Investment grants

November 5, 2014

As is known this summer dramatical changes were made into the laws on investments in frames of increase of investment attractiveness of the state.

One of key changes for attraction of investors is so called investment subsidies, which imply compensation of 30% of factual expenditures associated with construction and purchase of equipment within the project.

The procedures on granting investment subsidies are in the blueprint stages and presumably will come into force from January 2015. Our analysis of the draft documents shows up as follows:

Who is eligible for investment subsidies?

Investment subsidies can be granted to a legal entity provided that such entity:

  1. is a newly registered one;
  2. is implementing an investment priority project;
  3. is investing funds in the amount of not less 200,000 fold MAI (monthly assessment index), which is nearly $US 20,000,000.

Maximum amount of an investment subsidy is 1 500 000 fold MAI for the relevant year (about $US 15 million).

Briefly the procedure for providing grants will be as follows:

  • An investor files an application (attaching a business plan and project documentation approved with state expertise in addition to constitutive documents) with the Investment Committee of the Ministry of Investment and Development of the Republic of Kazakhstan.
  • The Investments Committee reviews the application and submits its conclusion to the State Commission (interdepartmental commission organised for these purposes) for consideration.

  • The State Commission takes a decision based on which the Government prepares and adopts a decree, i.e. Government will adopt a separate decree in relation of every investor and project.

However, the adopted governmental decree is not a final document for getting subsidies from the budget.

  • An investment agreement is signed on the basis of the Decree of the Government of the Republic of Kazakhstan (DGRK) and should include obligations of an investor and thereafter an investor starts implementation of the project.

  • An investor should file an annual audit report with the Investment Committee after the object is once up and operational, attaching all documents on performance of investment obligations.

  • Further on, the Investment Committee presents to the State Commission the amount of subsidies to be paid to an investor for consideration (the projects contains a calculation for factual investment subsidies to be paid and it directly depends on production figures).

Finally, the subsidies are being paid after the object is commissioned in full, as it is prescribed in the investment agreement, provided that an investor performs obligations on capacity loading. The subsidies will be paid in equal installments as per the schedule, not as a lump sum, within three years after commissioning of the object and up to expiry of an investment agreement.

Madina Sypatayeva