State-funded pension exemptions from taxation: upcoming alterations in EPSF payments scheduled for 2026
Starting from January 1, 2026, significant changes will be introduced to the taxation of pension payments in Kazakhstan with the enforcement of the new Tax Code.
The Unified Accumulation Pension Fund (UAPF), which is funded by mandatory pension contributions (MPC), mandatory professional pension contributions (MPPC), and voluntary pension contributions (VPC), will see modifications in the taxation of pension payments under the new Tax Code.
Under the current Tax Code, recipients have the option to choose whether to have individual income tax (IIT) withheld immediately upon receiving lump-sum pension payments or with a deferral until retirement. However, this deferral option will be waived with the introduction of the new Tax Code.
If a contributor has paid IIT earlier, it will not be refunded. Instead, the obligations for deferred IIT will be waived. It's important to note that this exemption does not apply to non-residents of the Republic of Kazakhstan, whose pension payments from the UAPF will continue to be taxed.
The UAPF has clarified how the new system will work for pensioners and contributors to the fund under the new Tax Code. As of January 1, 2026, all pension payments from the UAPF will be exempt from IIT for residents of Kazakhstan.
In contrast, pension payments from the UAPF are currently subject to IIT at a rate of 10%. However, the new Tax Code does not provide for the refund of previously withheld IIT on pension payments and lump-sum payments from the UAPF.
It's worth mentioning that pension payments from the state budget are not subject to IIT under the current Tax Code. This exemption remains unchanged under the new Tax Code.
The changes to the taxation of pension payments in Kazakhstan, as outlined in the new Tax Code, have been reported by liter.kz. Until December 31, 2025, the calculation, withholding, and payment of IIT on pension payments and lump-sum payments from the UAPF will continue under the current regime.
From January 1, 2026, the tax will be withheld when funds from the UAPF are transferred to the recipients' accounts. The specific detailed rates and additional applicable taxes for the new Tax Code are not explicitly detailed in the available search results.
In summary, the new Tax Code in Kazakhstan will bring about significant changes to the taxation of pension payments, with all pension payments from the UAPF becoming exempt from IIT for residents of Kazakhstan from January 1, 2026. Non-residents will continue to be taxed on their pension payments from the UAPF.
