What benefits can homeowners' associations expect to receive in 2025?

A group of deputies has proposed to equalize the benefits of housing cooperatives (KSK) with that of homeowners associations (OСI), as reported by inbusiness.kz.

After the decision was made to cancel the liquidation of apartment owners' cooperatives, a legal conflict arose. Previously, all KSKs in Kazakhstan were widely registered as consumer cooperatives – PKSK. This allowed them to circumvent the housing legislation prohibiting the combination of managing common property and providing services/performing works in these buildings. However, in the latest version of the Tax Code of the Republic of Kazakhstan, all consumer cooperatives lost their previous tax preferences and were required to pay turnover taxes (VAT). The owners' cooperatives – PKSK also fell under this regulation. Now, a group of deputies has introduced a draft law in parliament with amendments that propose to classify KSKs similarly to OСIs as non-profit organizations whose activities are not aimed at generating profit.

Income of KSK Subject to Withholding Tax

Article 307 of the Tax Code of the Republic of Kazakhstan discusses income received in the form of interest on deposits. Currently, if cooperatives have money placed in a deposit, they are, like all other commercial organizations, required to pay tax on the interest earned. If the deputies' amendments are approved, KSKs will be equated in status to OСIs and exempt from paying this type of tax.

Will KSK Pay VAT?

In addition to this draft law, there is also a proposal in parliament to amend housing legislation that aims to secure the right of KSKs to combine the management of common property and the provision of maintenance services. Consequently, the question arises regarding the cooperative owners' obligation to pay VAT. However, the deputies have decided to adhere to the new status of owners' cooperatives as non-profit organizations and exempt them from VAT for "…services within the framework of the activities of the homeowners association of a multi-apartment residential building, the apartment owners' cooperative (premises) for managing the condominium object, carried out in accordance with the housing legislation of the Republic of Kazakhstan…". This amendment is planned to be added to Article 394 of the Tax Code of the Republic of Kazakhstan.

Registration Fee Rates for KSK

In Kazakhstan, the Tax Code establishes a standard fee for state services for legal entities. Specifically, a fee of 6.5 MRP is set for state registration, re-registration, etc., of legal entities. Currently, only homeowners associations can benefit from preferential treatment, paying 1 MRP. If the deputies approve their colleagues' proposal, the minimum fee in the republic will also apply to KSKs. A similar situation exists regarding another fee – for re-registration. Here, the initiative group of the Mazhilis also proposes to equalize the benefits of OСIs and KSKs by setting the fee at 0.5 MRP. These changes will affect Article 553 of the Tax Code of the Republic of Kazakhstan.

For apartment and premises owners, the changes in the Tax Code of the Republic of Kazakhstan are of significant importance. Taxes are part of the payment structure for the maintenance of common property. Accordingly, a reduction in tax payments by KSKs should lead to a decrease in this type of expense, which is borne by property owners.

Earlier, inbusiness.kz reported on the intention to tighten penalties for KSKs for violating the rights of owners.

This material is for informational purposes only; it was written based on the "Comparative Table to the Draft Law of the Republic of Kazakhstan on Amendments and Additions to the Tax Code of the Republic of Kazakhstan on Taxes and Other Mandatory Payments to the Budget (Tax Code) Regarding Housing and Communal Services".