About







Investment Preferences

The state support of investments meant to create favourable investment climate to boost economy and investments into development of new, expansion and renovation of the existing production facilities along with the use of modern technologies, upgrade qualification of Kazakhstani human resources and environmental protection.

The state support instruments for the investment activity are investment preferences (incentives). The laws of the Republic of Kazakhstan establish procedures of granting the investment preferences  for the investment project, investment priority and special investment project.

The laws do not provide for any division into local and foreign investors and the definition investor means any individual or legal entity that makes investments into charter capital or expansion of fixed assets. All investors should have an equal access to investment preferences schemes.

The investment preferences shall mean the specifically targeted benefits provided under the laws of the Republic of Kazakhstan to the:

  1. Legal entities duly registered under the laws of the Republic of Kazakhstan that implement investment projects;
  2. Leasing companies that import technological equipment for the legal entities under the financial leasing agreement , that develop investment project.

A legal entity of the Republic of Kazakhstan shall mean a legal entity, inter alia with foreign shareholders, which was set up in manner, prescribed by laws of the Republic of Kazakhstan.

The investment project preferences scheme comprises of the:

  1. Exemption from customs duties and VAT for import (Duties and VAT free import);
  2. State In-Kind Grants, i.e. land plots, buildings, structures, machinery and equipment, computers, measuring and control instruments and devices, vehicles (except for motor vehicles), production and household equipment;  the maximum value of any state in-kind grant is thirty percent of the volume of investments into fixed assets of a legal entity of the Republic of Kazakhstan.

The investment priority project preferences scheme comprises of:

  1. Tax Incentives:
    • Property Tax;
    • Land Tax;
    • Corporate Income Tax 
  2. Investment Subsidies (Cashback);
  3. Import duties exemption;
  4. State in-kind grants.

The special investment project scheme is based on exemption from:

  • Import duties;
  • Taxes (VAT) pursuant to taxation laws of the Republic of Kazakhstan.

 

INVESTMENT PROJECTS

The investment project shall mean 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.

The investment priority project shall mean an investment project for the:

  • Development 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. monthly calculation indices (KZT 2405), established by the republican budget law and  effective on the date of filing an application for investment preferences;
  • Expansion and /or renewal of the existing production facilities with minimal investment amount equal to 5mln. monthly calculation indices, established by the republican budget law and effective on the day of filing an application for the investment preferences, into modification of basic assets, including renovation (renovation, reconstruction and modernization) of the existing of the production facilities that manufacture goods.

The investment priority project objected at creation of new production plants and/or expansion and renewal of the existing production plants should be implemented by a legal entity in one of the priority business activities against priority business activities list, established by the Government of the Republic of Kazakhstan.

The special investment project shall mean an investment project, implemented or is being implemented by:

  • a legal entity of the Republic of Kazakhstan, registered as a member of special economic zone ; or
  • owner of free customs zone 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.

 

CONDITIONS PRECEDENT

The investment preferences are available to the Kazakhstani legal entities only engaged ininvestment projects in the priority business activities prescribed by the Kazakhstani Government in the Decree No.13 of 14 January 2016. The priority business activities list contains two sections: Part 1 – activities list of investment projects and Part 2 – activities list of the investment priority projects. The conditions precedent list for the investment priority project scheme is  considerable and set forth below, whilst the investment project scheme is available to companies that plant to implement projects in priority business activities and special investment project scheme is available only to special economic zone participants, free customs zone owners and companies – signatories of industrial assembly agreements with the Kazakhstani government.

The investment preferences for the investment priority project are available subject to as follows:

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 against the list of priority business activities for the investment priority projects;

4) A legal entity is not an:

  1. autonomous educational organizations in accordance with the tax legislation of the Republic of Kazakhstan and the legislation of the Republic of Kazakhstan on education;
  2. 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 preferences

Investment project

Investment priority project

Special investment project

 

 

Setup of new production plants

(FABRICS, PLANT,SHOP)

Expansion and renewal of existing production plants

(RENOVATION, RECONSTRUCTION AND REFURBISHMENT (modernization))

 

Customs duty exemption (duty free import)

+/ 5 years

+/5 years

+/5 years

+/15 years

State in-kind grants

+

Max value size - 30% of investments amount

+

Max value size - 30% of investments amount

+

Max value size - 30% of investments amount

______

Tax preferences

(Tax incentives)

 

 

 

 

Exemption from VAT (VAT free import)

+/5 years

____

____

+/ Force period of special investment contract

Corporate income tax

________

+/10 years

+/3 years

________

Land tax

________

+/10 years

______

________

Property tax

________

+/ 8 years

_______

________

Investments subsidies (cash back)

 

Minimum investments amount is

5 000 000  monthly calculation indices

(approx. $US 37 600 000)

_______

 

General conditions precedent

  1. Recipient - applicant:

Legal entity, duly registered in the Republic of Kazakhstan

  1. Priority business activities: Governmental decree No.13 of 14.01.2016 (Part 1 Priority Business Activities for Investment projects)
  1. Recipient - applicant:

Legal entity, duly registered in the Republic of Kazakhstan

  1. Priority business activities:  Governmental decree No.13 of 14.01.2016 (Part 2 Priority Business Activities for Investment Priority Projects
  2. Minimal investments amount on the date of submitting an application:
  • 2,000,000 monthly calculation indices, approx.$ US 15,500,000 for building new production plants; or
  • - 5,000,000 monthly calculation indices, approx. $US 37,600,000 for renewal and expansion  production plants;
  1. A legal entity – applicant shall be neither of::
  • An autonomous educational organization under the tax laws of the Republic of Kazakhstan and the education laws cannot be an applicant and, accordingly a recipient of investment preferences;
  • An organisaton that carries out activitiy in the territory of Special Economic Zone under the tax laws and laws on special economic zones laws  of the Republic of Kazakhstan;
  1. Shareholders/participants:

The shareholding and/or participatory holding of the State or a quasi-state organization of the legal entity - applicant is maximum 26% and such membership of the State or a quasi-state organisation shall be ceased within five years from the date of investment contract registration.

Default of this condition will trigger one year suspending of investment preferences to the date of full cessation of membership of the State or a quasi-state organization. Default of cessation condition within the suspension period causes early termination of an investment contract and, subsequently reimbursement of provided preferences.

Exception: projects on production of coal bed methane provided that shareholding and/or participatory holding of the State or a quasi-state organization is maximum 50%.

  1. Funding sources:

No public budget means are raised for funding or provision of financial guarantees.

  1. Public Private Partnership Agreement:

No public partnership agreement, including concession agreement, was made for carrying out investment activity.

  1. Recipient-applicant:

1) Duly registered participant of Special Economic Zone under laws of the Republic of Kazakhstan on special economic zones;

2) Duly registered holder of free customs zone under the customs laws of the Republic of Kazakhstan;

3) legal entity – signatory party to Agreement on Industrial Assembly of motor vehicles;

  1. Business activities:

Business activities must be against the Priority Business Activities List, approved by the government of the Republic of Kazakhstan.

 

 

Should you have any further questions on state support instruments for investments, please contact the Department of Investment and Post-Investment Support by phone +7 7172 620 565.