	115132	19285	5506	26693	9907	14763

Sources : Statistics Agency of RK, 2001

THE LIST of USED SOURCES

1. Law of Republic of Kazakhstan from January 1, 2002 " Law on Taxes and other obligatory Payments to the Budget "

2. " Law on Taxes and other obligatory Payments to the Budget " Chapter 7 “Features of Taxation on Nonresidents Income” (with changes from January 1, 2002)

3. Bulletin of Accountant, “Tax Code about Taxation of Operation with Nonresidents of RK " (Print house “BIKO” Almaty, 2001) / 1 – 35/

4. Hodorovich, Mihail Ivanovich 1997, Taxation of Individuals /p25 – 40/

5. Lessons of Tax Reform, World Bank Publication /15 – 25/

6. National Statistics Agency of Republic of Kazakhstan, Short Statistics annual edition of Republic of Kazakhstan (Almaty, 2001) /130 – 135/

7. Kazakhstan Public Expenditure Review, June 27, 2000 (Document of the World Bank)

p /12- 15/

8. Macroeconomics, Timothy Tregarthen 1996 /p328 –340/

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