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04 03 2019
Doing Business in Kazakhstan

Year after year Kazakhstan is improving its positions in the rating list of the World Bank – “Doing Business”. As per the published rating list 2019, the country raised up to 28th place (out of 190 countries) in the general rating list. The leap was the harshest in the section “Protecting Minority Investors”; the country took the lead in ranking this indicator – the 1st place.

 

Kazakhstan ranking among the Top Thirty countries in Doing Business evidences that the reforms are continuing. Kazakhstan improved positions in six indicators out of 10 to be measured in the rating by implementing reforms in the area of registration of the companies, international trade, ensuring performance of contracts. As a result, the time required to establish a company was reduced from nine down to five days; so the country ranked 36th in the “Starting a Business” indicator having arisen five points more. Kazakhstan rose 21 points more as for “Trading Across Borders” indicator – up to 102nd place. Among reforms met with approval of the World Bank – implementation of the electronic customs declaration filing system ASTANA-1 IS and reduction of expenses for customs clearance of the commodities and transport vehicles from the amount of $493,5 down to the amount of $470. The country scaled two steps as for “Enforcing Contracts” indicator, having taken the high fourth place. Now the decisions made by the courts of all levels on commercial cases are available on-line.

 

As for the overall “Ease of Doing Business” index Kazakhstan ranked 35th, just after Japan. 

 

The experts from the World Bank stated the factors of the long-term trend to improve investment climate in Kazakhstan: first of all, political will of the country government to introduce the reforms and control of implementation thereof. Moreover, it is noted that consultations with the international specialists and consultations with the entrepreneurs help following the correct direction.

 

Reinvestment level is deemed as one of criteria for evaluating profitableness of investment climate in the international practice. It evidences a wish of the companies, which have already begun to work in the country, to stay here and to enlarge production.

 

There are good examples in Kazakhstan in this regard: in 2016, 15 new enterprises appeared exactly owing to reinvestments. For instance, the plant of Coca Cola Company was set up in Nur-Sultan (Astana), the plant of the Finnish company Tikkurila was set up in Almaty Oblast. The German concern Heidelberg and the others set up the new enterprises. 

 

The RK Ministry of Investments and Developments considers the high demand for the domestic goods in the neighbouring markets – in China, Russia, Iran, and the countries of the Central Asia – also is a good criterion of attractiveness of Kazakhstan for investing purposes. 

 

Among the measures taken to improve positions of Kazakhstan four basic points may be stated:

1) Introducing visa-free entry to Kazakhstan for the nationals of 61 countries; 

2) “Special Economic Area” – a part of the territory of the Republic of Kazakhstan with exactly marked out limits on which the special legal treatment of the special economic area is applied to carry out priority types of activity.

3) Forming a special investment board under the Supreme Court;

4) commencement of work of an investment ombudsman. 

 

Commencement to serve the business based on “one contact” principle is an important new development, as well. The central office of that network was opened in Nur-Sultan (Astana) under the Ministry of Foreign Affairs of Kazakhstan, and they are operating in the regions on the basis of the Population Service Centres. More than 300 government services relating to receipt of authorizations are rendered, up to and including the right to subsoil use. Such operation mode quickly gained popularity. 

 

“One contact” scheme assumes that an entrepreneur shall come one time to one place and submit a minimal set of papers to one specialist, and in a determined period of time it shall take a ready package of documents in the same place together with all necessary approvals and permits entitling to proceed to do business. Thus, as much comfortable as possible conditions are created as early as at the start and clear and predictable rules of the game are determined for a businessman coming to a decision to invest in developing economy of Kazakhstan. 

 

An important factor to choose Kazakhstan to do business is availability of the instruments of government support. There are two options of preferences for the investors. The basic one extends almost to all types of activity, except subsoil use, trade and production of excisable goods. Having signed an investment agreement, one can be exempted from payment of customs duties on equipment imported in Kazakhstan. This is a big edge, and the business actively enjoys the same. It is also possible to get the grants in kind from the State – those may be land, building, idle equipment being on the books of the State. 

 

The second option is aimed at support of specifically priority branches specified in the Government industrialization program. If the cost of a business project exceeds 2 million MCI (approximately $13 millions), a businessman can be exempted from three taxes: CIT – for a period of up to 10 years, tax on property – for a period of up to 8 years, land tax – for a period of up to 10 years. Moreover, the State will permit to import foreign labour power beyond a quota for the period of construction plus 1 year. 

 

There is one more extra-measure: an option to get investment subsidies from the State as a compensation for costs for construction and mounting works and cost of equipment – up to 30%. This instrument assumes support of the projects relating to implementation of innovations and aimed at output of export-oriented products.  

 

In general, the experts from the World Bank marked out as the advantages of doing business in Kazakhstan the low costs to set up small and medium-scale business entities owing to small registration fees and minimal set of documents. 

 

As for this indicator, the country is among 20% of the most favourable economies of the world. 

 

In order to study this issue in more details, we have prepared the information concerning business doing in Kazakhstan. This information is based on theoretical and practical knowledge of our specialists. Contents of this information is recommended for the foreign companies, which desire to do business in Kazakhstan. You will get exhaustive information about basic forms to do business, as well as information about taxation. If you come to a decision to set up a business in Kazakhstan, we will be glad to offer our professional services.