Invest In Kazakhstan 2014

By International Law Firm Adilet & Alem LLP

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Content

1.About Kazakhstan…………………………………………………………………..……….32.Why Kazakhstan…………………………………………………………..……………......53.Doing Business…………………………………………………………………….…………64.Priority Sectors……………………………………………………………….…………….95.Special Economic Zones in the Kazakhstan…………………………………..106.Contacts………….……………………………………………………………………………..14

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Kazakhstan is a unitary state with a presidential form of government. The President of the Republic of Kazakhstan is the head of state, its highest official determining the main course of the government’s domestic and foreign policies and representing Kazakhstan within the country and in international relations.

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About Kazakhstan

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Capital Astana

Largest city Almaty

Territory: 2,724,900 sq. km (1,052,085 sq. miles)9th largest country in the world.2nd largest country  amongst CIS nations

Population:  17,3 million people

Language: Kazakh is the state language. Among state organizations and local authorities, Russian is used along with the Kazakh language

Irrigated land: 20,660 sq km (2010)

GDP (purchasing power parity):

$243.6 billion (2013 est.)country comparison to the world: 53$231.9 billion (2012 est.)$220.6 billion (2011 est.)note: data are in 2013 US dollars

Gross national saving: 28.8% of GDP (2013 est.)country comparison to the world: 3123.9% of GDP (2012 est.)28.4% of GDP (2011 est.)

Public debt: 15.6% of GDP (2013 est.)country comparison to the world: 14313.2% of GDP (2012 est.)

Exports: $87.23 billion (2013 est.)country comparison to the world: 43$86.93 billion (2012 est.)

Imports: $52.03 billion (2013 est.)country comparison to the world: 55$49.08 billion (2012 est.)

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Why Kazakhstan?

Ample Natural Resources Favorable Location Political Stability Favorable business climate Investor protection Availability of transnational

corporations Foreign Direct Investments Economic growth Customs Union Markets Industrial and Innovative

Development

*** Kazakhstan’s priceless treasure is its mineral resources. Kazakhstan is the 6th largest country around the world in terms of mineral resources. 99 elements discovered, 70 elements explored, 60 are being recovered and used in Kazakhstan’s soil out of 110 elements of D.I.Mendeleyev’s periodic table, they are:oil, gas, uranium, zinc, tungsten, barium, silver, lead, chrome, copper, fluorites, molybdenum, and gold.Mineral and resources base of the Republic of Kazakhstan consists of 5,004 fields, estimated cost is around USD 46 trillion.

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No. Procedure Time to Complete Associated Costs

1Pay registration fee into the account of the Ministry of Justice

1 day no charge

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State registration of legal entity and tax registration at the Public Registration Center

7 days KZT 3462

3 Make a company seal 1 day KZT 2,000 - KZT 4,500

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Notarize certificate of state registration and other post-registration documents

1 day 10% MCI per page

5 Open the current account in the bank

1 day no charge

6Register for the obligatory insurance of life and health for employees

1 day no charge

Doing Business

Starting a Business

State registration subject to all legal entities established in the territory of the Republic of Kazakhstan, regardless of the purpose of their establishment, type and nature of their activities, participants (members).

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Licensing

To conduct special activities in Kazakhstan it is necessary to obtain a license. The following separate activities are subject to be licensed:1.industry;2.atomic energy use;3.toxic turnover;4.transport;5.drug, psychotropic substance, precursor trafficking;6.information security;7.special equipment for investigation works;8.turnover of arms, military hardware and particular types of weapons, explosives and its related products;9.use of outer space;10.informatization and communication;11.education;12.mass media;13.agriculture and forestry, geodesy and cartography;

14.  health service;15.  service of individuals and legal entities;16.  gambling industry;17.  veterinary science;18.  judicial and expert;19.  culture;20.  financial sector and activity related to concentration of financial resources;21.  architecture, city planning and construction;22.  production of state symbols of Kazakhstan;23.  production and turnover of ethyl alcohol and alcohol products, tobacco production;24.  export and import of goods;25.  commodity exchanges 

Non-licensed activity may result in administrative and criminal responsibility in terms of fines and confiscation of the proceeds from license-free activity of a company. Also, non-licensed activity is formal ground to hold transaction invalid which had been closed at the time of failure to meet a date and liquidate the company which infringed the licensing rules.

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Taxation

Entrepreneurial activity of a foreign investor is usually subject to the following taxes and duties:

Corporate income tax (CIT);Individual income tax (IIT);Mineral extraction tax (MET);Value added tax (VAT);Land tax from legal entities;Property tax from legal entities and individual entrepreneurs;Vehicle tax from legal entities;Pension taxes, social deductions.1. Corporate Income Tax (CIT)

CIT payers are legal entities: residents and non-residents which conduct its business through permanent agency or earn income from Kazakhstan sources.CIT rates:for income from production, processing and sale of agricultural products - 10 %;for passive income (fees, winnings, Kazakhstan income of non-residents) - 15%;for taxable income – 20%.

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Priority Sectors

Oil Refining and Development of Oil and Gas Infrastructure

Mining-and-Metallurgical SectorChemical Industry

Atomic IndustryMachine Industry

Pharmaceutical IndustryConstruction Industry and

Manufacture of Construction Materials

Agricultural SectorLight Industry

Tourism IndustryInformation Technologies

BiotechnologySpace Activity

Alternative Energy Industry

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Special Economic Zones in the Kazakhstan

«Special economic zone» – it is strictly delimited area of the Republic of Kazakhstanwith special legal regulation of special economic zone to implement activities ofhighest priority. (The Law «About special economic zones»)

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Legislative acts regulating SEZ activity

In Kazakhstan SEZ is regulated by the following legislative acts:• Tax Code - with regard to taxation;• The Law «About special economic zones» - the main Law regulating SEZ activity;• Agreement on free (special, specific) economic zones within the customs territory of the Customs Union and a «free customs zone» procedure - with regard to custom regulation within SEZ.

Government bodies regulating SEZ activity

Ministry of Industry and New Technologies- the main authorized body in development and regulation of SEZ in accordance with the Law «About special economic zones»Managing company- the Managing company is established to operate SEZTax Agency at SEZ area- Department of the Tax Committee of the Ministry of Finance is involved in tax regulation within SEZ.The Custom union at SEZ area- Department of the Committee for Custom Control of the Ministry of Finance is involved in custom regulation within SEZ

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Benefits within SEZ

Benefits within SEZ are provided with the Tax Code and the Law «About SEZ» Tax benefits

The following benefits are stipulated for SEZ members:

• 0% rate for corporate income tax;• 0% rate for land tax;• 0% rate for property tax ;• During the realization of customer goods within SEZ

suffers with zero-rate VAT. However these goods must meet all requirements of SEZ creation purposes according to the list of goods defined by the Government of the Republic of Kazakhstan.

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SEZ management

All SEZ are managed by the Managing company. The Managing company can be founded by private legal entities including foreign ones. Thus private investors (as well as foreign) are willing to participate in SEZ activity can appear as founders of the Managing company. They have an opportunity to take part in the decision making process that will affect their activity. Functions of the Managing company

1) interaction with the Government bodies regarding functioning of special economic zones;2) under-lease of land plots and let out for lease (under-lease) infrastructure facilities to persons implementing additional activity;3) signing and cancellation of treaties about implementation of activity;4) reporting to the authorized body regarding the results of SEZ activity in accordance with annual reports of SEZ members;5) attraction of members of special economic zone;6) attracting investments to the construction of infrastructure facilities and implementation of other SEZ activities;7) construction of infrastructure facilities in accordance with the approved Feasibility Study at land plots not given to SEZ members;8) development of one stop-shop;9) confirmation of actual demand of imported goods meeting the purpose of SEZ development;10) monitoring of the fulfillment of implementation contracts.The Managing company renders services to SEZ members through one stop-shop principle i.e. minimization of applicants during collection and preparation of various documents and limitation of liaison with officials

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Adilet & Alem LLP International Law Firm Kazakhstan, Astana010000, 6 Sary-arka Ave.Business Center ArmanEmail: info.astana@adiletandalem.comSkype: adiletandalem.ast.coPhone: +7 71 72 467-998

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