Investment activity

Investment Agreement

An investment agreement is an agreement for the implementation of an investment project concluded by a decision of the Government of the Republic of Kazakhstan between a person authorized by the Government of the Republic of Kazakhstan and a legal entity, including one registered in the jurisdiction of the Astana International Financial Center, providing for the implementation of investments in an amount of no less than seven and a half million times the monthly calculation indicator established by the law on the republican budget and in effect on January 1 of the relevant financial year.

The investment agreement determines the conditions and procedure for the provision of preferences and benefits provided for by the legislation of the Republic of Kazakhstan at the time of concluding the investment agreement, and also establishes counter obligations for legal entities that have entered into an investment agreement.

The legislation does not establish a list of priority activities for concluding investment agreements, but a negative list of activities is established. Investment agreements cannot be concluded for the implementation of projects in the following activities:

1) activities related to the circulation of narcotic drugs, psychotropic substances and precursors;

2) production and (or) wholesale distribution of excisable products;

3) holding a lottery;

4) activities in the gambling business;

5) activities related to the circulation of radioactive materials;

6) banking activities (or certain types of banking operations) and activities in the insurance market (except for the activities of an insurance agent);

7) auditing activities;

8) professional activity in the securities market;

9) activities in the field of digital mining;

10) activities of credit bureaus;

11) security activities;

12) activities related to the circulation of civilian and service weapons and ammunition for them;

13) activities in the field of subsoil use, including the activities of prospectors;

14) sale of minerals, including the activities of traders, activities for the sale of coal and oil.

The term, procedure and conditions for changing and terminating an investment agreement are established in  the rules  for concluding, changing and terminating investment agreements approved by the authorized investment body.

The provisions of the investment agreement shall remain in effect for twenty-five years from the date of its conclusion in the event of a change in the legislation of the Republic of Kazakhstan, except in cases of amendments to the investment agreement by agreement of the parties.

Conclusion of an investment agreement

In accordance with the rules for concluding, amending and terminating investment agreements, the agreement is concluded on the basis of the following conditions:

1) the cost of the investment project is not less than seven and a half million times the monthly calculation indicator established by the law on the republican budget and in effect on January 1 of the relevant financial year.

In this case, the costs of a fixed asset no earlier than 24 months prior to the date of filing an application to conclude an agreement and (or) the costs of future periods prior to commissioning are taken into account;

2) there are documents specified  in paragraph 6   of the Rules;

3) there is approval by the Commission for conducting negotiations of the draft agreement defining the investor’s reciprocal obligations.

To conclude an agreement, the applicant applies to the Task Force Department of JSC National Company KAZAKH INVEST with the following documents in the state and Russian languages ​​on paper and electronic media:

1) an application in accordance with  Appendix 1  to the Rules;

2) a copy of the applicant’s charter, a certificate of state registration (re-registration) of the applicant;

3) a business plan for an investment project in accordance with  Appendix 2  to the Rules;

4) feasibility study;

5) design and estimate documentation of the investment project;

6) the conclusion of a comprehensive non-departmental examination of construction projects, certified by the signature of the manager, in the manner determined by the legislation of the Republic of Kazakhstan (in the event of tax preferences being granted);

7) information confirming the right to use the licensed technology (agreement or other document regulating the right to use).

The information specified in subparagraphs 4), 5), 6), 7) of this paragraph shall be provided if available.

In the event of availability of a complete package of documents and information, including information on the types of requested investment preferences, the conditions and procedure for their provision, the investor's investment obligations, as well as compliance with  paragraph 1 of Article 295-2  of the Entrepreneurial Code of the Republic of Kazakhstan, Task Force sends the investor's documentation to the central government body exercising management in the sphere and/or industry in which the investment project will be implemented (authorized body).

In the event that an incomplete package of documents and/or information contained therein is provided, Task Force requests the missing information from the investor, including through preliminary negotiations and consultations with the applicant.

The total period for consideration by the authorized body of the list of documents stipulated by  paragraph 6   of the Rules and the preparation of a conclusion on the main terms of the agreement, taking into account the necessary examinations, development of a draft agreement, and approvals of the Commission, shall not exceed 3 (three) months from the date of its submission.

Following the review of the application, the authorized body issues a conclusion on the main terms of the agreement with the attached draft agreement, which has received approval from the Negotiating Commission, for review and decision-making on concluding the agreement at the next meeting of the Investment Headquarters.

Following the review by the Investment Headquarters, the conclusion on the main terms of the agreement may be approved or sent back for revision, or the agreement may be refused.

If the conclusion of the Republican Budget Commission is positive, the authorized body or the authorized body for investments, in accordance with the established procedure, develops a draft resolution of the Government of the Republic of Kazakhstan on the decision to conclude an agreement for the implementation of an investment project and sends it for approval to the interested government bodies and/or organizations within 10 (ten) working days.

The draft agreement shall be developed by the authorized body taking into account the provisions of the standard form established in accordance with  Appendix 4  to these Rules.

Taxation of persons who have entered into an investment agreement

1. An investment agreement, subject to the conditions stipulated by  Article 712-1   of the Tax Code of the Republic of Kazakhstan, may provide for the following preferences:

1) reduction of corporate income tax, calculated in accordance with Article 302 of this Code, by 100 percent on income from the implementation of an investment project for the types of activities determined by the investment agreement, obtained through the operation of fixed assets that were introduced as new production, expanded or updated within investment agreements;

2) application of the coefficient 0 when calculating land tax on land plots used for the implementation of an investment project;

3) application of a 0 percent rate to the tax base when calculating property tax on objects used for the implementation of an investment project;

4) exemption of turnover from the sale of goods, works, services from value added tax in accordance with subparagraphs 39), 43-1) and 47) of  Article 394  of the Tax Code of the Republic of Kazakhstan when carrying out activities by a person who has entered into an investment agreement on the territory of a special economic zone;

5) reduction of tax liabilities calculated from the amount of actual expenses of the taxpayer, in accordance with  Article 712-3  of the Tax Code of the Republic of Kazakhstan.

2. The deadline for applying the reduction in corporate income tax under an investment agreement shall commence on 1 January of the year in which such agreement is concluded and shall end no later than ten consecutive years, which shall be calculated starting from 1 January of the year following the year in which the agreement is concluded.

3. The deadline for applying the coefficient 0 when calculating land tax on land plots within the framework of an investment agreement shall begin on the 1st day of the month in which the agreement is concluded and shall end no later than ten consecutive years, which shall be calculated starting from January 1 of the year following the year in which such agreement is concluded.

4. The deadline for applying the 0 percent rate to the tax base when calculating property tax on objects under an investment agreement shall begin on the 1st day of the month in which the first asset is recorded as part of fixed assets in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, and (or) shall end no later than eight consecutive years, which are calculated starting from January 1 of the year following the year in which the first asset is recorded as part of fixed assets in accordance with international financial reporting standards and (or) the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

5. A person who has entered into an investment agreement shall not have the right to apply other provisions of this Code that provide for a reduction in corporate income tax, the application of reduced rates and coefficients when calculating property tax and land tax.

6. A person who has entered into an investment agreement maintains separate tax records of taxable items and (or) tax-related items for the purpose of calculating tax liabilities.

The procedure for reducing tax liabilities from the amount of actual expenses of the taxpayer

1. A reduction in the tax liabilities of a person who has entered into an investment agreement by the amount of actual expenses on the investment project is made if such a reduction is provided for in the investment agreement.

An investment agreement may provide for such a reduction in tax liabilities only when investments are made within the framework of an investment project in an amount of no less than fifteen million times  the monthly calculation indicator established by the law on the republican budget and in effect at the beginning of the financial year in which such an agreement is concluded.

The provisions of this paragraph shall not apply to persons who have entered into an investment agreement when they carry out activities on the territory of a special economic zone.

2. When concluding an investment agreement with a taxpayer, the authorized state body shall calculate tax preferences taking into account that the effect of preferences on corporate income tax, land tax and property tax and the reduction of tax liabilities for the specified taxes will not exceed the amount of the taxpayer’s actual expenses within the limits of the investments made.

3. A reduction in the taxpayer's tax liabilities for corporate income tax, land tax and property tax by the amount of actual expenses on the investment project shall be applied after the expiration of ten years of application of preferences for the said taxes within the term of the investment agreement, which shall not exceed twenty-five years. A reduction in the taxpayer's tax liabilities shall be made in an amount not exceeding twenty percent of the actual expenses incurred during the period of implementation of the investment project.

The period specified in the first part of this paragraph shall be applied taking into account the provisions of  Article 712-2  of the Tax Code of the Republic of Kazakhstan.

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