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“Unicase”

Legal Investment Instruments in Kazakhstan

Kazakhstan has enormous potential for profitable investments. Foreign investors are increasingly looking at the Kazakhstan market for implementing their projects in various areas of the economy.

According to the results summarised by KAZAKH INVEST1 for 20212:

  • More than 50 projects worth over USD3.8 billion were implemented (2.4 times more than in 2020);
  • About 5 thousand jobs were created;
  • According to the National Bank of Kazakhstan, around USD18.7 billion was attracted in Kazakhstan in the first 9 months of 2021 (showing a 50% increase compared to 2020);
  • 193 business delegations visited Kazakhstan as part of KAZAKH INVEST’s accompaniment to the country’s investment potential.
At the same time, KAZAKH INVEST shared its forecasts for 2022
  • Launch of about 60 projects worth USD6.2 billion;
  • Start of construction and installation work on 52 projects worth USD12 billion;
  • Support of major strategic projects, including preparation of investment agreements with the government.

Taking the above into account, it can be seen that the government of Kazakhstan is rapidly developing its investment attractiveness for investors. An important process in this mission is the development of legal investment instruments. Legal investment instruments shall be understood as investment agreements under which a wide range of investment preferences can be granted to investors.

The current Kazakhstan legislation provides for 4 types of investment agreements, 2 of which have been introduced in the recent past:
1. Model contract for the implementation of an investment project;
2. Model special investment contract;
3. Agreement on investments (no model form) – introduced in January 2021;
4. Agreement on investment obligations – introduced in January 2022.

To understand the differences between them, Unicase provides an overview of the main differences between these investment agreements in the table below.
Investment projects:
Provision:
Model contract for the implementation of an investment project
Types of investment projects implemented under the contract:
  • Investment project;
  • Priority investment project.
Model special investment contract
Types of investment projects implemented under the contract:
  • Special investment project.
Agreement on investments (no model form)
Types of investment projects implemented under the agreement:
  • Priority investment project.
Agreement on investment obligations
Agreement on investment obligations is an agreement (concluded between the Government of Kazakhstan and a legal entity) that provides for the obligation of a legal entity to finance capitalised subsequent expenses and/or expenses for the acquisition, production, construction of new fixed assets, as well as the financing of other expenses that increase the value of fixed assets in accordance with international financial reporting standards and/or requirements of Kazakhstan accounting and financial reporting legislation in an amount not less than 150 million MCI.
Investment company:
Provision:
Model contract for the implementation of an investment project
Legal entity of Kazakhstan (excluding AIFC territory).
Model special investment contract
Legal entity of Kazakhstan (excluding AIFC territory):
  • participants of a special economic zones;
  • owners of free warehouses;
  • which have concluded an agreement on industrial assembly of motor vehicles.
Agreement on investments (no model form)
  • Legal entity of Kazakhstan;
  • Legal entity established in AIFC.
Agreement on investment obligations
The agreement shall be concluded with a legal entity that meets the following conditions at the same time:
  • legal entity is an export-oriented commodity producer (at least 70% of the company’s total annual income);
  • legal entity is a large taxpayer subject to horizontal monitoring, including participation in a horizontal monitoring pilot project;
  • does not conduct activities for the production of excisable goods;
  • does not apply special tax regimes.
Activities:
Provision:
Model contract for the implementation of an investment project
List of priority activities identified for the implementation of investment projects and investment priority projects under investment agreements is approved by the government of Kazakhstan.
Model special investment contract
List of priority activities identified for the implementation of special investment projects under special investment agreements is approved by the government of Kazakhstan.
Agreement on investments (no model form)
List of priority activities identified for the implementation of investment priority projects under agreements on investments is approved by the government of Kazakhstan.
Agreement on investment obligations
Legal entity is an export-oriented commodity producer, except for exporters of hydrocarbon minerals and petroleum products. An exportoriented commodity producer shall be a legal entity whose income from sales for export constitutes at least 70% of the total annual income of the preceding year.
Investment preferences:
Provision:
Model contract for the implementation of an investment project
The following types of investment preferences are granted for an investment project (including a priority investment project):
  • exemption from customs duties and VAT on imports;
  • government in-kind grants. Other tax preferences for the investment priority project.
Model special investment contract
  • Exemption from VAT on import of goods;
  • Exemption from customs duties on imports of technological equipment, components and spare parts;
  • Exemption from customs duties on used raw materials and (or) supplies.
Agreement on investments (no model form)
  • Exemption from customs duties and VAT on imports;
  • Other tax preferences for the investment priority project;
  • Government in-kind grants. Other conditions stipulated for agreements on investments.
Agreement on investment obligations
Tax preferences are granted in accordance with the Entrepreneurial Code and the Tax Code in force at the time of the agreement.
Term:
Provision:
Model contract for the implementation of an investment project
The term of the investment contract shall be determined by the term of the investment preferences.
Model special investment contract
The term of the special investment contract shall be determined by the term of the investment preferences.
Agreement on investments (no model form)
The term of the agreement on investments is determined by the agreement.
Agreement on investment obligations
The term of the agreement is 10 years.
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