STATE SUPPORT INVESTMENT ACTIVITIES

The legislation establishes 2 categories of investors in the Republic of Kazakhstan (hereinafter referred to as the investor):

Investor

Large Investor

individuals and legal entities that invest in the Republic of Kazakhstan in an amount not exceeding two million times the MCI* .

individuals and legal entities that invest in the Republic of Kazakhstan in an amount of at least two million times the MCI*.

*MCI - monthly calculation index (By the Law of Kazakhstan dated November 30, 2018, the size of the MCI from January 1, 2019 is 2525 tenge)


The Republic of Kazakhstan provides state support measures for investments and guarantees, in accordance with legislative acts, the stability of the terms of contracts concluded between investors and government bodies of the Republic of Kazakhstan.


Investment preferences

The goals of state investment support are:

  • to create a favorable investment climate for the development of the economy and stimulate investment in the creation of new, expansion and renovation of existing industries using modern technologies;
  • to improve the skills of Kazakhstani personnel;
  • environmental protection.

State support for investment is to provide investment preferences and is carried out by:

  • The Ministry of Foreign Affairs of the Republic of Kazakhstan;
  • Joint-stock company «National company «KAZAKH INVEST»;
  • other authorized bodies.

Investment preferences are the benefits of a targeted nature, provided in accordance with the legislation of the Republic of Kazakhstan for:

  • legal entities of the Republic of Kazakhstan* implementing an investment project;
  • for leasing companies importing technological equipment on the basis of a financial leasing agreement for a legal entity of the Republic of Kazakhstan implementing an investment project as part of an investment project.

* Legal entity of the Republic of Kazakhstan - a legal entity, including a legal entity with foreign participation, established in the manner established by the legislation of the Republic of Kazakhstan.

In accordance with the Business Code of the Republic of Kazakhstan, the following types of investment projects are implemented in the Republic of Kazakhstan:

Investment

project -

Investment

priority project -

Investment

special project -

a set of actions that implies investing into creation of new, expansion and (or) renovation of existing production plants, inter alia plants that were set up, expanded and (or) renovated within the public private partnership projects, inter alia concession projects.

An investment project on certain priority activities, (the list was adopted with the decision of the Government of Kazakhstan dated January 14, 2016 No. 13) into:

  • creation of new production plants and implying investing by a legal entity into construction of new production plants (fabrics, plant and shop), for the minimal amount of 2mln. MCI;
  • expansion and /or renewal of the existing production facilities with minimal investment amount equal to 5mln. MCI, including renovation (renovation, reconstruction and modernization) of the existing of the production facilities that manufacture goods.

an investment project, implemented or is being implemented by:

a legal entity of the Republic of Kazakhstan, registered as a member of SEZ*; or owner of free warehouse stock as per the customs laws of the Republic of Kazakhstan; or being developed by a legal entity of the Republic of Kazakhstan that made an agreement on industrial assembly of motor vehicles.

*SEZ – Special economical zone.

INVESTMENT PROJECT preferences

1.exemption from customs duties for import of:
  • technological equipment (goods intended for use in the technological process of an investment project) - for the term of the investment contract, but not more than 5 years from the date of registration of the investment contract;
  • component parts for technological equipment (components that together comprise the structural integrity of the technological equipment) - for the term of the investment contract, but not more than 5 years from the date of registration of the investment contract;
  • spare parts for technological equipment - for a period of up to 5 years is granted to legal entities of the Republic of Kazakhstan depending on the amount of investment in fixed assets and in case the investment project complies with the list of priority activities adopted with the decision of the Government of the Republic of Kazakhstan No. 13 of January 14, 2016;
  • raw materials and (or) materials (any mineral, component, part or other product used to obtain finished products through the technological process) - for a period of 5 years from the date of commissioning of fixed assets under the work program (annex to the investment contract, defining the calendar schedule of work on the implementation of the investment project before putting the production into operation).
2.VAT* exemption on imports of raw materials and (or) materials – for the term of the investment contract.

3.State in-kind grants (the property* of the Republic of Kazakhstan which are granted for temporary free use after the expiration of the investment contract and when the investor has completely fulfilled investment obligations; or for temporary free use on the right of temporary free land use to a legal entity of the Republic of Kazakhstan engaged in investment project and subsequently can be delivered into possession of investor) - the size of a state in-kind grant is maximum 30% of investment amount in the fixed assets of a Kazakhstani legal entity.

*VAT - Value Added Tax (In accordance with Article 422 of the Code "On taxes and other obligatory payments to the budget", the VAT rate is 12%).

*plots, buildings, structures, machinery and equipment, computers, measuring and control devices and devices, vehicles (excluding motor vehicles), production and household equipment


Preferences for an INVESTMENT PRIORITY PROJECT

1.exemption from customs duties for import of:
  • technological equipment (goods intended for use in the technological process of an investment project) - for the term of the investment contract, but not more than 5 years from the date of registration of the investment contract;
  • component parts for technological equipment (components that together comprise the structural integrity of the technological equipment) - for the term of the investment contract, but not more than 5 years from the date of registration of the investment contract;
  • spare parts for technological equipment - for a period of up to 5 years is granted to legal entities of the Republic of Kazakhstan depending on the amount of investment in fixed assets and in case the investment project complies with the list of priority activities adopted with the decision of the Government of the Republic of Kazakhstan No. 13 of January 14, 2016;
  • raw materials and (or) materials (any mineral, component, part or other product used to obtain finished products through the technological process) - for a period of 5 years from the date of commissioning of fixed assets under the work program (annex to the investment contract, defining the calendar schedule of work on the implementation of the investment project before putting the production into operation).
2.VAT exemption on imports of raw materials and (or) materials – for the term of the investment contract.

3.State in-kind grants - the size of a state in-kind grant is maximum 30% of investment amount in the fixed assets of a Kazakhstani legal entity (plots, buildings, structures, machinery and equipment, computers, measuring and control devices and devices, vehicles (excluding motor vehicles), production and household equipment).

4.exemption from other taxes: corporate income tax, land tax, property tax.

5.Investment Subsidies (are not available under the investment priority projects on expansion and renewal of the existing production plants) – a non-repayable and non-refundable budget subsidy (cashback) granted by the Government of the Republic of Kazakhstan as an investment preference to a legal entity of the Republic of Kazakhstan, which signed an investment contract on investments in the amount of at least 5 000 000 (five million) MCI. The size of the subsidy - is up to 30% of the cost of construction and installation works and the purchase of equipment without VAT and excise taxes, provided for in the work program of the investment contract.


Preferences for INVESTMENT SPECIAL PROJECTS

1.exemption from customs duties for a period not exceeding 15 years from the date of registration of a special investment contract (but not more than the validity period of the SEZ*) for import of:
  • technological equipment (goods intended for use in the technological process of an investment project);
  • component parts (components that together comprise the structural integrity of the technological equipment) and spare parts for technological equipment;
  • raw materials and (or) materials (any mineral, component, part or other product used to obtain finished products through the technological process);
  • raw materials and (or) material in the composition of finished products produced on the territory of the SEZ* or free warehouse stock.
2.VAT exemption on imports of raw materials and (or) materials, exemption from other taxes: corporate income tax, land tax, property tax.


Preferences

Investment project

Investment priority project

Investment special project



Creation of new industries (fabrics, plant and shop)

Expansion and /or renewal of the existing production facilities (renovation, reconstruction and modernization)


Exemption from customs duties

+

+

+

+

State in-kind grants

+

+

+


Investment subsidies


+



Exemption from the following taxes:

VAT free import

+

+

+

+

Corporate income tax


+

+

+

Land tax


+

+

+

Property tax


+

+

+


Requirements for granting investment preferences

Investment preferences are provided only to Kazakhstan legal entities (see note above), who plan to implement investment projects in priority activities according to the list of priority activities, adopted with the decision of the Government of Kazakhstan of January 14, 2016 No. 13.

Investment preferences are granted on the following conditions:

Investment project

1) The recipient is a legal entity of the Republic of Kazakhstan;
2) A legal entity carries out priority business activities according to the first part of the list of priority business activities for the investment priority projects adopted with the decision of the Government of Kazakhstan of January 14, 2016 No. 13;

Investment priority project

1) The recipient is a legal entity of the Republic of Kazakhstan;

2) The investments amount is at least 2mln.MCI for building new production plants or 5mln.MCI for expansion and renewal of the existing production plants;

3) A legal entity carries out priority business activities according to the second part of the list of priority business activities for the investment priority projects adopted with the decision of the Government of Kazakhstan of January 14, 2016 No. 13;

4) A legal entity is not an:

  • autonomous educational organizations in accordance with the tax legislation of the Republic of Kazakhstan and the legislation of the Republic of Kazakhstan on education;
  • organization operating in the territory of a special economic zone, in accordance with the tax legislation of the Republic of Kazakhstan and the legislation of the Republic of Kazakhstan on special economic zones;

5) The shareholding of the state and (or) a quasi-state entity (national company) does not exceed twenty-six percent as a founder and (or) participant (shareholder) of a legal entity of the Republic of Kazakhstan.

The state or quasi-state entity (governmental companies) can remain as a shareholder in the legal entity – applicant five years maximum from the date of registration of the investment contract. The state and (or) quasi-state entity should resign of the shareholders or participants (shareholder) of the legal entity of the Republic of Kazakhstan within five years from the date of investment contract registration. Failure to comply with the resign condition will result in suspension of investment preferences scheme up to the complete resignation from the shareholders/participants of the legal entity of the Republic of Kazakhstan for one year.

Failure to comply with the resign condition during the suspension period triggers the early termination of the investment contract and return of previously granted investment preferences.

These conditions are not applicable, when a quasi-public entity in which the state or other quasi-public entity holds less than fifty percent (50) carries out an investment priority project in the area of extraction of coal bed methane;

6) no public budget funds are raised or provided as the guarantees of financing for the implementation of the investment priority project;

7) no public-private partnership agreement, including a concession agreement, is made for the investment project.

Investment special project

1) a legal entity of the Republic of Kazakhstan, registered as a member of SEZ;

2) a legal entity of the Republic of Kazakhstan, registered as a owner of free warehouse stock as per the customs laws of the Republic of Kazakhstan;

3) a legal entity of the Republic of Kazakhstan that made an agreement on industrial assembly of motor vehicles;

4) a legal entity carries out priority business activities according to the first part of the list of priority business activities for the investment priority projects adopted with the decision of the Government of Kazakhstan of January 14, 2016 No. 13;


Simplified procedure for attracting foreign labor

In 2017, the Government of Kazakhstan, together with the World Bank, developed the National Investment Strategy for 2018-2022. Thus, the priority sectors of the economy are:

  • Food industry
  • Deep processing of minerals
  • Metallurgy
  • Chemistry and petrochemistry
  • Mechanical Engineering
  • For implementing of investment projects in priority sectors (in addition to the above preferences) the attraction of foreign labor is carried out without quotas and permits.

    Investment Ombudsman

    The Investment Ombudsman has been created and is successfully functioning in the Republic of Kazakhstan. He is obliged to ensure compliance with the legal rights and interests of investors in Kazakhstan.

    In order to objectively consider issues and make collegial recommendations, a working group was established by the Investment Ombudsman, which included deputy heads of the following state bodies of Kazakhstan: the General Prosecutor's Office, the Ministry of Finance, the Ministry of Justice, the Ministry of Foreign Affairs, the Ministry of Energy, the Ministry of Agriculture, the Ministry national economy, the Ministry of Education and Science, the Ministry of Culture and Sports, the Ministry of Labor and Social protection of population.

    Servicing investors through a "single window"

    In the Republic of Kazakhstan there is a “single window" mechanism for investors.

    In accordance with Article 282 of Entrepreneurship Code of RK № 375-V dated October 29, 2015:

    Principle of “single window" for investors - central form of assistance to investors from the side of authorized body of investment in provision of state services prescribing minimizing participation of investors in collection and preparation of documents and limitation of their direct contact with state bodies.

    For today investors can get all the state services necessary for investment projects realization, as well as consult on the questions of its receiving in the Investors Service Centers (Nur-Sultan city, Kabanbay batyr str. 32/1, “Transport Tower" building, 1 floor) and Investors Service Centers in all regions of Kazakhstan.

    The list of Investors Service Sectors:

    1. In Nur-Sultan: department of Essyl district (St. Petersburg BC, Dostyk str., 20) department of Essyl district (Sauran str., 7).
    2. In Almaty: department of Medeu district (Markova str., 44), department of Bostandyk district (9А Khodzhanov str.), department of Auyezov district (Dzhandosov str., 51).
    3. In Akmola region: Department №2, located by the address: Kokshetau city, Abay str., 96.
    4. In Aktobe region: Department №1, located by the address: Aktobe region, Turgenev str., 109.
    5. In Almaty region: Taldykorgan city department, located by the address: Tauelsizdik str., 67B.
    6. In Atyrau region: Department № 1, located by the address: Atyrau city, Satpayev str., 23.
    7. In East-Kazakhstan region: City Department № 3, located by the address: Ust-Kamenogorsk, Belinskyi str., 37 а.
    8. In Zhambyl region: Department № 1, located by the address: Taraz, K.Koigeldy str., 158А.
    9. In West-Kazakhstan region: Department №1, located by the address: Uralsk city, Zhambyl str., 81.
    10. In Karaganda region: Department №7, located by the address: Karaganda city, Tatimbet str., 10/5.
    11. In Kostanay region: Department № 1, located by the address: Kostanay city, Taran str., 114.
    12. In Kyzylorda region: Department № 1, located by the address: Kyzylorda str., Muratbayev str., 2 е.
    13. In Mangistau region: Aktau city Department, located by the address: Aktau city, 15 microdistrict, build. 67 b.
    14. In Pavlodar region: Department №3, located by the address: Pavlodar city, Pavlov str., 48.
    15. In North-Kazakhstan region: Department № 1, located by the address: Petropavlovsk city, M. Auyezova str., 157.
    16. In Turkistan region: Department №2, located by the address: Shymkent cityMadeli Kozha str., 1G.
    Created at : 6.09.2019, 13:00, Updated at : 6.09.2019, 13:05