Popular locations for encryption mining enterprises: An in-depth analysis of Kazakhstan's encryption tax system and regulatory dynamics.

As of March 2025, there are already 75 mining companies officially registered in Kazakhstan.

Written by: FinTax

1. Introduction

1.1 National Overview

The Republic of Kazakhstan, abbreviated 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, borders countries such as Russia, China, Kyrgyzstan, Uzbekistan, and Turkmenistan, and faces Iran and Azerbaijan across the Caspian Sea, making it the largest landlocked country in the world. The country is composed of 14 provinces and 3 cities of republican significance. The state 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 that has a relatively fast-growing economy, a stable political situation, and relatively good social order. Notably, as early as 2021, Kazakhstan's Bitcoin Mining hash rate reached the third highest in the world, and according to data from the Kazakhstan National Revenue Agency, 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 in the "Digital Assets Law of the Republic of Kazakhstan", digital assets refer to properties created in electronic digital form and assigned a digital code, including the use of cryptography and computing tools, which are not monetary accounting units and/or legal tender, registered and protected through the immutability of information based on distributed data platform technology.

According to the explanatory regulations of the Astana International Financial Centre: Digital assets are a digital representation of value, which have the following characteristics: (1) can be traded digitally and serve as (a) a medium of exchange; or (b) a unit of account; or (c) a store of value; (2) can be exchanged for fiat currency, but are not issued or guaranteed by any government jurisdiction; (3) execute the above functions solely based on the agreement of the digital asset user community; (4) should be distinguished from fiat currency and electronic currency.

To stay consistent with the terminology used in that country's regulations, this article will continue to use the term "digital assets."

2. Cryptocurrency Tax Policies and Their Dynamics

2.1 General Taxation Overview

The tax regulations of Kazakhstan consist of the Kazakhstan Tax Code and normative legal documents issued in accordance with its provisions. Kazakhstan reformed its tax system in 2017 and introduced a new version of the Tax Code, which came into effect in 2018. Other normative legal documents related to taxation mainly include the Transfer Pricing Law and the Administrative Penalty Law, among others. In addition, national authorities such as the Ministry of Finance and the State Revenue Committee have the authority to issue normative tax documents within their jurisdiction, thereby further specifying the implementation of specific provisions in the Tax Code and normative legal documents related to taxation.

The tax authority of Kazakhstan is composed of the National Revenue Committee and local tax authorities. The main responsibilities of the National Revenue Committee are to ensure the payment of taxes and to provide guidance on financial matters, fulfilling the management responsibilities for tax and customs affairs. Local tax authorities must have codes approved by the government of Kazakhstan, which include regional branches of state, the city of Astana, the city of Almaty, district, city, and urban district government agencies, as well as the National Revenue Committee's interregional branches. If economic special zones are established, tax authorities can be set up within those zones. The tax authority is under the leadership of the National Revenue Committee.

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

2.1.1 Corporate Income Tax

(1) Resident Enterprises. If an enterprise is established in Kazakhstan according to Kazakhstani law, or established under foreign law but its actual management or effective management is located within Kazakhstan, then the enterprise is considered a resident enterprise. The taxable scope includes the annual gross income obtained globally, subject to corporate income tax. Unless otherwise specified, the corporate income tax rate in Kazakhstan is 20%.

(2) Non-resident enterprises. According to Kazakhstan's tax law, non-resident enterprises are a concept corresponding to resident enterprises, meaning that any enterprise that does not belong to "residents" is classified as a "non-resident enterprise." Furthermore, even if an enterprise is considered a resident taxpayer according to the Kazakhstan Tax Code, if an international tax agreement signed by Kazakhstan determines that the enterprise is a non-resident enterprise, then the enterprise must comply with the provisions of the tax law applicable to non-resident enterprises. Non-resident enterprises are only required to pay corporate income tax in Kazakhstan on income derived from within Kazakhstan. If a non-resident enterprise conducts business in Kazakhstan through a permanent establishment, it must also pay corporate income tax in Kazakhstan on income derived from abroad that has a substantial connection with that permanent establishment. Unless otherwise specified, the applicable corporate income tax rate for non-resident enterprises that do not constitute a permanent establishment is generally 20%. Additionally, the net income of a non-resident legal entity's permanent establishment (after deducting 20% corporate income tax) is subject to a 15% branch profits tax, which can be reduced according to the applicable double taxation avoidance agreement (DTT). Therefore, if the DTT does not provide for a reduction, the effective tax rate on the income of a non-resident legal entity's permanent establishment is 32%.

2.1.2 Personal Income Tax

(1) Resident taxpayers. Individual income tax resident taxpayers refer to individuals who permanently reside in Kazakhstan and individuals 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) within any consecutive 12 months at the end of the current tax year. If an individual is engaged in investment activities in the international financial center "Astana," they are considered to be permanently residing in Kazakhstan if they stay for at least 90 days (including the day of arrival and departure) within any consecutive 12 months. A center of vital interests refers to individuals who simultaneously meet the criteria of being a citizen of Kazakhstan or holding a residence permit in Kazakhstan, having a spouse or close relatives residing in Kazakhstan, and having family and a home in Kazakhstan that is available for themselves, their spouse, or relatives at any time. The tax scope includes all income derived from sources within and outside Kazakhstan for individuals. After deducting tax-exempt and non-taxable income from the total income (excluding tax-exempt income and non-taxable income), the balance is the taxable income, which is taxed at a rate of 10%.

(2) Non-resident taxpayers. The Kazakhstan Tax Code does not provide a specific definition of non-resident individual income taxpayers, but if they do not meet the criteria for resident taxpayers as stated in the individual income tax, they are considered non-resident individual income taxpayers. Non-resident individuals must pay individual income tax on all income derived from within Kazakhstan, with a general tax rate of 20%. Except for special provisions, non-resident individuals are not allowed to make tax deductions from income obtained within Kazakhstan.

2.1.3 Value Added Tax

The Tax Code of Kazakhstan stipulates that VAT taxpayers include: 1) individual entrepreneurs, practitioners, resident enterprises (excluding state-owned enterprises and state higher education institutions) registered for VAT in Kazakhstan, and non-resident enterprises conducting business in Kazakhstan through branches. 2) Persons who import goods into Kazakhstan in accordance with the Customs Code of the Eurasian Economic Union and the Customs Law of the Republic of Kazakhstan. 3) Foreign enterprises providing electronic services within Kazakhstan. A VAT rate of 12% applies to taxable turnover and taxable imports, while certain transactions are subject to a zero VAT rate.

2.2 Cryptographic Tax Policy

In June 2021, Kazakhstan President Kassym-Jomart Tokayev signed an amendment to the Tax Code regarding taxation on digital asset Mining. Starting from January 1, 2022, taxes will be levied on the electricity consumption of digital asset miners during the Mining process. From January 1, 2024, the tax rate for electricity used in digital asset Mining will be standardized at 2 tenge per kilowatt-hour. When using self-generated electricity or renewable energy not connected to Kazakhstan's unified power grid, the fee will be calculated at a rate of 1 tenge per kilowatt-hour. In the absence of control devices for measuring electricity consumption for digital asset Mining or in the case of device failure, consumption will be determined based on the maximum load scenario.

Companies engaged in the digital asset industry in Kazakhstan are also required to pay corporate income tax, with a tax rate of 20%. When calculating tax, the company's annual total revenue needs to be adjusted according to tax laws: the actual income from the sale of digital assets is not included in the annual total revenue, and the taxable income is confirmed based on the product of the quantity of digital assets obtained by the taxpayer and the value of digital assets published daily by the Kazakhstan tax authorities or the Astana International Financial Centre. Expenses unrelated to income obtained, including digital asset Mining expenses, are not deductible.

Individuals selling digital assets in Kazakhstan must report income derived from property appreciation for personal income tax purposes. The personal income tax rate for residents is 10%, while for non-residents, the rate is generally 20%.

According to the relevant regulations of value-added tax in Kazakhstan, the digital assets distributed among individuals engaged in digital asset Mining activities from digital pools do not constitute taxable turnover for value-added tax. Moreover, the turnover from the sale of digital assets is exempt from value-added tax.

As of March 2025, there are 75 officially registered Mining companies in Kazakhstan. According to data from the Kazakhstan National Tax Committee, the various taxes from the activities of these companies totaled 17.7 billion tenge over the past three years, including 11.6 billion tenge from digital asset mining taxes. It is noteworthy that the Tax Committee discovered irregularities during the 2024 tax audit, resulting in an additional collection of 4.9 billion tenge in taxes, including 2.3 billion tenge in digital asset mining taxes and 2.6 billion tenge in corporate income taxes. Furthermore, it was found that some citizens selling digital assets underreported their income, involving 4.3 billion tenge in personal income tax. These phenomena prompted the Kazakhstan National Tax Committee to further enhance supervision and inspection of the entire process of digital assets.

3. Digital Asset Regulatory Policies and Their Dynamics

3.1 Digital Asset Regulatory Policies

The Astana International Financial Center (AIFC) is a designated area within the city of Astana, the boundaries of which are determined by the president, and where a special legal regime for the financial sector is implemented. The concepts and types of digital assets, as well as the procedures and conditions for the issuance (excluding digital asset Mining), deployment, circulation, and storage of digital assets in the AIFC are determined by the AIFC legislation. The requirements for digital asset exchanges and their licensing processes are also determined by the AIFC legislation.

On January 1, 2018, the Astana Financial Services Authority (AFSA) was established. This authority is an independent regulatory body of the Astana International Financial Centre, responsible for regulating the central participants engaged in financial and ancillary services as well as capital market activities within the Astana International Financial Centre. It also serves as the regulatory authority for companies registered with it that engage in non-financial service activities. The specific responsibilities of the authority include: 1) drafting legal bills concerning the regulation of financial services and related activities of central institutions, submitting them for public discussion and approval by the responsible institutions; 2) enacting laws related to the regulation of financial services and related activities; 3) registering, certifying, and issuing licenses to central participants; 4) maintaining a registry of central participants; 5) monitoring and supervising the activities of central participants and taking regulatory measures against them.

In 2023, Kazakhstan passed the "Digital Assets Law," which lays the legal foundation for the issuance and circulation of digital assets as well as the development of digital asset Mining activities. The law clarifies that the national regulatory objectives in the field of digital assets are to carry out the issuance and circulation of digital assets and Mining activities in the Republic of Kazakhstan, promote economic development, and enhance competitiveness.

Overall, Kazakhstan has an open and supportive policy stance towards digital assets. It continuously promotes the improvement of the regulatory framework and adopts a "pilot first" regional strategy to encourage technological experimentation and model innovation to drive the development of the digital economy.

3.2 Latest Developments in Digital Asset Regulation

As we enter 2025, Kazakhstan has accelerated the construction of its digital asset regulatory system, continuously promoting the formulation and improvement of relevant laws and regulations. According to a series of speeches made by the President at the expanded government meeting and in the Parliament, various relevant departments have responded quickly, actively formulating policy guidelines and continuously disclosing 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, vigorously laying out key areas such as digital tenge, trading service providers, and crypto payments.

On January 27, 2025, the National Bank of Kazakhstan (NBK) announced the release of the 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 interactions among market participants. Furthermore, in 2024, as part of the second phase of the "Digital Tenge" project, new use cases for digital assets in public and crypto payments were tested, laying the groundwork for their comprehensive integration into the national economy. 2025 is the final year for the phased launch of national digital assets, and the report outlines the direction for the development of the "Digital Tenge" project in 2025: first, an appropriate regulatory and legal framework is needed for the full implementation of national digital assets and to leverage their advantages. In 2025, it is planned to approve the legislative framework for information technology services based on the work done in 2023 and 2024. Second, in 2025, the basic scheme for testing cross-border payments with digital assets will be conducted in the context of complete integration with all participants.

On January 28, 2025, the President of Kazakhstan mentioned at an expanded government meeting that "in our country, such (digital) assets can only be legally traded on the AIFC Digital Asset Exchange. However, experts say that only 5% of Kazakhstan's digital asset investors use the center's platform, while the rest operate in what is known as the 'grey zone.' It is urgent to establish infrastructure for a broader legal circulation of digital assets. Financial regulators should begin to participate in the formulation of an appropriate legal framework." In response to the President's call, the AIFC stated that all of the President's directives will be implemented within the existing framework of its main and special powers. In response to the call for financial regulators to begin formulating an appropriate legal framework, the National Bank of Kazakhstan stated in response to media inquiries that they have already begun to push for legislative amendments. The National Bank of Kazakhstan plans to create a regulated environment for the circulation of digital assets nationwide, and hopes that this move will ensure transaction transparency and protect the interests of citizens. At the same time, it is expected that digital assets will not be used as a means of payment.

In addition to regulating digital assets, the National Bank of Kazakhstan plans to introduce Digital Financial Assets (DFA) into circulation, which will bring new opportunities for innovative financial instruments, including the tokenization of assets. Furthermore, the department added that the detailed operating mechanisms of the digital asset market and the conditions for the circulation 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, delivered a report at the briefing on the development of national digital financial infrastructure and regulatory approaches for digital assets. The report mentioned that, based on the instructions of the President of Kazakhstan, the National Bank, in collaboration with relevant government agencies, has developed a series of legislative amendments to establish a legal foundation for the circulation of digital assets. The revisions include two parts: first, the introduction of digital financial assets and the definition of their legal status. Second, regulation of the trading of unsecured digital assets by issuing licenses to cryptocurrency exchange service providers. Alongside legislative initiatives, the National Bank is establishing a regulatory sandbox for digital assets. Within this framework, market participants will be able to test various innovative services and technologies. Yerlan Ashykbekov, Director of the Payment Systems Department of the National Bank of Kazakhstan, stated that digital asset trading service providers will be officially introduced within the legal framework of Kazakhstan. These service providers will operate under licenses and be subject to the supervision of the National Bank, while digital asset exchanges currently operating within the AIFC will continue to be separately regulated by the AIFC financial regulatory authority.

In addition, to explore more possibilities for cryptocurrency payments, Kazakhstan has taken a series of measures. First, it has established a pioneering pilot zone. On May 29, 2025, the President of Kazakhstan announced, "We plan to create an innovative pilot zone called CryptoCity, where digital assets can be used to purchase goods, services, and more." Second, the "Crypto Card (криптокарты)" project has been launched. The Crypto Card allows consumers to make cashless transactions associated with wallets hosted by licensed exchanges. This solution provides the ability to securely and conveniently integrate the circulation of digital assets into existing payment infrastructures. According to the mechanism of the "Crypto Card," when customers sell digital assets on the AIFC crypto market, they can instantly credit their value to the "Crypto Card" (a standard payment card linked to the customer's bank account) at the time of payment transaction, and payment will be made in real currency after the instant sale of the crypto assets.

It is worth noting that during this meeting, it was also revealed that market participants will implement multiple pilot projects in the digital asset field under the coordination of the national bank, including: 1) issuing stablecoins supported by the national currency (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 the underlying collateral of digital financial assets; 4) organizing cryptocurrency exchange services and cryptocurrency storage services.

4. Summary

Kazakhstan's progress in the field of digital assets reflects its open attitude and strong support for this industry. The country continues to take measures to improve the regulatory system for digital assets and calls for a moderate relaxation of regulations at the policy level to stimulate innovation and development in the industry, while shaping a compliant and competitive digital asset ecosystem globally, demonstrating its strategic ambition to build a digital financial hub in Central Asia. At the same time, Kazakhstan is committed to building modern digital asset infrastructure to ensure that digital assets can effectively integrate into the national economic structure. These initiatives 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 secure a place in the global digital economy. With the gradual implementation of a regulatory framework for innovative digital assets and infrastructure, Kazakhstan is expected to become a leader in the Central Asian digital asset field, further promoting the diversification of its economy and enhancing international competitiveness.