Legislation
Kazakhstan❜s Oil and Gas Tax Regime: Key Changes introduced in 2026 and the Upcoming 2027 Reform
Elena Kaeva, Partner, Tax, Legal and People Services, PwC Kazakhstan
Leylim Mizamkhan, Director, Tax Services, PwC Kazakhstan
Aralbek Mukan, Associate, PwC Kazakhstan
Daniyar Urkumbayev, Senior Associate, PwC Kazakhstan
Introduction
On 1 January 2026, Kazakhstan’s new Tax Code came into effect, retaining the basic structure of taxation in the oil and gas sector while introducing several significant changes to the taxation of subsoil users. The most important changes relate to the treatment of costs incurred during exploration and preparation for production, the rules for establishing liquidation security, the expanded application of the alternative subsoil use tax (ASUT), and the future reform of the mineral extraction tax (MET) scheduled for 2027.
For industry participants, it is important not only to understand that the legislation has changed but also how the new system will affect the economics of specific projects. Given the capital-intensive nature of the oil and gas industry, even targeted changes to tax rules may significantly affect cash flows, investment decisions and field profitability.
Current Taxation Framework for Oil and Gas Companies
Oil companies in Kazakhstan pay generally applicable taxes, including corporate income tax (CIT) and value added tax (VAT). However, they are also subject to a special tax regime for subsoil users, which makes the oil and gas sector significantly different from most other sectors of the economy.
A key feature of the regime is the requirement to maintain separate tax accounting for each subsoil use contract. Income, expenses, assets and liabilities are accounted for separately for each field or contract area, effectively treating each project a separate taxable unit.
In addition to CIT, oil companies may pay special taxes and payments under subsoil use legislation, including:
mineral extraction tax (MET), which is charged on extracted hydrocarbons. The tax base is determined based on the value of the extracted resources, while the current rates for oil range from 5% to 18%, depending on the annual production volume;
excess profit tax (EPT), which is calculated separately for each subsoil use contract and is intended to tax part of a project’s excess returns. EPT applies on a progressive scale: the first 25% of net income relative to deductions is not taxed, while the excess is taxed at rates ranging from 10% to 60%;
historical cost reimbursement payment, which represents compensation to the state for the costs of geological studies and exploration of the relevant subsoil area incurred before the subsoil use contract was signed;
rent tax on oil exports, which is payable on exported oil and applies at rates linked to global oil prices;
alternative subsoil use tax (ASUT), which may apply to certain oil and gas contracts instead of MET, EPT and the historical cost reimbursement payment. Unlike MET, ASUT is calculated based on the financial result under the contract, while its rate depends on the global oil price and ranges from 0% to 42%.
Therefore, the tax burden on an oil subsoil user depends not only on the project’s profitability but also on a combination of factors, including production volumes, global oil prices, the stage of field development and the applicable tax regime. This is why projects of a similar scale may have significantly different effective tax burdens.
At the same time, the approaches to taxing subsoil users changed in several areas in 2026, while the introduction of certain provisions of the new Tax Code has been postponed until 2027.