Kazakhstan

Kazakhstan retains its key investment advantages, such as its geographical location, market access, vast natural resources, and human capital. To attract foreign investments, the country has created a favorable investment climate: a simplified tax regime is in place, national legislation is being improved, and the package of investment preferences is expanding. Investors implementing projects in priority sectors of the economy are guaranteed stability in tax legislation. Currently, a new Tax Code is being developed. In his speech at the extended Government meeting on February 7, 2024, President Kassym-Jomart Tokayev noted: “The new Tax Code should ensure a reasonable balance between creating comfortable conditions for investors and maintaining the necessary level of budget revenues. Even the most advanced tax policy will be ineffective without proper administration.” Having worked for over 20 years in the Kazakhstani consulting services market, OLYMPEX ADVISERS faces various practical situations. Sometimes foreign investors, taking advantage of the privileges, act dishonestly. However, cases of wrongful and aggressive administration by tax authorities regarding international transactions have also increased. Ambiguities in legislation and administration generate disputes. An example is the tax dispute over the taxation of corporate income tax on dividends paid to non-residents before 2021. OLYMPEX ADVISERS' experts successfully represented and defended the taxpayer's interests in Kazakhstan's tax authorities in appealing decisions resulting from desk audits. Reasoned arguments were presented, international and law enforcement practices were studied, and legislative inconsistencies were identified. The essence of the dispute was the legality of the taxpayer's actions when applying national legislation. The taxpayer exempted the non-resident's income in the form of dividends from taxation, complying with all conditions of the Tax Code. However, the tax authority assessed additional corporate income tax, citing the absence of the concept of "net income" in the Tax Code for dividend taxation purposes. The tax authority argued that the exemption should be based on tax accounting data, not accounting data. This new concept, introduced on January 1, 2021, effectively changed the taxable object and canceled previously provided benefits. The wrongful retrospective application of changes to dividends for 2018-2019 created ambiguity in interpreting the norm. The issues concerned the definition of net income (based on tax or accounting data), the methodology for its determination, and supporting documents. OLYMPEX ADVISERS conducted extensive work discussing the dispute at the National Chamber of Entrepreneurs "Atameken" and the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan. The experts' arguments and justifications were heard by the tax authority, and the total amount of the contested tax was completely canceled. OLYMPEX ADVISERS, as a private consulting organization, adheres to the main principle of respecting the state's interests and supporting investor trust. Authors: Ainagul Akisheva (Director of the International Taxation and Securities Group) [email protected] Dana Omarova (Head of Tax Consulting Practice) [email protected]  

GRATA International's specialists of the Pharmaceuticals & Healthcare sector released a new publication on Advertising of drugs and dietary supplements.  In this edition we have collected the most up-to-date information about the general requirements, features and prohibitions for advertising medicines, medical products, and dietary supplements in Belarus, Azerbaijan, Georgia, Armenia, Kazakhstan, Uzbekistan, Mongolia. GRATA International (gratanet.com)  

The GRATA International Legal Series (the “GILS”) is a distinctive legal handbook, offering essential legal insights and practical tips for conducting business across jurisdictions where GRATA International operates.  Legal experts within the GILS framework provided an overview of the legislative database across different legal environments and presented them in a Q&A format. The second edition of GILS is dedicated to corporate law and covers key issues of corporate legislation in 15 jurisdictions: Armenia, Azerbaijan, Belarus, Georgia, Cyprus, Kazakhstan, Kyrgyzstan, Moldova, Mongolia, Russia, Turkey, Turkmenistan, Tajikistan, the United Arab Emirates, Uzbekistan. This edition of GILS provides an overview of the environment for doing business in each jurisdiction: forms of doing business and establishment of legal entities, general taxation issues, regulatory and other issues. GRATA International provides a full range of services in the field of corporate law, including advising on topical issues of corporate legislation, structuring and support of M&A, establishment of Joint Ventures, conducting legal Due Diligence, Background Checks, resolution of corporate disputes etc. Read GILS: Corporate law→  

Introduction Kazakhstan has made a significant step towards attracting foreign tourists and developing retail trade by introducing the Tax-Free system.This pilot project allows foreign citizens (excluding citizens of Russia, Belarus, Armenia, and Kyrgyzstan) to reclaim the value-added tax (VAT) on goods purchased within the republic. This article will discuss the key aspects and expected effects of the implementation of the Tax-Free system in Kazakhstan Pilot Project: First Steps The Tax-Free system was launched on a pilot basis at the “Esentai Mall” shopping center and Almaty International Airport in Almaty. This pilot program is the result of the joint efforts of the Ministry of Finance of the Republic of Kazakhstan and the company “Global Blue”, the leading Tax-Free operator in the international arena. Legal Basis The project is implemented on the basis of the Rules approved by the Order No. 871 of the Acting Minister of Finance of the Republic of Kazakhstan dated August 13 2019, with subsequent amendments extending the term of the pilot project until December 31, 2024. According to these Rules, participants of the pilot project are taxpayers who have a trading place in Esentai Mall and are VAT payers. VAT Refund Process The Tax-Free system allows foreign buyers to reclaim VAT under certain conditions. For this, the buyer must make a purchase of at least 73,840 tenge (164 USD in 2024) and receive a Tax-Free document (receipt) on the same day. The buyer must present passport and the fiscal receipt within one day after the purchase. The VAT refund is only applicable to non-food items purchased from participants in the Tax-Free system at Esentai Mall. The buyer must leave Kazakhstan with the goods within 90 days of purchase. Expected Results The introduction of the Tax-Free system aims to enhance Kazakhstan's attractiveness to foreign tourists. It is expected to attract an additional 300,000 foreign tourists per year. According to forecasts, the economic impact of the Tax-Free system in the country will amount to about 440 million USD by 2025. The role of “Olympex Advisers” LLP "Olympex Advisers" played a crucial role in developing and coordinating the Tax-Free project. It not only represented the interests of the Ministry of Sports and Culture of the Republic of Kazakhstan and taxpayers but also actively assisted in the creation and launch of the pilot project. "Olympex Advisers" is ready to provide practical assistance to all participants of the pilot project concerning VAT refunds. Conclusion The introduction of the Tax-Free system in Kazakhstan represents an important step towards the development of shopping tourism and increasing trade turnover in the country. This project has every chance to become a successful example of effective use of tax mechanisms to stimulate economic growth and attract foreign tourists. Author: Ainagul Akisheva (Director of the internation taxation and securities group) [email protected]