The financial leasing market in Kazakhstan is developing and increasing every year. Leasing is an indispensable contractual tool for business development and provides an opportunity to improve the investment potential of the country. Currently, the legislation of Kazakhstan fully regulates the procedure of leasing agreements and minimizes the risks for all parties.
The Kazakhstan Law "On Financial Leasing" (hereinafter – the Law)
states that any leasing contract should meet at least one of the
1) ownership acquisition is specified in the leasing contract;
2) the lease term is more than 75% of the leased asset’s useful life;
3) current (discounted) value of lease payments for the whole term
exceeds 90 percent of the value of the asset.
In addition, the Law also provides for international leasing when one of
the parties is a non-resident of Kazakhstan.
There are 5 types of financial lease in Kazakhstan. The terms below may have different connotations in other jurisdictions, but these are what the Law has, translated verbatim. The following types of lease are available:
1) reverse lease - a seller sells the asset to a company on the condition
that the asset is leased back to the seller;
1-1) secondary lease - the leased asset, remaining in the ownership of
the lessor in the event of leasing contract termination or cancellation, is
leased to another lessee;
2) bank lease - a bank acts as lessor;
3) full lease - lessor bears the expenses for the asset maintenance;
3-1) sublease - lessee transfers the asset to third parties for temporary
use for a fee and for a period according to terms of the subleasing
agreement the property previously received from the lessor under the
leasing agreement and constituting the leasing object
4) net lease - lessee bears the expenses for the asset maintenance;
5) Islamic lease - this type of leasing fully complies with the principles of
There is a difference between reverse lease and sublease. Under reverse
lease, an entity sells its property to a leasing company and at the same
time enters into an agreement with that company under which it receives
the same property on lease. Under a sublease contract, the lessee, with
the lessor's permission, can become a sublessor, transferring the leased
asset to other lessees.
Kazakhstan's leasing market is growing every year, and leasing itself is an indispensable tool for business development, enhancing the country's investment potential. At the moment, the legislation fully regulates the lease procedure and minimises risks for all parties involved as the state is interested in facilitating business and developing the level of leasing activities.