On the 12th day of June 2014 Kazakhstan President N. Nazarbayev signed into Law of the Republic of Kazakhstan “On amendments and supplements into the legal acts of the Republic of Kazakhstan pertaining to the improvement of investments climate ( the “Law”), by virtue of which, the following legal acts of the Republic of Kazakhstan should be amended:
- Land Code of the Republic of Kazakhstan;
- Tax Code of the Republic of Kazakhstan;
- Law of the Republic of Kazakhstan “On Natural Monopolies and Regulated Markets”;
- Law of the Republic of Kazakhstan “On Employment”;
- Law of the Republic of Kazakhstan “On Investments”;
- Law of the Republic of Kazakhstan “On Concessions”;
- Law of the Republic of Kazakhstan “On Population Movement”.
It would be advisable for investors to note and consider the following improvements introduced by the Law.
First of all the improvements mostly proceed from the introduction of definition “investment priority project”, i.e. investment project of a newly registered legal entity in one of the priority business sectors that were listed and established by the Government of the Republic of Kazakhstan envisages investments in the amount equal to two million fold of monthly calculation index (nearly US$ 20 million).
A newly registered legal entity can apply for investment priority projects if it:
1) Was registered not earlier than twelve calendar months before date of applying for investments preferences;
2) Carries out one of priority business activities established for the investments priority projects;
3) Envisages implementing an investment priority project within one investment contract.
The amendments into the tax legislation provide for 10 years exemption from corporate income tax and land tax for entities implementing investment priority projects (a less period could be provided by an investment agreement), and 8 years exemption from property tax ( a less period could be provided by an investment agreement). In case when land tax and property tax exemption existed before the Law enactment, exemption from corporate income tax will be an additional preference for investors, developing investment priority projects.
In cases when investment priority projects are being developed by a legal entity-employer, the latter will not be subject to obtain work permits for attracting foreign labour force as well as general contractor, subcontractor and etc. of a legal entity that develops a priority investment project.
The Law introduced new concepts such as “Investment Ombudsman”, the main function of which will be support and protection of rights and interests of investors and “investment grant” i.e. a governmental non-repayable and non-refundable grant given to a legal entity, developing priority investment project. The essence of such preference targets at compensation up to 30 (thirty) per cent of construction and equipment costs.
Finally, one of the most important improvements is provision of legislative framework for a stability guarantee in case of legislation change. In particular, the legislation ensures stability in the area of taxation and attraction of foreign labour force for legal entities, which will develop priority investment projects.