Abstract
This study analyzes the impact of thin capitalization rules in Kazakhstan on corporate tax avoidance strategies. Based on agency theory, it examines managerial decision-making, showing that managers seek to enhance corporate value by reducing tax expenses. The thin capitalization rule regulates the debt-to-equity ratio of companies and limits the deductibility of certain interest expenses. This policy is evaluated using the Difference-in-Differences (DID) method, comparing the behavior of high-debt and low-debt firms. The results indicate a decline in conforming tax avoidance, while non-conforming avoidance remained largely unchanged. Multinational corporations reduced conforming avoidance more significantly but adapted through alternative methods. The study highlights Kazakhstan’s tax system alignment with international standards and its regional characteristics. Furthermore, the introduction of GAAR and SAAR rules is noted as key instruments in restricting corporate tax planning. The empirical analysis is based on data from 2018–2025, covering 1,353 firm-year observations. Findings suggest that thin capitalization rules help reduce aggressive tax avoidance, with multinational corporations being more affected compared to domestic firms. This research provides valuable insights into the role of conforming and non-conforming avoidance in corporate strategy and offers regulators useful information for evaluating policy effectiveness.