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What Amendments Are Awaited For Kazakhstan in 2024?
What Amendments Are Awaited For Kazakhstan in 2024?
Termination of the Moratorium on Business Inspections
In 2024, the business inspections moratorium in Kazakhstan was terminated.
The moratorium was previously introduced on January 1, 2020, and implied banning the unscheduled state inspections of small business enterprises and micro-businesses except the individual inspections (with 14 exceptional grounds).
It was announced that 2024 the government will introduce a new automated control system, which will reduce the number of on-site inspections twice. According to Askar Kuantyrov, the Minister of National Economy, the system of inspections must change fundamentally, release trustworthy citizens from unnecessary supervision of the state bodies, and reduce the number of fines several times. It is also noted that on-site inspections will be appointed only in cases where the system shows an increased risk.
The information published on the website of the Ministry of Finance lists 760 companies that will receive requests on scheduling a tax inspection and a notice that will be sent 30 calendar days before the start of the audit. On the other hand, it is worth noticing that an unscheduled inspection could be scheduled at any time, regardless of the presence or absence of the company in the above under art. 145 clause 3 of the Tax Code.
In 2024, the business inspections moratorium in Kazakhstan was terminated.
The moratorium was previously introduced on January 1, 2020, and implied banning the unscheduled state inspections of small business enterprises and micro-businesses except the individual inspections (with 14 exceptional grounds).
It was announced that 2024 the government will introduce a new automated control system, which will reduce the number of on-site inspections twice. According to Askar Kuantyrov, the Minister of National Economy, the system of inspections must change fundamentally, release trustworthy citizens from unnecessary supervision of the state bodies, and reduce the number of fines several times. It is also noted that on-site inspections will be appointed only in cases where the system shows an increased risk.
The information published on the website of the Ministry of Finance lists 760 companies that will receive requests on scheduling a tax inspection and a notice that will be sent 30 calendar days before the start of the audit. On the other hand, it is worth noticing that an unscheduled inspection could be scheduled at any time, regardless of the presence or absence of the company in the above under art. 145 clause 3 of the Tax Code.
The Third Stage of the Universal Revenue Declaration
On January 1, 2024, the third stage of universal revenue declaration came into legal force, which requires the managers, founders (partners) of legal entities and individual entrepreneurs, as well as their spouses, to submit a Declaration of Assets and Liabilities (also known as Tax Form No. 250.00).
The first stage of the Universal Revenue Declaration was previously introduced on January 1, 2021, requiring civil servants and their spouses to provide an “entry” declaration. The second stage was later enforced on January 1, 2023, and required government agencies, quasi-public sector entities, employees and their spouses to provide a declaration of revenues.
Key points on the issue:
On January 1, 2024, the third stage of universal revenue declaration came into legal force, which requires the managers, founders (partners) of legal entities and individual entrepreneurs, as well as their spouses, to submit a Declaration of Assets and Liabilities (also known as Tax Form No. 250.00).
The first stage of the Universal Revenue Declaration was previously introduced on January 1, 2021, requiring civil servants and their spouses to provide an “entry” declaration. The second stage was later enforced on January 1, 2023, and required government agencies, quasi-public sector entities, employees and their spouses to provide a declaration of revenues.
Key points on the issue:
- Form 250.00 must be submitted to the state revenue authorities no later than July 15 - in paper, by September 15 - in electronic form through the web application "Taxpayer's Cabinet" (cabinet.salyk.kz) or mobile applications e-Salyq Аzamat, eGov mobile, Halyk;
- After filing Form 250.00 in 2024, individuals must file an annual income and asset return (Tax Form 270.00) beginning 2025.
Currency Сontrol
Starting January 1, 2024, the currency control regulation was amended in the Republic of Kazakhstan. These changes contributed to restricting the transactions performed in foreign currencies (“foreign exchange transactions”) and increasing the liability for violations of Law “Republic of Kazakhstan dated July 2, 2018 No. 167-VI “On currency regulation and currency control”.
Amendments introduced a new article 20-1 regulating the specifics of conducting currency control on the repatriation of national and (or) foreign currency for export or import by the state revenue authority.
Thus, when conducting currency control, the state revenue authority will conduct an inspection and (or) exercise another form of control over the compliance by the inspected resident with the requirement to repatriate national and (or) foreign currency for export or import.
The foreign exchange contracts for export or import are subjected to accounting registration if their amount exceeds USD 50,000 in equivalent. An exporter or importer applies for an account number before any of its parties begin to fulfil obligations under a foreign exchange contract for export or import. To obtain an account number, the exporter or importer submits to the authorised bank (its branch) or local branch of the National Bank:
1) an application for acceptance of a foreign exchange agreement on export or import for exchange control in the form according to Appendix 3 to the Rules;
2) an original or copy of the foreign exchange agreement on export or import. If a foreign exchange agreement on export or import is concluded in a foreign language, then its translation into Kazakh or Russian is provided.
When receiving an account number from a local branch of the National Bank, the exporter or importer additionally submits a document with sample of original signatures.
Moreover, in the new year, new Rules for export-import currency control are enforced, implying several aspects:
Additionally, the liability for failure to comply with the requirement for repatriation of national and (or) foreign currency within the framework of article 251 of the Code of Administrative Offenses of the Republic of Kazakhstan was amended with new details. From now on, an omission to comply with the requirements of repatriation of national and (or) foreign currency committed in the form of failure to credit national and (or) foreign currency to bank accounts in authorized banks of national and (or) foreign currency transferred by a resident of the Republic of Kazakhstan in favor of a non-resident of the Republic of Kazakhstan for making payments on imports, subject to return due to non-fulfillment or incomplete fulfillment by the non-resident RK obligations, -entails a fine in the amount of twenty percent of the amount of national and (or) foreign currency not credited. The amendments have also restricted the amount of fine excluding the limitation, which means that the possible fine can exceed 2000 Monthly Calculated Indexes (MCI) (approximately USD 16 365).
Starting January 1, 2024, the currency control regulation was amended in the Republic of Kazakhstan. These changes contributed to restricting the transactions performed in foreign currencies (“foreign exchange transactions”) and increasing the liability for violations of Law “Republic of Kazakhstan dated July 2, 2018 No. 167-VI “On currency regulation and currency control”.
Amendments introduced a new article 20-1 regulating the specifics of conducting currency control on the repatriation of national and (or) foreign currency for export or import by the state revenue authority.
Thus, when conducting currency control, the state revenue authority will conduct an inspection and (or) exercise another form of control over the compliance by the inspected resident with the requirement to repatriate national and (or) foreign currency for export or import.
- This inspection does not require the execution of an act on its purpose;
- Implies sending a written request for information and (or) documents related to the conduct of a foreign exchange transaction, including the fulfilment of obligations under a foreign exchange agreement for export or import.
The foreign exchange contracts for export or import are subjected to accounting registration if their amount exceeds USD 50,000 in equivalent. An exporter or importer applies for an account number before any of its parties begin to fulfil obligations under a foreign exchange contract for export or import. To obtain an account number, the exporter or importer submits to the authorised bank (its branch) or local branch of the National Bank:
1) an application for acceptance of a foreign exchange agreement on export or import for exchange control in the form according to Appendix 3 to the Rules;
2) an original or copy of the foreign exchange agreement on export or import. If a foreign exchange agreement on export or import is concluded in a foreign language, then its translation into Kazakh or Russian is provided.
When receiving an account number from a local branch of the National Bank, the exporter or importer additionally submits a document with sample of original signatures.
Moreover, in the new year, new Rules for export-import currency control are enforced, implying several aspects:
- some special procedures for assigning an account number to a foreign currency export or import agreement, conditions and criteria, including the threshold value of the amount, the presence of which is subject to control of compliance with the repatriation requirement;
- the procedure for the transfer of an exporter or importer to service under a foreign exchange export or import agreement from one authorized bank to another authorized bank, as well as the features of monitoring the exporter’s or importer’s compliance with the repatriation requirement under a foreign exchange export or import agreement when the authorized bank terminates business relations with the client;
- the procedure for monitoring the movement of money and other fulfillment of obligations under a foreign exchange agreement for export or import and transfer of information and (or) documents under a foreign exchange agreement for export or import;
- the procedure for monitoring the fulfillment of the repatriation requirement under a foreign exchange agreement for export or import and the procedure for maintaining its separate records in the territorial division of the state revenue authority;
- the procedure for resuming procedures for monitoring compliance with the repatriation requirement under a foreign exchange agreement on export or import;
- the procedure for removing a foreign exchange agreement for export or import from accounting registration;
- and other special cases.
Additionally, the liability for failure to comply with the requirement for repatriation of national and (or) foreign currency within the framework of article 251 of the Code of Administrative Offenses of the Republic of Kazakhstan was amended with new details. From now on, an omission to comply with the requirements of repatriation of national and (or) foreign currency committed in the form of failure to credit national and (or) foreign currency to bank accounts in authorized banks of national and (or) foreign currency transferred by a resident of the Republic of Kazakhstan in favor of a non-resident of the Republic of Kazakhstan for making payments on imports, subject to return due to non-fulfillment or incomplete fulfillment by the non-resident RK obligations, -entails a fine in the amount of twenty percent of the amount of national and (or) foreign currency not credited. The amendments have also restricted the amount of fine excluding the limitation, which means that the possible fine can exceed 2000 Monthly Calculated Indexes (MCI) (approximately USD 16 365).
Digital Mining
Starting January 1, 2024, a new procedure for acquiring and paying a fee for issuing the license for digital mining activities was introduced. Previously, licensing was not to engage in digital mining, only requiring notifying the state authorities. An overall receipt time is 15 working days.
The license has 2 subtypes of activities, and the license fee varies accordingly:
1) for issuing a license of subtype I - carrying out digital mining activities by a digital miner with their own digital mining data processing centre - 2000 MCI (approximately USD 16 460);
2) for the issuance of a license of subtype II - the implementation of digital mining activities by a digital miner without their own digital mining data processing centre and activity using their own hardware and software complex for digital mining located in the digital mining data processing centre - 5 MCI (approximately USD 41);
3) for renewing the license - 10% of the rate when issuing a license accordingly.
Moreover, amendments introduced a new qualification requirement for the activities of a digital miner of subtype I in paragraph 2 of article 9-4 of Law of the Republic of Kazakhstan “On Electric Power Industry”. It implies providing information about the availability of an automated system for commercial metering of electrical energy, the special automatic load shedding, and a telecommunications system that ensures their unification with the systems installed by the system operator and the energy transmission organisation when connecting to their networks.
In addition, amendments were accompanied by the requirements to connect digital miners to electrical networks. Thus, mining pools will now provide information about the digital assets they distribute between the miners according to a special form.
Starting January 1, 2024, a new procedure for acquiring and paying a fee for issuing the license for digital mining activities was introduced. Previously, licensing was not to engage in digital mining, only requiring notifying the state authorities. An overall receipt time is 15 working days.
The license has 2 subtypes of activities, and the license fee varies accordingly:
1) for issuing a license of subtype I - carrying out digital mining activities by a digital miner with their own digital mining data processing centre - 2000 MCI (approximately USD 16 460);
2) for the issuance of a license of subtype II - the implementation of digital mining activities by a digital miner without their own digital mining data processing centre and activity using their own hardware and software complex for digital mining located in the digital mining data processing centre - 5 MCI (approximately USD 41);
3) for renewing the license - 10% of the rate when issuing a license accordingly.
Moreover, amendments introduced a new qualification requirement for the activities of a digital miner of subtype I in paragraph 2 of article 9-4 of Law of the Republic of Kazakhstan “On Electric Power Industry”. It implies providing information about the availability of an automated system for commercial metering of electrical energy, the special automatic load shedding, and a telecommunications system that ensures their unification with the systems installed by the system operator and the energy transmission organisation when connecting to their networks.
In addition, amendments were accompanied by the requirements to connect digital miners to electrical networks. Thus, mining pools will now provide information about the digital assets they distribute between the miners according to a special form.
Oil, Gas, Subsoil Use Law
The Order of the Minister of Energy of the Republic of Kazakhstan, dated December 21, 2022, No. 425, entered into legal force starting January 1, 2024. It amended the “The Rules for equipping production facilities with metering devices for crude oil and gas condensate and providing appropriate metering devices for crude oil and gas condensate”.
Amendments included additions to the list of the production facilities required to be equipped with the necessary equipment for the crude oil and gas condensate metering and terms of compliance, which must be followed starting January 1, 2025. Moreover, some reforms were also related to the updates to the rules for the formation and operation of an information system for accounting for crude oil and gas condensate, raw gas, and processing products.
The system is designed for automated collection, processing, storage and use of data on the crude oil and gas condensate circulation amounts, prepared for delivery to the consumer in accordance with the legislation of the Republic of Kazakhstan, on the amount of raw gas in circulation, prepared for processing and delivery to the consumer in accordance with legislation of the Republic of Kazakhstan, as well as used for own needs, subject to disposal by injection into the reservoir to store and (or) maintain reservoir pressure, burned in cases and under the conditions established by article 146 of the Code of the Republic of Kazakhstan dated December 27, 2017 No. 125-VI “On subsoil and subsoil use”.
Legal entities engaged in this industry are required to provide access to their existing data recording systems on the amount of crude oil and gas condensate in circulation, prepared for delivery to the consumer, on the amount of raw gas in circulation, prepared for processing and delivery to the consumer, as well as used for own needs, subject to disposal by injection into the reservoir for storage and (or) maintaining reservoir pressure to the authorised body in the field of hydrocarbons.
The Order of the Minister of Energy of the Republic of Kazakhstan, dated December 21, 2022, No. 425, entered into legal force starting January 1, 2024. It amended the “The Rules for equipping production facilities with metering devices for crude oil and gas condensate and providing appropriate metering devices for crude oil and gas condensate”.
Amendments included additions to the list of the production facilities required to be equipped with the necessary equipment for the crude oil and gas condensate metering and terms of compliance, which must be followed starting January 1, 2025. Moreover, some reforms were also related to the updates to the rules for the formation and operation of an information system for accounting for crude oil and gas condensate, raw gas, and processing products.
The system is designed for automated collection, processing, storage and use of data on the crude oil and gas condensate circulation amounts, prepared for delivery to the consumer in accordance with the legislation of the Republic of Kazakhstan, on the amount of raw gas in circulation, prepared for processing and delivery to the consumer in accordance with legislation of the Republic of Kazakhstan, as well as used for own needs, subject to disposal by injection into the reservoir to store and (or) maintain reservoir pressure, burned in cases and under the conditions established by article 146 of the Code of the Republic of Kazakhstan dated December 27, 2017 No. 125-VI “On subsoil and subsoil use”.
Legal entities engaged in this industry are required to provide access to their existing data recording systems on the amount of crude oil and gas condensate in circulation, prepared for delivery to the consumer, on the amount of raw gas in circulation, prepared for processing and delivery to the consumer, as well as used for own needs, subject to disposal by injection into the reservoir for storage and (or) maintaining reservoir pressure to the authorised body in the field of hydrocarbons.
Land Law: Rules for Selling Land Plots at Electronic Auctions Are Reformed
The Ministry of Agriculture of the Republic of Kazakhstan adopted an Order dated December 20, 2023 No. 446 “On amendments and additions to the order of the Minister of Agriculture of the Republic of Kazakhstan dated October 15, 2021 No. 297”. These amendments reformed the ways a land plot to be put up for auction limited to the following manner:
- formation of the list of land plots for the tender (auctions) with their subsequent placement on the public cadastral map (PCC) by Akimats (the seller);
- submission of the self-prepared proposals for the vacant land plots suitable for auction, forming a scheme for allocating the requested land plot to the PCC.
The procedure for creating a tender (auction) on the web portal was provided with more details. With new amendments taking place, the winner is determined by the automatic generation of a protocol on the results of the bidding (auction), after which the web portal sends the status “Trading (auction) took place” to the “Unified State Real Estate Database System” with an electronic protocol on the results.
A settlement procedure has been established, according to which, when transferring payments up to 10,000 MCI (approximately USD 82,300) to the organiser, the buyer makes the transfer through the “electronic government” payment gateway. If the payment exceeds 10,000 MCI, the winner attaches an electronic copy of the payment receipt.
Overview on the Wind Power Station Project Implementation Agreement between the Government of the Republic of Kazakhstan and the Government of the United Arab Emirates (UAE)
On 23 November 2023, the Government of the Republic of Kazakhstan approved the law on the ratification of the Agreement on the implementation of the wind power station project (hereinafter referred to as the "Agreement") between the Government of the Republic of Kazakhstan and the Government of the United Arab Emirates (UAE). The Agreement has been adopted to enhance relations in the energy sector to combat global warming and develop "green" technologies and innovations aimed at producing and storing electrical energy. This Agreement also aimed to implement major projects in Kazakhstan.
Parties of the Agreement
The representative for Kazakhstan is the Ministry of Energy, and for the UAE, it is the Ministry of Energy and Infrastructure.
The Kazakhstani side has undertaken obligations to ensure the participation of all necessary and interested parties in implementing major projects.
General terms and conditions for major projects
The parties have agreed on implementing major projects up to 1 GW. To reduce carbon dioxide emissions, onshore wind resources will be utilised for electricity production from renewable sources. Each major project's power purchase period is 25 years, compared to the standard 15 years.
The Agreement also establishes key conditions for implementing projects and must be included in PPA, such as Balanced Risk Allocation, Tariff Specification, Take or Pay Mechanisms, Real-Time Balancing Market Participation and other terms aimed at PPA proper execution.
According to the agreement, the first two major projects are expected to involve a wind power station with a capacity of 500 MW each.
First major project in Zhambyl Region
The 500 MW wind power station project in Zhambyl Region will have an energy storage system using battery energy storage systems (BESS) with a capacity of 150 MW and a capacity of 300 MW/h, connected to the automatic frequency control system managed by KEGOC. The BESS suitability coefficient is 95%, with 400 full charge and discharge cycles per year. The project will be led by Abu Dhabi Future Energy Company PJSC – Masdar, collaborating with W Solar Investment - Sole Proprietorship L.L.C., Kazakhstan Investment Development Fund (KIDF) Management Company Ltd. and Qazaq Green Power PLC.
Second major project with a capacity of 500 MW
The second major project will have a capacity of 500 MW in one or more stages. The BESS will constitute 30% of the installed capacity for 2 hours, complying with the requirements set within the framework of the first project. For the second, the leading developer should obtain approval from the Ministry of Energy to involve partners or any third parties.
The tariff for both projects is 4.49 USD per kWh, highlighting the commitment to sustainable energy collaboration.