guide kazakhstan

7/29/2019 Guide Kazakhstan

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GUIDE TO DOING BUSINESS IN KAZAKHSTAN

I. THE COUNTRY AT A GLANCE

A. What languages are spoken?

The official state language is Kazakh language. Russian is the language of inter-ethnic

communication and is widely spoken in urban areas, whereas people from rural regions tend to

speak Kazakh. English is used by international organizations and the foreign businesscommunity in Kazakhstan.

B. What is the exchange rate for the U.S. dollar, the Euro?

As of February 02, 2010 the exchange rates of the National Bank of Kazakhstan are:1 USD (United States Dollars) - 148.14 KZT (Tenge);

1 EURO (Euros) - 203.16 KZT (Tenge).

C. Describe your country’s geography, proximity to other countries and climate.Area: Total: 2,717,300 km²

Land: 2,669,800 km²

Water: 47,500 km²

Capital city: Astana

Major rivers: Tobyl, Isil, Ertis, Ural



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Border length: Total 12012 km

Border countries: Russia (6477km), Uzbekistan (2300km), Kyrgyzstan (980km),

Turkmenistan (380km), and China (1460km)

Coast line: Caspian Sea and Aral Sea

Naturalresources: Natural gas, oil, coal, chromium, gold, tungsten, copper, lead, and zinc

Climate: Kazakhstan has an extreme continental climate with average temperature inJanuary between -19 and -4

oC and in July between +19 and +26

oC

D. Are there cultural influences or prohibitions on the way business is conducted?

There are no cultural influences or prohibitions on the way business is conducted in Kazakhstan.

The Civil Code establishes that citizens and legal entities must act in good faith, reasonably and

fairly when exercising their rights, and comply with the requirements which are contained in the

legislation, as well as with the moral principles of the society. Entrepreneurs must also complywith business ethics rules.

E. Are there religious influences or prohibitions on the way business is conducted?

There are no religious influences or prohibitions on the way business is conducted in

Kazakhstan. Kazakhstan is officially a secular state. Sunni Islam is the major religion. The

Russian Orthodox Church is the dominant Christian denomination. There are also Protestant,Roman Catholic, and Jewish communities.

F. Explain your country’s infrastructure. Be sure to explain which cities have airports,

railroad systems, ports, and public transportation.

Airports: Aktau, Aktobe, Almaty, Arkalyk, Astana, Atyrau, Karaganda, Kokchetav,

Kostanay, Oral, Oskemen, Petropavl, Semei, Shymkent, Taraz, Zhezkazgan.The most important carrier is now Air Astana which flies to Aktau, Aktobe,

Almaty, Astana, Atyrau and Oral as well as to the following international

directions: Amsterdam, Bangkok, Beijing, Delhi, Dubai, Frankfurt,Hannover, Istanbul, Moscow, London and Seoul.

Highways: Total: 258029 km

Waterways: 3900 km on the Syrdariya and Ertis rivers

Ports: Caspian Sea: Aktau – railhead 1524 mm; Atyrau – railhead 1524 mm

Others: Oskemen, Pavlodar, Semey



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Roads and rails: The extent of main rail roads of the Republic of Kazakhstan is 13.3 thousand

km, including 5.1 thousand km of double track, and 3.5 thousand km of

electrified lines. The management of a railway transportation of Kazakhstanis carried out by the Republican State enterprise “Kazakstan Temir Zholy”.

Commissioning of railway Friendship [Druzhba] – Alashan'kou on the

border of China with Kazakhstan and termination of construction of therailway Tedzhen – Serahs – Meshhed on the border of Iran with

Turkmenistan have finished formation of two transcontinental highways:

Transasiatic (Pekin – Almaty – Istanbul) and Euroasian (London – Almaty – Pekin).

G. Explain the communication system.

There are well-developed television and radio broadcasting systems; the penetration of mobile

telephone services is 94% (2009). Kazakhstan had a strong fixed-line penetration (22 telephone

lines per 100 inhabitants by the end of 2008) with six operators providing fixed line telephoneservices to about 3.5 million subscribers. Dominant market position belongs to the state-owned

telecommunication company “Kazakhtelecom”.

Number of Internet users: 2,300,000 (2009); Internet country code: .kz

H. Describe the public services – i.e. water, electricity, gas. Are they publicly or

privately owned?

Electricity: There is one integrated power supply system in the Republic of Kazakhstan, whichconsists of electrical stations, power lines and substations that provide an effective and a high-

quality energy supply to the consumers.

Electrical power is produced by 60 electrical stations of various patterns of ownership. Electricalstations are divided into stations of national, industrial and regional significance.

The main state authority that controls and regulates the power industry is the Ministry of Energy

and Mineral Resources of the Republic of Kazakhstan.

Gas: The consumption of gas in Kazakhstan is around 8 billion cubic meters per year. However,the gas transport system provides with own fuel, mainly, the west part of Kazakhstan. Demands

of consumers of the South-Eastern and the Northern Kazakhstan are complied by importation of

gas from Uzbekistan (approximately 1.4 billion cubic meters) and Russia (approximately 1.2 billion cubic meters).

Water: Kazakhstan water resources’ management of the past decades can be described as

fragmented, underfunded and poorly governed. However, the Committee for Water Resourceshas been dealing with the consequences of environmental mismanagement and has embarked

upon a new project on water resources management aimed at strengthening the water management organizations within the country and at instituting the practice of Integrated Water

Resource Management (IWRM).

II. GENERAL CONSIDERATIONS

A. Investment policies



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1. Does the country generally welcome investment? Are there governmental or

private agencies devoted to the promotion of investment?

By creating a favorable investment climate Kazakhstan welcomes investments to develop theeconomy and stimulate investments into establishment of new facilities, enlargement and

renewal of existing facilities, with application of up-to-date technologies, creation of new and

preservation of existing jobs, as well as environmental protection. The state support of investments in Kazakhstan is carried out by the Committee on Investments of the Ministry of

Industry and Trade of the Republic of Kazakhstan.

2. What is the rate of inflation?

According to the National Bank’s report, inflation in 2009 decreased by 1.5% and averaged at

6.2%, which was lower than in 2008. In 2010, the National Bank expects the situation in theconsumer market to remain stable. The inflation forecast for 2010 is 6.0-8.0%.

3. Explain any sector exceptions, incentives or restrictions on foreign

investment?

Generally, the Law on Investments establishes equal treatment of foreign and local investors. It

creates a system of investment incentives that support direct investments in the priority types of

activity, the list of which is approved by the Government of Kazakhstan.Local companies engaged in a designated priority activity may be eligible for benefits and

preferential treatment and may receive, depending on the circumstances:

• an exemption from customs duties on imported equipment required for investment projects (the exemption can be granted for up to 5 years); and/or

• state in-kind grants (land plots, buildings, equipment, machinery, etc.).

There are some sector-specific restrictions: (1) investment preferences are not available tosubsoil users; (2) the Land Code provides with a restriction on foreign investments when it

comes to agricultural land in Kazakhstan, which can be privately owned only by Kazakhstani

citizens and companies incorporated in Kazakhstan, and so on.

4. Describe de facto restrictions on investment, if any, such as bureaucratic

discretion.

Foreign investors are treated equally with domestic investors and, in most circumstances, are permitted to conduct business on the same terms as domestic business ventures. However, as the

economy of Kazakhstan is in transition to a market based economy, there are still can be greater

risks (such as corruption and bureaucracy within governmental and administrative apparatus) incomparison with countries having a more developed economy.

5. What types of businesses are conducted in the country?

Natural resources: Business in Kazakhstan is mostly focused on the oil and gas industry, since

Kazakhstan is the second largest oil producer among former Soviet Republics, after Russia. Themost important oil field is the Tengiz oil field that is estimated to contain 6-9 billion barrels.

Other important fields are Uzen and Karachaganak. Kazakhstan produces over half a million

barrels of oil a day.



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Kazakhstan also contains large quantities of coal, chromium, gold, tungsten, copper, lead and

zinc. The mining industry is the second largest earner for the country. Kazakhstan is a major coal

producer, consumer and exporter. The major coal producing areas are centered in the Karagandaand Ekibastuz basins.

Agriculture: According to the Agriculture Ministry of the Republic of Kazakhstan, Kazakhstan

remains a major world exporter of grain and grain products. The country's major crops includewheat, barley, cotton and rice. Wheat is the leading agricultural commodity of Kazakhstan's

export trade. Kazakhstan harvests 14-15 million tons of wheat per year. Kazakhstan is

constructing grain terminals in harbors of Azerbaijan, Iran and Georgia in conjunction with thesecountries to further increase export of grain. It is also considering the ways to enhance capacities

of railway export of grain.

The livestock is one of the most important agricultural commodities as well. Main livestock products are dairy goods, leather, meat and wool.

B. Diplomatic Relations

1. Explain any established diplomatic relations your country may have.

Since gaining independence in 1991 Kazakhstan has established diplomatic relations with over

110 countries, among them: CIS: Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Russia, Tajikistan, Turkmenistan,

Ukraine, Uzbekistan;

Europe: Austria, Belarus, Belgium, Bulgaria, Croatia, Czech Republic, France, Germany,Greece, Hungary, Italy, Latvia, Lithuania, the Netherlands, Norway, Poland, Romania, Russia,

Spain, Switzerland, Turkey, Ukraine, the United Kingdom;

Middle East, Asia and Africa: Egypt, Israel, the United Arab Emirates, Saudi Arabia, Qatar,the Hashemite Kingdom of Jordan, Iran, Pakistan, Afghanistan, India, China, Malaysia, Korea,

Japan, Mongolia, Singapore, Lebanon, the Libyan Arab Jamahiriya, Thailand;

Rest of world: Australia, Canada, Cuba, the United States.

2. Give addresses, and contact information for the embassies or consulates in

your country.

Addresses and contact information of the embassies or consulates in Kazakhstan can be found onthe web-site of the Ministry of Foreign Affairs of the Republic of Kazakhstan:

http://portal.mfa.kz/portal/page/portal/mfa/en/content/ministry/missions.

3. Are there prohibitions or restrictions on certain business dealings with the

country?

In general, there are no prohibitions or restrictions on business dealings in Kazakhstan, other

than prohibition to carry out monopolistic and other kind of activities aimed to restrict a lawful

competition and to impair the rights and lawful interests of consumers. Kazakhstan may alsoenforce special measures to protect the domestic market from import of certain products (i.e.

protection measures, antidumping measures and compensation measures).

4. Explain any travel restrictions to or within the country?



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Entry, stay and departure of foreigners in Kazakhstan are subject to the provisions of the Law on

Migration and corresponding by-laws such as the Rules on Entry and Stay of Foreigners in

Kazakhstan and Foreigners’ Departure from Kazakhstan. Pursuant to these regulations,foreigners entering Kazakhstan are required to present a valid passport and a visa unless

otherwise is stipulated. Thus, for example, under certain circumstances citizens of CIS countries

may enter Kazakhstan by submitting a valid passport only.

C. Government

1. Explain your country’s election system and schedule. Is there an anticipated

change in the present government?

According to the Law on Elections in the Republic of Kazakhstan, Kazakhstan has a mixedelection system composed of proportional and majority voting systems. In majority-type

elections, a candidate running for presidency, seat in the Senate of the Parliament, or seat in the

Majilis of the Parliament (the part which is elected by the Assembly of the People of Kazakhstan) must gain an absolute majority (50 percent plus 1 vote) of votes or a relative

plurality of votes of constituents in comparison with other candidates during reelection. Also,

one must receive more votes of constituents in comparison with other candidates in order to

become a member of a local self-governing body.When elections are conducted by means of the proportional system votes shall be given for party

tickets in the single nationwide constituency.

Schedule:

• The most recent Presidential elections were held on December 4, 2005. Election of the President is held once in 5 year period on the first Sunday of December and can

not be carried out concurrently with voting for new deputies of the Parliament.

• The upper house of the bicameral Parliament is the 47-member Senate, with 32

members chosen by directly elected regional councils and 15 appointed by thePresident. The senators serve six-year terms, with half of the 32 elected members up

for election every three years.

• In the lower house, the Majilis , 98 of the 107 Majilis deputies are elected via a

proportional, closed list system. The remaining nine deputies are chosen by the

Assembly of the People of Kazakhstan. All are elected for five year terms.

2. Is the present government stable? Briefly explain your country’s political

history in the last decade.

Kazakhstan was established as an independent and sovereign state in 1991. In its first decade of

national independence, Kazakhstan's government demonstrated a strong commitment to found an

open, democratic government with a market-based economy.At the referendum held on August 30, 1995 a new Constitution of the Republic of Kazakhstan

established a Presidential Republic. Under the Constitution, the President of Kazakhstan is thehead of the state and also is the commander in chief of the armed forces. He is responsible for

domestic and foreign policy and represents Kazakhstan in international relations. The President

is elected for a term of five years and may be re-elected for a second term.



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The President has the authority to issue decrees, initiate constitutional amendments, dissolve

Parliament, veto legislation, appoint and dissolve the Government and appoint local heads of

Government. The Government is appointed by the President and is accountable to him. TheGovernment is headed by the Prime Minister and is comprised of two deputy prime ministers

and 17 ministers in the Cabinet. The Parliament of Kazakhstan comprised of a lower house (the

Majilis) and upper house (the Senate).The political party system is in its initial stages of development. The principal party is Nur-Otan,

with other parties including Azat, Akzhol, the Communist Party, the National Social Democratic

Party, the Communist People's Party, Party of Patriots, Adilet and Rukhaniyat.Kazakhstan is divided into 14 oblasts (regions) and the two municipal districts of Almaty and

Astana. Each is headed by an akim (provincial governor) appointed by the President. Municipal

akims are appointed by oblast akims. The Government of Kazakhstan transferred the capitalfrom Almaty to Astana on June 10, 1998.

3. Explain your country’s judicial system.

The Kazakhstani court system consists of three levels. The highest level is the Supreme Court of

Kazakhstan. The courts of two lower levels include:

1) Oblast (regional) courts and courts equivalent to them;

2) District courts and courts equivalent to them.Legislation affords a ground for establishment of specialized courts for adjudication of certain

types of dispute. As of today, there are military, administrative, economic, financial, and juvenile

specialized courts within the country.

Is the judicial system generally perceived to be impartial? According to the Constitutional

Law on the Court System and Status of Judges of the Republic of Kazakhstan, judicial power shall be exercised on behalf of the Republic of Kazakhstan and is intended to protect rights,

freedoms and lawful interests of individuals and organizations and to ensure the implementation

of the Constitution, laws, other regulatory legal acts and international treaties of the Republic of

Kazakhstan. Everyone is guaranteed a judicial defense against any unlawful decisions and acts of state agencies, organizations, officials and other persons which infringe or restrict the rights,

freedoms and lawful interests provided by the Constitution and the laws of Kazakhstan. No one

may be deprived of the right to have his case considered in compliance with all the requirementsof the law and fairness by a competent, independent and impartial court.

Must disputes be resolved in the country? Kazakhstan law allows contractual parties to choosea dispute resolution procedure outside the country. However, certain disputes are reserved for the

exclusive jurisdiction of the Kazakhstan courts. The courts of Kazakhstan shall consider disputesinvolving rights over immovable property located within the country, disputes involving

transportation agreements, disputes on international marriage dissolution if both of the spouses

reside in Kazakhstan, disputes involving election process, disputes on condensation of legal actsand some other disputes which are assigned to the exclusive competency of the Kazakhstan

courts by the Kazakhstani legislation.



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Is there a political method of resolving disputes? Justice in Kazakhstan shall be administered

exclusively by courts.

Are alternative methods of dispute resolution permitted? Kazakhstan law allows for

alternative dispute resolution methods, such as arbitration and international commercial

arbitration. The major difference is that international commercial arbitration have jurisdictionover disputes if at least one of the parties is non-resident of Kazakhstan. Arbitration courts, in

turn, resolve disputes between residents of Kazakhstan only.

How long does it take to resolve disputes? The duration of the dispute resolution proceedings

may vary substantially depending on the complexity of the case, chosen method of dispute

resolution, the issues in dispute, the fulfillment of legal requirements and deadlines and theconduct of the parties.

As a general rule, the district courts of general jurisdiction (first instance courts) must consider

the case within a reasonable time but not more than two months after opening proceedings.Sometimes courts miss these terms; everything depends on each specific case.

Can foreign judicial decisions be enforced in the country? Decision of foreign court shall be

recognized and executed in Kazakhstan if its recognition and execution is envisaged by theKazakhstani law or an international agreement of Kazakhstan on the principle of reciprocity.

Decision of a foreign court may be compulsory executed in Kazakhstan during three years

starting from the day when it enters into force. Permit for compulsory execution of decision of a foreign court shall be granted in accordance

with the terms and procedure set by the Kazakhstani legislation unless other terms and conditions

are foreseen by an applicable international agreement to which Kazakhstan is a party.

Can decisions from the country be enforced outside the country? The enforcement of

decisions outside Kazakhstan depends upon the private international law rules that may be

applicable in the country where enforcement is sought, as well as on the existence of reciprocityand relevant international treaties and agreements.

Are there separate tribunals depending upon the subject matter of the case? There arecourts that deal with both criminal and civil matters as well as specialized military, financial,

economic, administrative and juvenile courts.

Are there different legal systems within the country or its political subdivisions? There is

only one legal system.

Can the investor choose to be subject to the country's jurisdiction or not? Although parties

to an agreement may specify the governing law and form of dispute resolution applicable to their relations in a wide variety of circumstances, an investor may not opt out of Kazakhstan

jurisdiction altogether. The investor will remain subject to Kazakhstan jurisdiction in all areas

where the Kazakhstani courts retain exclusive jurisdiction.



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4. Explain your country’s legislative system.

The Republic of Kazakhstan has a continental law system based on a hierarchical structure of

written laws with the Constitution as the country's supreme law. Ratified international treatiesare part of the legislation and take priority over domestic laws, except where an international

agreement requires the issue of a special law for its application.

D. Environmental Considerations

1. What is the public/government attitude toward environmental regulation?

In 2007, the Ministry of Environmental Protection of the Republic of Kazakhstan adopted the

Ecological Code that has brought environmental legislation in line with progressive internationallaws and standards. The Committee on Environmental Regulation and Control of the Ministry of

Environmental Protection plays an important role in enforcing the law and exercising State

control of environmental matters. Moreover, the Ministry takes new approaches to resolve the

existing environmental problems in the country such as a desiccation of the Aral Sea, protectionof the fragile Caspian ecosystem, remediation of the Semipalatinsk nuclear testing range, cleanup

of the Baykonur launching facility, development of mechanisms for regional transboundarywater management and so on.

2. Explain any environmental regulations.

The main regulatory document is the Ecological Code of the Republic of Kazakhstan. Itregulates relations in the area of protection, utilization and restoration of the natural resources

when carrying out activities which are related to the usage of natural resources and have an

impact on environment of Kazakhstan. Other related regulations are:The Water Code aims at attaining and supporting an ecologically secure and economically

optimal level of the water consumption, protection of the water fund, water supply and water disposal system for saving and improving environment and living conditions of the population;The Forest Code regulates public relations on possession, usage, disposal of the forest fund, and

also sets legal base for protection, reproduction and increase of the ecological and resource

potential of the forest fund and its rational usage. The Land Code regulates relations in the area of land use and protection of lands, reproduction of

soil fertility, safety and cultivation of the environment.

E. Intellectual Property

1. Describe the law for the protection of intellectual property, including

trademarks, copyrights, patents and know-how.Legislation on intellectual property includes the Copyright Law, the Trademark Law, the PatentLaw, Protection of Topologies of Integrated Circuits and the Law on Selection Achievements.

Patents

There are three types of industrial property protected under Kazakhstani law:

• inventions;

• utility models; and



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• industrial designs.Each of the abovementioned patents has a different validity term from three to 20 years, which

can be extended. The period of extension varies for each type of patent.For the protection of the patent rights there are the following measures foreseen by the

legislation: (1) registration; and (2) the document title issued by the Committee of Intellectual

Property Rights of the Ministry of Justice. In case of infringement of his rights the patent holder can request:

• that the infringement of his rights ceases; and

• compensation for damages and moral injury.

Trade marks

There are markings intended to differentiate goods and services that can be registered as trademarks:

• graphic;• verbal;

• alphabetical, numerical, or extensional;

• combinations of these.Trade mark rights are protected with or without registration, through international treaties to

which Kazakhstan is a party. The trade mark owner has an exclusive right to use the trade mark.It cannot be used by anyone else without the owner's consent. The infringer of the trade mark

right must compensate the owner for damages and terminate the illegal use of the trade mark.

Trade mark registration is valid for ten years from the date of the application's submission andcan be extended repeatedly for an additional ten years.

Registered designsSee above, Patents.

Copyright

According to Kazakhstani law, copyright arises when the product is created. A copyright holder

has a right but is not obliged to register the product by filing an application with the Committee

of Intellectual Property Rights of the Ministry of Justice. The author or other copyright holder has an exclusive right to use the copyrighted object. The court implements copyright protection

through declaration of copyright, suppression of the actions which infringe the copyright, and so

on.Copyrights are valid for the author's lifetime plus 70 years after his death.

Confidential information

There are no formal actions needed to protect confidential information from unauthorized use.

Owners of confidential information are entitled to request immediate termination of its illegal

use and to receive compensation for damages from the infringer.The right to protection of confidential information is valid as long as the information remains

official or a commercial secret.



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Know-how

Know-how (commercial secret) matters are governed by the Civil Code of Kazakhstan. It is

secret information that is not easily accessible, has commercial value and is subject to adequate protection of its secrecy. An individual that possesses technical, managerial or commercial

information, which is not known by third parties, including secrets of production, has the right on

protection of this information from illegal use. Know-how is considered as and protected thesame way as confidential information (see above).

2. Does the country subscribe to international treaties? Describe.

Since gaining independence in 1991, Kazakhstan became a party to all major international IP

treaties and conventions, including:

1. the Convention Establishing the World Intellectual Property Organization;2. the Paris Convention for the Protection of Industrial Property;

3. the Madrid Agreement Concerning the International Registration of Trade Marks;

4. the Patent Cooperation Treaty;5. the Eurasian Patent Convention;

6. the Berne Convention of Copyright Protection;

7. the Convention for the Protection of Producers of Phonograms against Unauthorized

Duplication of their Phonograms;8. the Trademark Law Treaty;

9. the Nice Agreement Concerning the International Classification of Goods and Services

for the Purposes of the Registration of Marks;10. the Locarno Agreement Establishing an International Classification for Industrial

Designs;

11. the Budapest Treaty on the International Recognition of the Deposit of Microorganismsfor the Purposes of Patent Procedure;

12. the Strasbourg Agreement Concerning the International Patent Classification;

13. the WIPO Performances and Phonograms Treaty (WPPT).

3. Are there substantive prior approvals by national investment boards?

There are no prior approvals by national investment boards

4. What are the notarization requirements?

In order to represent foreign companies and individuals before the Patent Office there is a need

to submit a notarized, apostilled or legalized Power of Attorney. Type of certification variesdepending on the country of the company or individual’s origin. Notarization is necessary for

Kazakh/Russian translations of documents filed to the Patent Office for registration.

5. Are there regulatory guidelines for licenses?

Kazakhstani legislation does not provide with an exhaustive list of information which have to beincluded in a license agreement in order for such agreement to be registered within the State

Register. However, it must be submitted in a written form and can not contain any clauses

contradicting legislation of Kazakhstan or international agreements to which Kazakhstan is a

party.



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6. Are there specific exceptions or requirements relation to a particular

product(s)?There are no specific requirements.

7. When are royalties from licenses deemed to be excessive?

Kazakhstani law does not provide for upper limit of the royalties.

8. Do local antitrust or competition laws apply to licenses?

The Law on Competition states that any agreement between market entities that leads to or may

lead to limitation of competition shall be prohibited and recognized as invalid in full or in part in

accordance with the procedure established by the legislation of the Republic of Kazakhstan.However, these restrictions do not apply to license agreements; complex business license

(franchising) agreements; agreements for technology transfer; agreements on cooperation in

research and experimental works; other agreements on transfer of rights for intellectual propertyobjects, etc. Therefore, it is a general rule that provisions of the competition law do not apply to

intellectual property transfer.

9. What typical agreements do foreign corporations enter into with their wholly

owned subsidiaries?

License agreements are the most common intellectual property agreements signed by foreign

corporations and their wholly owned subsidiaries.

III. INVESTMENT INCENTIVES

A. Explain any export incentives or guarantees. Be sure to answer the following

questions:

1. Are there tax incentives for exports?

2. If so, are they limited to certain types of products?

If an exporter can provide the tax authorities with all the supportive documentation required by

the tax legislation export of goods from Kazakhstan is taxed at 0% VAT rate.Exporters of the excisable production are free of the excise duties if they can provide the tax

authorities with all the supportive documentation required by the tax legislation.

Resource rent on export of crude oil and gas condensate is at 0% rate when world price of thesematerials is below USD 50 per barrel.

3. Is export financing available from government or private sources?

4. If so, what forms of financing or guarantees are available?

There are no government programs aimed at financing of export.Private sources financing may be available depending on the current situation in the financial

services market. Kazakhstani legislation, generally, provides for the forms of financing from

private sources. Specifically, in order to finance an export project there are traditional financial

instruments, such as loans, financial leasing, etc.



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5. Is there any governmental insurance for exports?

Kazakhstan does not provide with governmental insurance for exports.

6. Must a national be a participant in the enterprise in order for the investor to

benefit from these incentives?

N/A

B. Explain any grants, subsidies or funds your country offers foreign investors. Be sure

to answer the following questions:

1. Are grants and subsidies restricted by the type of activity?

The Law of the Republic of Kazakhstan on Investments provides with certain investment

preferences. These preferences are obtainable under the following terms:

1. The investment activity is complied with the list of priority types of activitiesapproved by the Government of the Republic of Kazakhstan;

2. Investment stays within the maximum amount of investment approved by the

Government of Kazakhstan for each priority type of activity;

3. Investment preferences are granted by conclusion of a contract with a legal entityincorporated in Kazakhstan and engaged in realization of the investment projects.

2. What is the process for obtaining approval for these grants or subsidies?

Both international and domestic investors are provided with the following investment

preferences: (1) exemption from customs duties, and (2) state in-kind grants.

Exemption from customs duties is contracted for an import of equipment and its parts importedfor realization of the investment projects. It is granted for the period of validity of a contract

concluded between the investor and the authorized state investment authority; however, this

preference can not be given for more than 5 years from the moment of the contract’s registration.

The investment authority sends a notification on decision to grant an exemption from customsduties to the customs authorities within 5 business days.

State in-kind grants are provided conjointly by the state authorities on investment, on the state

property management and (or) on the land resources. Decision of the state investment authorityshould be a sufficient ground for a free transfer of the state in-kind grant’s ownership or land use

to the investor. A respective contract should be (1) concluded between a Kazakhstani legal entity

and the state investment authority within 10 business days from the date of decision onassignment of the state in-kind grant, and (2) registered within 5 business days from the date of

signing of the contract. The contract comes into force from the date of its state registration.State in-kind grants include the transfer of lands, buildings, machines and equipment, computers,

measuring and controlling devices, transports (excluding motor cars), productive and household

inventory. The maximum volume of the in-kind grant can not be more than 30% of theinvestment contributed into fixed assets of a Kazakhstani legal entity.

3. How long does it take to receive approval?



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The investment authority executes registration of an application after the application for

providing investment preferences has been received. Decision to grant the investments authority

shall be made within twenty business days from the moment of the application’s registration.

4. Can the investor receive loans from the government or governmental

agencies?

The government or governmental agencies of Kazakhstan do not provide loans to the investors.

However, in order to support domestic entities, including domestic investors, the government has

established two assistance programs: (1) micro-credit lending program, and (2) program of larger loans for small and medium businesses.

5. Must a national be a participant in the enterprise in order for the investor to

receive these grants or subsidies?

There is no such obligation. Investor only needs to meet the requirement of conformity of the

investment activity such as the list of prior types of activities and submit all necessary documentsverifying financial, technical and organizational resources of a Kazakhstani legal entity when

applying for the preferences.

C. Explain any national tax incentives for foreign investors. Be sure to answer the

following questions:

1. Are the incentives restricted by the type of activity?

2. Are the incentives restricted by the duration of the activity?

3. What is the process of application?

Investors may enjoy available tax incentives through a company registered in Kazakhstan. Thefollowing Kazakhstani legal entities are prohibited from using incentives:

• registered in special economic zones;

• producing and selling alcohol products, beer and tobacco products;

• producing agricultural products.

Tax incentives are the below listed costs which can be deducted from the corporate income taxtaxable income;

1) cost of the reconstruction or modernization of the preference objects; and/or 2) cost of the preference objects itself, including:

• nonresidential buildings or its parts if they meet special requirements set by the tax

legislation except for the stores, cultural and entertainment buildings, hotels,restaurants, office buildings, car parking and some others;

• production facilities if they meet special requirements set by the tax legislation exceptfor sport and recreational facilities, cultural and entertainment facilities and some

others;



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• machinery and equipment if they meet special requirements set by the tax legislation.

D.

Explain any regional tax incentives open to foreign investors. Be sure to answer thefollowing questions:

1. Are there tax incentives for the investor that exists only in certain regions of

the country?

2. Does the investor need to receive approval to be eligible for these incentives?

3. Are the incentives restricted by the type of activity?

4. Are the incentives restricted by the duration of the activity?

5. What does the process of application involve?

N/A. There are no regional tax incentives available.

IV. FINANCIAL FACILITIES

A. Banking/Financial Facilities

1. What kind of financial institutions exist?

Banking sector: At present time, Kazakhstan banking sector differs from the one it had a year

earlier. BTA Bank and Alliance Bank, two of the top-four banks, plus Astana Finance andBTA’s subsidiary TemirBank undergo debt restructuring.

Prior to 2009 the banking sector of Kazakhstan was privately owned. In 2009 the Government of

Kazakhstan through the National Welfare Fund Samruk-Kazyna became the major stakeholder in

BTA and Alliance banks. It also acquired a minor stake in Halyk Bank and Kazkommertsbank,the other two top-four banks. There are some banks such as Bank CenterCredit and ATF Bank

that have survived the crisis.

Currently, the following types of non-bank financial institutions operate in Kazakhstan: pawnshops, financial companies, insurance companies, pension funds and investment funds.

2. Must the investor maintain a bank account in the country?

A foreign investment may be made either in monetary form or in form of property (goods,

services, property rights and so on). If the investment is made in monetary form it could be

transferred to Kazakhstan directly from the investor's account opened in a foreign bank or through an account opened in a Kazakhstani bank in accordance with the bank and currency

legislation of Kazakhstan.

3. What are the requirements for opening a bank account?

In order to open a bank account foreign legal entities, its branch or representative offices have to

submit the following documents to the bank:

1. Document with a sample of the signature of an authorized company’s representative andan imprint of the stamp;

2. A copy of document confirming information on the client’s registration provided by an

appropriate tax authority;3. A copy of the document confirming state registration (re-registration) of the branch

and/or representative office in Kazakhstan, a notarized translation into Kazakh and/or



16

Russian languages of the branch or representative office’s statute, and a copy of a power

of attorney issued by the foreign company to the head of its branch or representative

office;4. An original or a notarized copy of an extract from the trade register or another similar

document containing information on the state registration, as well as on the date and

place of such state registration with its translation into Kazakh or Russian languages, if necessary, legalized or apostilled in accordance with legislation of the Republic of

Kazakhstan or an international agreement to which Kazakhstan is a party;

5. A copy of the ID document of the persons authorized to sign payment documents inaccordance with the document containing sample of the signature of the company’s

authorized representative and imprint of the stamp.

In order to open a bank account non-residents of the Republic of Kazakhstan have to submitthe following documents to the bank: (1) ID document (a passport, an identity card of a stateless

person or a residence permit of a foreign citizen reside in Kazakhstan); (2) a copy of the

document confirming state registration of a tax payer issued by the tax authority.

4. What are the restrictions, if any, on the investor's use of the account?

In general, there are no limitations on the investor’s use of the account.

However, there might be certain restrictions on payment operations to be made to/from a bank account depending on a particular type of the account opened by the bank for a client on the

basis of a contract regulating terms of the bank’s services.

5. What is the type of financial system in the country?

Financial system of Kazakhstan is governed by the Law on State Regulations and Supervision of

Financial Market and Financial Organizations as well as by other Kazakhstani laws andregulations setting out the rules and procedures for rendering financial services in Kazakhstan.

Financial system is supervised by the following state authorities: (i) the National Bank of the

Republic of Kazakhstan and (ii) the Agency on Regulation and Supervision of Financial Market

and Financial Organizations. In addition, certain other agencies, such as the Agency of theRepublic of Kazakhstan for Competition Protection (Antimonopoly Agency), are also

responsible, within their authority, for supervision and control over financial market activities

and financial organizations.

6. How is the banking system structured?

The Republic of Kazakhstan has a two-tier banking system. The National Bank of the Republicof Kazakhstan is the central bank of Kazakhstan and constitutes the upper (first) tier of the

banking system. All other banks constitute the lower (second) tier of the banking system,excluding the Development Bank of Kazakhstan that has a special legal status.

7. Is there a stock market?

Taking into account that Kazakhstani stock market has been recently emerged (upon achieving

independence by Kazakhstan less than 20 years ago), it still lacks appropriate legal and

regulatory framework in comparison with mature stock markets of the developed counties.



17

Currently, Kazakhstan is taking steps to make the local stock market more attractive for issuers

and investors; regulatory and technical systems are being improved.

The Kazakhstan Stock Exchange (KASE) is a vital part of the stock market. It is amultifunctional financial platform where stock prices and market exchange rates of Tenge to the

world reserve currency are formed. In addition, the National Bank of Kazakhstan constantly uses

stock exchange instruments for realization of its monetary policy and market regulations.

8. Can the investor receive bank loans?

There are no direct legislative restrictions. Conditions of the loan (cost, rate of remuneration,repayment schedule and so on) are subject to negotiations between the bank and the borrower.

Generally, banks will require posting of a guarantee.

V. EXCHANGE CONTROLS

A. Business Transactions with Nationals, Residents or Non-Residents

1. How are nationals, residents and non-residents defined?

The Law of the Republic of Kazakhstan on Currency Regulation and Currency Control contains

the following definitions:1. Non-residents are (1) individuals, legal entities, branches and representative offices which are

not included in the list of residents; (2) international organizations if otherwise is not specifically

stated in the international (interstate) agreements on establishment of such organizations; and (3)diplomatic and other official representatives of the foreign states;

2. Residents are (1) citizens of the Republic of Kazakhstan, including those who are temporarily

abroad or in civil service outside of the Republic of Kazakhstan, except for the citizens of theRepublic of Kazakhstan who have a resident card of another state; (2) foreigners and stateless

persons who have a resident card issued by the Republic of Kazakhstan; (3) all legal entities

established in accordance with the legislation of the Republic of Kazakhstan and residing in

Kazakhstan, as well as branches and representative offices of such legal entities residing inKazakhstan or abroad; and (4) diplomatic, trade and other official representatives of the Republic

of Kazakhstan located outside the Republic of Kazakhstan.

2. Are there restrictions on conducting business with nationals, residents or

non-residents?

If there is a threat to the economic safety and stability of the financial system of Kazakhstan, aspecial currency regime may be enforced in order to eliminate such danger. This regime

temporarily provides with some currency restrictions upon operations conducted by residents andnonresidents with the use of currency. These restrictions may require:

1) To place deposit without remuneration for a period of time defined by the servicing bank

or by the National Bank of Kazakhstan. Amount of the deposit will be accounted at a certain percentage from the amount of the currency operation;

2) To obtain a special permit of the National bank of the Republic of Kazakhstan on carrying

out the currency operations;

3) To sale foreign currency upon its receipt;



18

4) To limit (i) the use of the accounts in foreign banks, (ii) the period for return of the

currency gains, and (iii) amount and numeraire of the currency operations.

3. Are there reporting requirements?

According to the currency legislation of the Republic of Kazakhstan, residents and non-residents

carrying out activities in Kazakhstan may be obliged to provide accounting details, informationand documents regarding conducted currency operations to the National Bank of the Republic of

Kazakhstan or the so called Agents of Currency Control (i.e. servicing banks).

4. Can the investor receive loans from nationals, residents or non-residents?

Generally, investor is not prohibited from receiving loans from residents or non-residents.

However, some other restrictions and additional obligations may apply.

Thus, financial loans between residents and non-residents for a period of time exceeding 180

calendar days require registration with the National Bank of Kazakhstan. Regime of registrationincludes initial registration of the loan agreement with the National Bank of Kazakhstan andsubsequent reporting to the National Bank on payments made under this contract.

B. Investment Controls

1. Are there restrictions on direct investment in the country?

2. Must the investor make declarations regarding the nature of his/her

investment?

Generally there are no restrictions on direct investment in the country except for the cases

mentioned in the part related to capitalization (see below Section VII. Structures for Doing

Business).Investor is not obliged to file declarations regarding the nature of his/her investments except for

the cases when such information is requested under currency regimes of notification or

registration discussed below.

C. Money Transfer

1. Is there free determination of exchange rates?

The National Bank of the Republic of Kazakhstan is responsible for the management of the

foreign exchange rates.

2. Are there restrictions on the transfer of money into or out of the country?All foreign currency transfers are subject to Kazakhstan’s currency regulations. According to the

Law on Currency Regulation and Currency Control, any agreement between a resident and a

non-resident, depending on the type of currency in which operations will be carried out, is

normally subject to notification or registration (depending on the specifics of the given currencyagreement) with the National Bank of the Republic of Kazakhstan.

3. Are there restrictions on the remittance of profits abroad?



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After paying off all the appropriate taxes and other compulsory payments in accordance with the

legislation of the Republic of Kazakhstan, investors have the right to use their earnings at their

own discretion. Transfer of the profit abroad is not prohibited, but, generally, should be carriedout using a bank account in the servicing bank.

4. Are there reporting requirements?

5. Can hard currency be taken out of the country?

According to the customs legislation import into/export from the Republic of Kazakhstan of the

national or foreign currency (cash) that exceeds the equivalent of USD 3000 requires mandatorywritten declaration with the customs authorities of Kazakhstan. The mandatory written

declaration is effected when filling and submitting a passenger’s customs declaration.

In order to export or import the cash in amount exceeding equivalent of USD 10000 documents

proving legality of the origin must be submitted.

VI. IMPORT/EXPORT REGULATIONS

A. Customs Regulations

1. Is the country a member of GATT?

Kazakhstan applied for the WTO membership in April 1996. According to the WTO’sinformation bilateral market access negotiations are ongoing. The latest revision of the draft

Report of the Working Party was circulated in June 2008. The tenth meeting of the Working

Party was held in July 2008. 2. Is the country a member of the EEC?

Kazakhstan is not a member of the EEC.

3. Is the country a party to a regional free trade agreement?

Kazakhstan is a party to the following free trade agreements:1. Free trade agreement on establishing the Common Economic Zone between Ukraine, Belarus,

Kazakhstan and the Russian Federation;

2. Free trade agreement between the Government of Georgia and the Government of Republic of Kazakhstan;

3. Free trade agreement between the Government of the Republic of Armenia and the

Government of the Republic of Kazakhstan; 4. Free trade agreement between the Government of Ukraine and the Government of Republic of

Kazakhstan; and

5. Others.

4. Does the Customs Department value the goods?



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Value of the goods shall be declared when moving through the customs border of the Republic of

Kazakhstan. All imported/exported goods are subject to the customs control which is carried out

by the customs authority of Kazakhstan.

5. How are goods cleared through customs?

Upon arrival in Kazakhstan, imported goods are subject to clearance at a customs warehouse.The time consuming and costly process requires submission of numerous documents including a

customs declaration, commercial invoice, supply contract, shipping documentation, packing list,

and a “transaction passport” issued by the servicing bank registered in Kazakhstan. Thetransaction passport is a document intended to stem capital outflow and money laundering by

requiring importers to verify compliance with currency regulations for goods valued in excess of

the equivalent of USD 10000.Depending on the nature of the goods, several additional documents may be requested. These

include import licenses, certificates of origin and conformity, insurance documentation, etc.

Although Kazakhstan has removed the need for import and export licenses for mostcommodities, licenses are obligatory for a number of products including: chemicals, pesticides,

biological materials, armaments, weapons, medicines, medical equipment, rare metals, waste,

etc.

6. Are there applicable tariffs?

There are customs tariffs that were established by the Decree of the Government on Customs

Tariffs and Trade Classification of Foreign Economic Activities of the Republic of Kazakhstanand which are also applicable to the goods moving through the customs border of the Republic of

Kazakhstan.

B. Exports

1. Are there restrictions on exports?

According to the Customs Code, there are certain restrictions on exports of:

1. Military weapons, ammunitions and military munitions, weapons of a mass destruction, andalso materials and equipment, which can be used in creating a weapon of mass destruction;

2. Art works, antiquities and other things that represent artistic, historical, scientific or cultural

values;3. Inhabitants of the plant and animal life that brought into the Red Book and a horn of saiga;

4. Objects of the animal life, its parts and derivatives;

5. Drugs, psychotropic drugs and precursors and also accessories for the drug usage;6. Annulled securities.

2. Are export licenses required?

Although Kazakhstan has removed the need for import and export licenses for most

commodities, licenses are obligatory for a number of products including: chemicals, pesticides, biological materials, armaments, weapons, medicines, medical equipment, rare metals, waste,

etc.

3. Are there applicable export duties?



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There are customs tariffs established by the Decree of the Government on Customs Tariffs and

Trade Classification of Foreign Economic Activities of the Republic of Kazakhstan applicable to

the goods moving through the customs border of the Republic of Kazakhstan.

C. Foreign Trade Regulations

1. Are there foreign trade regulations on the import or export of goods involved

in the business?

The Russian Federation, Belarus and the Republic of Kazakhstan established the Customs Unionof the three countries of the Eurasian Economic Community and have adopted new unified

customs tariff and non-tariff regulations starting January 1, 2010. The CU Customs Code is

expected to take effect starting July 1, 2010 and its main purpose is to regulate the createdintegral customs zone.

D. Imports

1. Are import licenses required?

Although Kazakhstan has removed the need for import and export licenses for most

commodities, licenses are obligatory for a number of products including: chemicals, pesticides, biological materials, armaments, weapons, medicines, medical equipment, rare metals, waste,

etc.

2. Are there applicable import duties?

There are customs tariffs established by the Decree of the Government on Customs Tariffs and

Trade Classification of Foreign Economic Activities of the Republic of Kazakhstan applicable tothe goods moving through the customs border of the Republic of Kazakhstan.

From time to time the Government enacts, on a temporarily basis, reduced or 0% rate duties for

import of certain products. There is also a system of preferences allowing to (1) apply 75% rate

customs duties when importing certain goods produced in and imported from the developingstates, as defined by the legislation of Kazakhstan, and (2) exempt from the customs duties when

importing certain goods produced in and imported from the least developed states, as defined by

the legislation of Kazakhstan.

3. Are there applicable import quotas?

Pursuant to the Law on Protective Measures of the Domestic Market upon Import of Goods theGovernment of Kazakhstan may apply protective measures by imposing quotas on import of

goods which are brought to Kazakhstan for a free circulation on its domestic market in suchquantities (absolutely or relatively to the domestic production) and on such terms that it causes a

serious damage or arise a threat of a serious damage to the domestic producers of similar or

competitive products.When imposing quotas, annual scope of the import quota must not reduce the volume of import

to a level lower than the average volume of import during the previous period; except for the

cases when, for prevention or elimination of a serious damage, necessity of another decision is

proven.



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The Government of Kazakhstan may apply country-by-country quota within the annual scope of

the import quota. In case when the import quota is divided between states-suppliers of certain

goods the Government of Kazakhstan may, by means of consultancies, reach an agreement ondistributing the import quota among states-suppliers interested in import of these goods into

Kazakhstan.

However if such agreement can not be reached, the Government of Kazakhstan, on the basis of average quantity or cost of the imported goods, divides the import quota among the states-

suppliers in proportion corresponding to the import of goods during the last period. Any other

factors that may have influenced or may influence the import of goods shall be taken intoconsideration as well.

If it is necessary the Government of Kazakhstan can divide the import quota among states-

suppliers taking into account absolute and relative criteria of growth of the import from certainforeign states (unions of foreign states).

4. Are there applicable import barriers?

Legislation of Kazakhstan states the purpose of protection of the sovereignty and economic

security of the Republic of Kazakhstan while enhancing the links between the economy of

Kazakhstan and the world market through the liberalization of foreign economic activity. At the

present time, two types of legal restrictions on importations are used in furtherance of thisobjective: (a) protective measures (i.e. protective duties and special import quotas); and (b)

licensing procedures (although drastically reduced).

E. Manufacturing Requirements

1. Must the product contain ingredients or components, which are found or

produced only in the country?

2. Will the importation of certain component parts be permitted only if they are

to be ultimately incorporated in a final product?

There are no manufacturing requirements for a product to contain ingredients or components,which are found or produced only in Kazakhstan. However, if the product contains certain

prohibited ingredients or components its import may be forbidden.

There is no such import requirement as ultimate incorporation in a final product.

F. Product Labeling

1. Are there applicable labeling or packaging requirements (e.g. multi-lingual

notices, safety warnings, listing of ingredients, etc.)?

In the time of disposal of goods information for consumers have to follow these goods in the

form of text, notation and (or) pictures on a package, label, bottleneck label, contra label, tag,

sticker, documents, booklets taking into account requirements set by the legislation of Kazakhstan for marking of certain types of products. Information for consumers given on a

package, label, bottleneck label, contra label, tag, sticker, documents and booklets has to be in

Kazakh and Russian languages.



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VII. STRUCTURES FOR DOING BUSINESS

A. Governmental Participation

1. Will the government seek to participate in the ownership or operation of the

entity (e.g. depending on the type of activity involved)?

Yes. State monopoly is preserved for certain types of activities which can cause a negative effect

on constitutional structure, national security, protection of public order, human rights and liberty,

population’s health. More often the government participates through state owned companies.

2. If so, to what extent?

Usually a state enterprise is created with the government owning 100% of the company. Inrelation to state owned companies it varies depending on the relationship between the

participants of the enterprise.

3. What is the investor's potential liability to partners, investors or others?

Kazakhstani law does not envisage special liability requirements to foreign investors

participating in entities established by such foreign investors in conjunction with the government

of Kazakhstan. As in many other jurisdictions, scope of liability of foreign investors dependsupon such general legal considerations as type of the respective entity, contractual obligations of

the investors, political and country risks, etc.

4. Are there restrictions on capitalization?

There is no restriction in relation to direct government participation.

5. What are the investor's tax consequences? (See also Sections XII and XIII)

As a general rule, which is subject to certain exemptions, foreign investor would be obliged to

pay income tax on dividends received from the entities established by such foreign investors in

conjunction with the Government of Kazakhstan.

B. Joint Ventures

1. Are joint ventures permitted?

Yes, joint ventures are permitted.

2. If so, what is the registration or incorporation procedure?

There is no special procedure for registration of joint ventures. The most commonly used formsfor incorporation of joint ventures are Limited Liability Companies and Joint-Stock Companies.

Please see below the details of registration procedure for LLC.

3. How long do these procedures take?

Please see below.

4. What costs and fees are involved?



24

Please see below.

5.

Must a national of the country or a related state, (e.g. the EEC) be aparticipant, manager or director?

There is no such strict requirement. However, in order to be employed in Kazakhstan, foreigners

must obtain a work permit.

6. What is the investor's potential liability?

Kazakhstan’s law does not envisage special liability requirements to foreign investors participating in entities established by such foreign investors in conjunction with the investors of

Kazakhstan. As in many other jurisdictions, scope of liability of foreign investors depends upon

such general legal considerations as type of the respective entity, contractual obligations of theinvestors, political and country risks, etc.


There are restrictions on foreign capitalization for companies operating in the following spheres:

mass media, banking, insurance and telecommunications. Thus, foreign citizens and entities, as

well as stateless individuals are not allowed to hold more than 20 percent of an entity operating

in the sphere of mass media. The limitation is 49 percent for the companies in the sphere of telecommunications. As to the finance sector, offshore companies, as well as individuals and

entities affiliated with offshore companies cannot participate in the companies in banking and

insurance sectors.

8. What are the investor's tax consequences?

As a general rule, which is subject to certain exemptions, foreign investor would be obliged to pay income tax on dividends received from the joint ventures registered in Kazakhstan.

C. Limited Liability Companies

1. Are limited liability companies permitted?

Yes, limited liability companies are permitted.

2. If so, how are they registered or incorporated?

All the legal entities except for the participants of the Regional Financial Centre of Almaty city

(hereinafter – RFCA) are registered through the Justice bodies of the Republic of Kazakhstan.The legal entities which are participants of the RFCA are registered through the Agency of the

Republic of Kazakhstan on Regulation of Activities of the RFCA.In order to register a legal entity, the following documents must be submitted to the registering

body: an application filled in the form established by the Ministry of Justice of the Republic of

Kazakhstan (for the RFCA participants – in the form established by the Agency of the Republicof Kazakhstan on Regulation of Activities of the RFCA), founding documents (charter,

foundation agreement of an entity with several participants or resolution on foundation of the

legal entity for an entity with one participant) composed in both Kazakh and Russian languages

in 3 copies.



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There are some cases when additional permit from either the National bank of the Republic of

Kazakhstan or the Agency of the Republic of Kazakhstan on Regulation and Supervision of

Financial Market and Financial Organizations, or the Agency of the Republic of Kazakhstan for Competition Protection is required in order to register a legal entity.

If a legal entity is founded by another legal entity, additional certificate from the local tax

authority, stating that the founder entity has no tax arrears, is needed.In addition, a document certifying the location of the legal entity (notarized copy of leasing

contract, purchase-sale contract or other document confirming the ownership rights to the real

estate, etc.) must be provided.In order to register an entity with foreign participants the following documents must be provided

to the registering body along with the documents stated above: a legalized extract from trade

register or other legalized document certifying that the foreign participant (legal entity) is a legalentity under the laws of the foreign country, with notarized translations in Kazakh and Russian

languages; a copy of passport or other personal identification document of the foreign participant

(individual) with notarized translations in Kazakh and Russian languages.Finally, the state duty for registration, in the amount of 6.5 Monthly Calculation Indexes

(hereinafter – MCI) for medium and large sized limited liability companies, and 2 MCI for small

sized limited liability companies, must be paid and the receipt must be attached to the documents

(1 MCI ≈ USD 9.42 as of February 2010).


Generally, overall registration procedure, which includes registration with state registrar,statistics authorities and tax authorities, takes up to 2 weeks for small businesses and up to 3

weeks for medium and large businesses.


There is a minimum charter capital fee for a limited liability company in the amount equal to one

hundred KZT for the small sized limited liability companies (KZT 100 ≈ USD 1.5 as of February

2010), and one hundred MCI for the medium and large sized limited liability companies. Theseamounts must be paid prior to state registration of the company and the rest of the contributions

(if any) - within one year after the state registration.

Also there are such expenses as notary's fees for certification of the charter and the resolution onfoundation or foundation agreement, state duty for registration of a limited liability company,

official payments for obtaining a seal and opening of bank accounts, as well as fees of

consultants, if necessary.

5. Must a national of the country or a related state be a participant, manager or

director?

There is no requirement to appoint citizens of Kazakhstan as managers or directors of limited

liability companies established in Kazakhstan. Additionally, participation of legal entitiesestablished in Kazakhstan or citizens of Kazakhstan in limited liability companies is not

required. It should be noted, however, that appointment of foreign citizens to such positions

requires prior obtaining of work permits by the legal entities acting as employers. Work permits

are issued by the local state authority on employment and social programs.



26


Yes. Such restrictions inter alia include: (i) prohibition to increase charter capital of the company prior to full payment of the previous amount of the charter capital by its participants; (ii)

prohibition of the use of personal non-property rights for the purposes of charter capital

formation.


As a general rule, which is subject to certain exemptions, foreign investor would be obliged to pay income tax on dividends received from the limited liability companies registered in

Kazakhstan.

D. Liability Companies, Unlimited

1. What are the forms of liability companies?

Kazakhstani law allows establishment of additional liability companies in Kazakhstan in addition

to limited liability companies described above. Participants of an additional liability company

bear liability for the company’s obligations with their contributions to the charter capital, in case

of its insufficiency – with their property multiplied by their contributions.

2. How are these companies registered or incorporated?

Additional liability companies in Kazakhstan are incorporated and registered under the samerules as limited liability companies.


Duration of registration procedures is similar to that established and described for limited

liability companies.


Similar to those established and described for limited liability companies (including minimum

charter capital formation expenses).

5. Must a national of the country be a participant, manager or director?

No. Please see the comment to the relevant question in the Section C above.

E. Partnerships, General or Limited

1. Are partnerships recognized or permitted?

Yes. Partnerships in Kazakhstan can exist in the following five forms: (i) full partnership, when

all participants (partners) bear additional joint liability with all of their property for the partnership's obligations; (ii) limited partnership, when some participant(s) (partners) bear joint

liability for the obligations of the partnership with all their property (full partners) and some

participants bear liability only in the amount of their contributions to the partnership (limited

partners); (iii) simple partnership, which is not registered with the State Registering body of



27

Kazakhstan as it is not recognized as a legal entity and constitute a separate form of joint activity

agreement; (iv) limited liability partnership as described above; and (v) additional liability

partnership as described above.

2. Must a national of the country or related state be a partner?

No. Please see the comment to the relevant question in the Section C above.

3. If so, to what extent?

N/A


Similar to those established and described for limited liability companies. There is a minimumcharter capital of a full partnership at the amount equal to twenty-five MCI and a minimum

charter capital of a limited partnership at the amount equal to fifty MCI.


In full partnerships all of the participants (partners) bear additional joint liability for the

partnership’s obligations with all of their property. In limited partnerships full partners bear

additional joint liability for the obligations of the partnership with all of their property, whereasliability of other participants (limited partners) is limited to the amount of their contributions.


Taxation of dividends. Please see the comment to the relevant question in the Section C above.

F. Partnerships, Undisclosed

1. Do undisclosed partnerships exist?

Yes. Simple partnership is not registered with the State Registering body of Kazakhstan, as it is

not recognized as a legal entity and constitutes a separate form of joint activity agreement.

2. If so, how are they formed?

Simple partnership is formed on the basis of a joint activity agreement with the aim to make a profit or achieve any other goal not conflicting with the laws of the Republic of Kazakhstan.


No costs are involved in the process of forming a simple partnership.

4. Must a national of the country or a related state be a participant, manager or

director?

There is no such requirement.


Investor’s liability depends on his/her contractual obligations.



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No specific implications.

However, as any other income gained on the territory of the Republic of Kazakhstan, incomegained by a foreign investor on the territory of the Republic of Kazakhstan through simple

partnerships is subject to the income tax.

Depending on the type and duration of the foreign investor’s participation in the simple partnership’s activity it may lead to foundation of a permanent establishment of the foreign

investor in Kazakhstan and additional taxation on this permanent establishment.

G. Sole Proprietorships

1. Can the investor be a sole proprietor?

Foreign citizens and individuals without citizenship cannot be sole proprietors in Kazakhstan

except for oralmans – individuals of Kazakh origin who had permanent residence outside of the

Republic of Kazakhstan at the moment of Kazakhstan’s gaining sovereignty. In general, there areno restrictions as to citizens of Kazakhstan in terms of establishing a sole proprietorship.

2. How is the sole proprietorship registered or established?

Sole proprietorship is not recognized as a legal entity under Kazakhstani laws. An individualmust submit the following documents to the local tax body in order to be registered as a sole

proprietor: application for receiving a certificate of sole proprietor in the form established by the

Ministry of State Income of the Republic of Kazakhstan; a copy of ID document with provisionof its original for verification; a document certifying the location of the sole proprietor (house

register or a real estate title); 2 photos of 3x4 cm; receipt confirming payment of the applicable

state duty.

3. How long does this process take?

An individual receives a certificate of sole proprietor within 1 business day after the submission

of the necessary documents mentioned above.


Registration duty in the amount of 2 MCI (approximately USD 19) must be paid in order toregister a sole proprietorship in the local tax body.


The sole proprietor is liable with its all property for the obligations of the sole proprietorship.


The sole proprietorship’s capital is formed of the proprietor’s personal property.


The sole proprietor would be obliged to calculate and pay income and social tax on the income

received from his business activity.



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H. Subsidiaries/Branches/Representative Offices

1.

Can the investor establish a branch, subsidiary or representative office?Under Kazakhstani law, it is possible for either foreign or national investors to establish a

representative office, a branch and a subsidiary in Kazakhstan.

2. If so, how long does registration or incorporation take?

Registration and incorporation of a branch or a representative office of a national investor takes

up to 3 weeks. The term of establishment of a subsidiary depends on the type of a subsidiary (alimited liability company, a joint-stock company etc.).


The costs of establishment of a branch or a representative office by a national investor include

only registration and consultants fees. The costs of establishment of a representative office by a

foreign investor include state duty for registration, notary's and consultants fees. Please refer above for the costs of establishment of a subsidiary in a form of a limited liability company.


Since a representative office and a branch are not separate legal entities, but structuralsubdivisions of a legal entity, the liability of an investor will depend on a parent company which

established a representative office or a branch. As to a subsidiary, the extent of the investor's

liability will be defined by a specific type of company used for establishment of a subsidiary.Please refer to the above sections for more details.

5. Must a national of the country be a participant, manager or director?

Generally, there are no restrictions that require appointing nationals/foreigners as managers or

directors of a representative office or a branch. Similarly, there are no restrictions as to being a

participant, a manager or a director of a subsidiary. However, foreigners must obtain a work

permit before being employed in Kazakhstan.


There are no restrictions on capitalization of branches and representative offices. Please refer tothe sections above for details on restriction on capitalization of specific companies, which could

be subsidiaries.


8. Are these tax consequences different than those of a local company?

Incorporation of a branch or a representative office, except for the representative offices meant

for preliminary and auxiliary work, leads to foundation of a permanent establishment of the

foreign investor in Kazakhstan.Generally taxation of the permanent establishment is very similar to taxation of a local company.

Thus, corporate income tax is calculated by the same token as the corporate income tax of the

local companies. However, foreign investors should be aware that after paying the corporate



30

income tax they would also be obliged to pay corporate income tax on the net profit reduced on

the amount of the already paid corporate income tax.

I. Trusts and other Fiduciary Entities

1. Are trusts or other fiduciary entities recognized?

Trusts are not recognized in Kazakhstan, while organizations similar to fiduciary entities –

investment funds exist under the laws of the Republic of Kazakhstan.

2. If so, how are each defined?

There are two types of investment funds in Kazakhstan: incorporated investment funds and

mutual funds. Incorporated investment fund is defined as a joint-stock company the main activityof which is to accumulate and invest the money paid for its shares and the money gained from its

investments. Mutual fund is defined as a sum of money belonging to shareholders and

administered by a managing company gained from the payments made for its shares and from itsinvestments.

3. What are the legal consequences of a transfer of assets to a trust or

fiduciary?

In accordance with the fiduciary management agreement, an investor transfers money to

fiduciary management with aim of joining it with other investors’ money for the following

investments. Acquisition of shares in a mutual fund certifies that an investor has joined thefiduciary management agreement and alienation of the shares means termination of the fiduciary

management agreement. Holders of shares of a mutual fund do not bear liability for the

obligations appeared in relation to fiduciary management of the fund’s assets.

4. Can the investor be the grantor, trustee or beneficiary?

It is possible for an investor to enter an investment fund and to be a grantor of assets.

VIII. REQUIREMENTS FOR THE ESTABLISHMENT OF A BUSINESS

A. Alien Business Law

1. Is the business subject to any alien business law?

There is no special law with regard to this matter. The foreign investor must comply with thegeneral rules provided by the Kazakhstani legislation.

2. Are there registrations or reporting requirements?

According to the Civil Code, registration of a business of a foreign investor is carried out under

the same conditions as registration of a business of Kazakhstani nationals. The foreign investors

may establish a Kazakhstani legal entity that is either entirely controlled by a foreign; or co-

owned as a joint venture with a Kazakhstani partner; or establish a branch or a representativeoffice. The choice of a vehicle is important due to the different financial, legal, commercial and

tax implications arising there from.



31

There are no special reporting requirements for a foreign business. Business of a foreign investor

must follow the same reporting procedures as the business of nationals of the Republic of

Kazakhstan.

B. Antitrust Laws

1. Do the entity's operations comply with anti-trust laws?

To prevent violations of the antitrust legislation, the Agency of the Republic of Kazakhstan for

Competition Protection controls economic concentrations. Such control is realized through procedure of filing an application to the Kazakhstani antitrust authority if a newly established

business meets certain criteria described in the Law on Competition.

2. Are there filing requirements?

Application for economic concentration shall be submitted to the Kazakhstani antitrust authority

by (1) a person that takes the corresponding decision on economic concentration; (2) thefounders of the market entity; or (3) by the entity purchasing the shares, key production assets

and intangible assets or corresponding rights. If a party of such transaction consists of several

entities, the application shall be filed by one of the entities on behalf of other participants of the

transaction. Application shall be prepared in writing in the form established by the antitrustauthority and shall be supported by additional documents and information specified in the

legislation. The documents and information attached to the application shall be valid and

complete either in originals or in certified copies. The antitrust body checks for the completion of submitted materials and notifies the applicant in writing on either acceptance of the application

for consideration or its denial within 10 days after the application has been received. The period

of the application’s consideration shall not exceed 50 (fifty) calendar days from the moment of the acceptance of the application for its consideration.

C. Environmental Regulations

1. Is the business of the investor subject to environmental regulation?

Those activities which have effect on the environment and require receipt of permissions or

licenses can be carried out only after obligatory permissions or licenses are obtained. The process of obtaining permissions and licenses is regulated by the Law on Licensing and some

other by-laws of the Republic of Kazakhstan. Prior to commencing activities with significant

impact on the environment, an environmental impact assessment has to be carried out.Companies engaged in environmentally hazardous business activities are subject to the

mandatory requirement of obtaining environmental insurance covering potential damage as aresult of the environmental contamination.

2. If so, are there added costs involved (e.g. audit requirements)?

Pursuant to the Ecological Code, audit requirements are carried out by an environmental impact

assessment report of individuals or legal entities. Ecological audit can be held in form of

mandatory audit and initiative audit.

The grounds for a compulsory ecological audit are:



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1) Significant damages on environment caused by business activities of individuals and

legal entities;

2) Reorganization of a nature user that carries out ecologically dangerous types of activity;3) Bankruptcy of a nature user that carries out ecologically dangerous types of activity;

Initiated ecological audit is held at instigation of an individual or a legal entity in accordance

with a contract established between the initiator and an ecological audit authority.Involved costs may vary.

D. Government Approvals

1. Are government approvals required for the anticipated business?

2. If so, how long does this process take?

3. What fees are involved?

Kazakhstan legislation envisaged the principles of freedom of entrepreneurial activity. It shall be

treated as the right of any person to conduct any business activity unless the law prohibitsconducting this type of activity or the law requires obtainment of a license for being engaged in

it. Please, refer to the part on licenses/permits below for information regarding licenses and

permits envisaged by the Kazakhstani law.

E. Insurance

1. Must the enterprise carry insurance?

Applicable legislation provides for particular cases when an enterprise is obliged to carry

insurance. Please see below.

2. If so, what kind of risks must be insured?

The Law of the Republic of Kazakhstan on Mandatory Insurance of Civil Liability of Employer

for Causing Damage to Life and Health of Employees Carrying out Labor Obligations provides

for the following kinds of risks to be insured by an employer: professional disability of employees and accidents with employees at work place. Also, Kazakhstani laws set forth the list

of other risks subject to mandatory insurance. For instance, the following risks are assigned to

this category: insurance of liability of transporters, insurance of liability of travel agents and etc.

3. Is there a state monopoly on insurance?

There is no state monopoly on insurance. Insurance activities can be carried out by either privateor state companies.

F. Licenses/Permits

1. Are licenses or permits required for the anticipated activity?

Kazakhstani laws contain exhaustive list of activities which require licenses and/or permits.

2. If so, how does the investor apply for and receive the necessary license or

permit?



33

The company engaged directly or through its branch or representative offices in the activities,

which require license and/or permit, may apply for a license or a permit. The company shall pay

a fee and provide the authorized licensing authority with the required scope of documents andinformation including documents and information confirming compliance of the applicant with

the licensing requirements foreseen by the legislation for this type of activity. Licenses and

permits are not transferable under Kazakhstani law.

3. How long does it take to receive the license or permit?

Depending on the size of a business it takes usually up to 10 working days or up to 30 workingdays from the day of obtainment of all the required documents and information by the licensing

state authority.

IX. OPERATION OF THE BUSINESS

A. Advertising

1. Are there restrictions on advertising?

Pursuant to the Law on Advertising the following advertising is forbidden (1) of the goods,

works and services prohibited to trade; (2) of non-registered religious organizations and religiousschools.

Also, advertisement may not be used for propaganda or agitation of a forced reform of the

constitutional system; violation of integrity of the Republic of Kazakhstan; detriment of thesecurity of the state; fomentation of social, race, national, religious, class and tribal discord;

worship of brutality and violence; pornography; and distribution of information containing state

secrets and other secrets protected by the legislation of the Republic of Kazakhstan.

B. Attorneys

1. Is it necessary to have local counsel?

Kazakhstani law does not require compulsory engagement of local legal counsels for the

purposes of operation of a business.

2. How can local counsel be found?

There is no specific way to find a local counsel.

3. How much are attorneys’ fees?

Many of Kazakhstan lawyers generally charge according to the number of hours spent on dealingwith a matter. Rates vary, and it is difficult to generalize.

C. Bookkeeping Requirements

1. Must the investor keep local books of accounts?

Kazakhstani companies and representative or branch offices of foreign companies must keep

accounting records and prepare financial reports for income and tax purposes.



34

2. In what form must the investor keep accounts (e.g. GAP, in what language,

etc.)?The books must be kept and financial reports must be prepared in Kazakh and/or Russian

languages. The reporting currency is Tenge.

D. Business Ethics/Codes

1. Are there certain business ethics or codes, which the investor must follow

(e.g. GAAP for accountants, etc.)?

There is the Declaration on the Code of Ethics of Foreign Investors Working in Kazakhstan. It is

not obligatory but is highly recommended by the Foreign Investors Council chaired by the

President of the Republic of Kazakhstan

E. Law Protection Laws

1. Are there consumer protection laws, which apply to the investor's

operations?

Consumers’ protection legislation can be divided into special legislation and legal acts of general

character. Special legislation is composed of the Law of the Republic of Kazakhstan onProtection of Consumers’ Rights and the Civil Code of the Republic of Kazakhstan. The second

type of regulation that is applicable to consumers’ protection is the laws and by-laws of general

character which provide for due quality of goods and compliance of products and services withsanitary and other regulations, for example, the Law of Kazakhstan on Safety of Food Products,

the Code of the Republic of Kazakhstan on Health of People and Health System, the Law of

Kazakhstan on Competition, the Law of Kazakhstan on Natural Monopolies and RegulatedMarkets an so on.

F. Construction

1. What are the costs of construction?

If construction is carried out by means of a state procurement, the cost of performed works will

be paid by the client (the Government) at a rate put in the budget for the current year pursuant tothe order foreseen by the applicable legislative acts and/or contract.

2. Are permits required for construction?

Construction activities are heavily regulated in Kazakhstan and require a number of permits and

approvals. The primary legislative act regulating the area of construction is the Law onConstruction. Most types of construction activities are subject to mandatory licensing in

Kazakhstan. The Law on Licensing provides with a detailed list of construction activities subject

to licensing.

3. How is authorization to construct obtained?

Permission to carry out building and assembly works can be issued by:



35

(1) the competent state authority on architecture, town-building and construction executing

the state architect-constructive control on the quality of construction of the objects of

the republic significance;(2) the local executive authorities of the oblast, city of the republic significance and the

capital executing a state architect-constructive control on the quality of construction of

objects of the local significance.Permission is issued on the basis of an application and enclosed documents.

4. How long does it take to receive authorization?

Within 7 business days from the day of obtainment of all required documents by the competent

state authority.


Free of charge

G. Contracts

1. Can the investor freely enter into local contracts?

Foreign investor can freely enter into local contracts.

2. Can the law of another country govern the contracts?

Pursuant to Kazakhstani law the parties to the contract may choose the law governing their relations, provided that such relations contain a so called “foreign element”. Foreign element is

considered to be present in the relations if one of the below requirements is met:

(1) at least one of the parties is an alien, stateless person or a foreign legal entity;(2) object of the contract is located outside Kazakhstan; or

(3) legal fact, which triggers the arising, alteration or termination of legal relations, took or

is taking place outside Kazakhstan.

H. Price Controls

1. Are there applicable price controls?

Kazakhstani legislation generally does not contain provisions on price control; however,

formation of prices for certain products and services is under the state supervision.

The Law on Natural Monopolies and Regulated Markets provides with a list of areas of regulatedmarkets’ business activity where the prices for certain products, goods and services are under the

state control. These areas are: railway transportation, electric- and heat power industries, petrochemicals and gas, oil transportation, civil aviation, port operations, telecommunication and

postal services.

The competent authority carries out the price expertise in accordance with the procedure of pricesetting established by the Government of Kazakhstan. Based on the results of the expertise, the

competent authority in a month period from the day of receipt of a notice or information on the

released prices sends to a participant of regulated market a motivated conclusion on:

1) Prohibition on increase the prices;



36

2) Decrease of the current or projectable prices to the level of prices founded in accordance with

the procedure of price setting.

The Law also provides with a list of natural monopolies where regulated tariffs or their upper

limits for certain goods (works, services) are set by the competent authority. These monopolies

are:1) Transportation of oil and (or) oil products by main pipelines;

2) Storage and transportation of gas or gas condensate by main and distributing pipelines,

exploitation of gas distributing units and gas distributing pipelines;3) Transfer and distribution of electrical power;

4) Production, transfer, distribution and supply of heat power;

5) Railway network;6) Runways;

7) Aeronavigation;

9) Ports, airports;10) And some others.

Regulated tariffs cannot be less than the cost of input necessary for providing the goods (works,

services). Tariffs or their upper limits can be established once a year.

I. Product Registration

1. Must the entity register its product?

2. If so, how is registration obtained?

3. How long does the process take?

4. Are there fees involved?

Certain goods and equipment produced in Kazakhstan or imported into Kazakhstan must comply

with Kazakhstani standards of quality and must have a certificate of conformity with such

standards. Testing and issuance of certificates of conformity are performed in Kazakhstan,

except for the cases when Kazakhstan recognizes certificates of conformity issued abroad.Pursuant to the Law on Technical Regulations certification of the products’ quality is carried out

by:

1) the producer (manufacturer) of products in the form of passing the declaration onconformity;

2) the consumer of products in the form of carrying out a certification under his

instructions by the authority on quality certification;3) the authority on quality certification in the form of carrying out certification and issuing

a certificate of conformity.The quality certification of a product can be as compulsory or voluntary.

The compulsory quality certification is carried out in the following forms:

1) Passing the declaration on conformity;2) Carrying out the required certification.

The compulsory certification of product is carried out by compliance to the requirements and by

schemes of quality confirmation stated in the technical regulations. Technical experts can be

involved in the compulsory quality certification of products.



37

The quality certificate is issued only upon passing the tests foreseen for the chosen scheme of

quality confirmation.

The voluntary quality certification of products, services and processes is carried out at theinitiative and requirements of an applicant on a contract base.

The quality certification carried out by the foreign states is recognized in accordance with

international agreements.

J. Reductions or Return on Capital

1. Can capital be repatriated while the corporation is still ongoing?

According to the Law on Currency Regulation and Currency Control, repatriation of national and

foreign capital involves crediting of the bank accounts with:

(1) Profits from the sale of goods and rendering works and services in national and foreigncurrencies;

(2) Return of money in national and foreign currencies in case of breach of the undertakenobligation or incomplete performance of the undertaken obligations.Resident of Kazakhstan, party to a transaction, must ensure compliance with requirements of the

repatriation set by the National Bank of Kazakhstan. Applicable period of repatriation shall be

accounted on the basis of performance of the obligations undertaken by the parties to a currencyagreement as well as in accordance with the regulatory legal act of the National Bank of

Kazakhstan.

K. Sale of Goods

1. Are there restrictions on the manner, time or place of sale of goods?

Kazakhstan applies certain types of restrictions on sale of goods such as tobacco, alcohol,weapons, drugs and certain other potentially hazardous products.

L. Trade Associations

1. Are there trade associations the investor can or must join?

2. If so, are there fees involved?

3. Are there mandatory trade practices?

There is no direct obligation to join trade associations. In Kazakhstan, there is the Union of Chambers of Commerce and Industry of the Republic of Kazakhstan, which is a non-

commercial, non-state, self-financial organization that integrates individuals and legal entities of

the Republic of Kazakhstan. Membership is not obligatory and, therefore, mandatory trade practices exist only for members. The annual fee of contribution varies from USD 100 for toUSD 500 depending on the size of the company.

X. CESSATION OR TERMINATION OF BUSINESS

A. Termination



38

1. What are the tax consequences of terminating the business?

No special tax consequences arise from terminating a business. All the outstanding taxes and

payments owed to the budget must be paid within 10 calendar days from the date of submissionof the liquidation tax return. By rule, liquidation procedure is also accompanied by a tax

documentary inspection carried out by the tax authorities.

Upon clearance of the taxes payable, completion of the inspection and delivery of theinformation on closing of bank accounts to the tax authorities, tax authorities provide the tax

payer with information on absence of arrears in payment of taxes. From this moment relations

with the tax authorities are considered as ended.

2. What costs are involved in termination?

There are costs related to the work of a liquidation commission. As a rule, such costs are notsignificant. The amount is established on the case by case basis.

3. How long does it take to terminate the business?

Generally, termination of the business takes 3-6 months. However, there might be complicated

cases when liquidation lasts years.

4. How is the investor's particular form of business treated in termination?

Suspension of a company may be carried out voluntarily or compulsory by means of a court

decision. Depending on the type of a company, compulsory liquidation must take place in the

following cases:1) Bankruptcy;

2) Nullification of the state registration due to violation of the state requirements during the

state registration;3) Carrying out an activity without obligatory permit (license), an activity forbidden by the

law, or with repeated or gross violation of the applicable legislation;

4) Reduction of the charter capital to an amount less than a minimal obligatory amount of

the charter capital set by the legislation;5) Failure to form the charter capital of the partnership within the timeframe prescribed by

the law;

6) Other cases foreseen by the legislation of Kazakhstan.Liquidation is handled by a liquidation commission that is authorized to manage the company in

the period of liquidation; and it is appointed by decision of a court or by decision of a general

meeting of participants.Liquidation procedure is regulated by the Civil Code of the Republic of Kazakhstan and by the

Law on Bankruptcy.

5. Can the business be terminated without government approval or

intervention?

Generally, the business can be terminated without governmental approval or intervention upon

decision of its owners. However, the termination procedure always involves close interaction

with different state authorities.



39

6. What are the obligations toward creditors, employees and others upon

termination?

Pursuant to the Civil Code of Kazakhstan, payments to creditors of a liquidated legal entity arecarried out by the liquidation commission in order of the following priority:

1) Alimonies withheld from wages and/or from other earnings, as well as claims of individuals

to compensate the harm to life and health caused by the legal entity under liquidation procedure;

2) Salary and compensation payments to employees; debt on social deductions to the State

Fund of Social Insurance; compulsory pension contributions withheld from the salaries; aswell as royalties under copyright agreements except for the cases when part of the

abovementioned obligations shall be compensated together with the 5th

priority payments;

3) Creditors` claims secured by a pledge of property of the legal entity under liquidation procedure up to the amount of pledge except for the claims of holders of the mortgage

bonds and holders of the state securities;

4) Tax and other mandatory payments to the state budget;5) Payments to other creditors.

B. Insolvency/Bankruptcy

1. What is the extent of the investor's liability in the event of insolvency or

bankruptcy?

The investor's liability depends on the type of a company. The investor of a joint-stock companymay be liable by the value of its stake only. The investor of a limited liability company may be

liable by its contribution to the company's charter capital only. The investors of an additional

liability company or a full liability company may be subject to additional liability or full liability by all assets owned by them. In case the investors have not paid their contributions in full, they

may also be subject to additional liability in the amount of non-paid contributions.

2. What choices, if any, are available to the investor with regard to the

restructuring of the business?

The Civil Code states the following types of reorganization of a legal entity:

1. Merger;2. Affiliation;

3. Division;

4. Separation, and5. Reshaping.

Reorganization can be voluntary or compulsory. Voluntary reorganization is carried out on the basis of a decision made by the company’s owner, by an authorized body of the owner, by the

shareholders (participants), or also by the authority that is competent to make such decisions by

constituent documents of the legal entity. Sufficient base for compulsory reorganization is acourt decision in the cases stated by the legislation of Kazakhstan.

XI. LABOR LEGISLATION, RELATION, AND SUPPLY



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A. Employer/Employee Relations

1. What laws govern employer/employee relations?

The Labor Code of the Republic of Kazakhstan

2. Are there obligations to train employees?

The Labor Code states that the employer is entitled to perform professional trainings, retrainingand skills development courses for employees or other individuals (who are not in labor

relations with this company) directly within the company or by using services of educational

organizations of elementary level education, secondary level education, high level education and postgraduate study.

The employer is obliged to create conditions allowing employees to combine their work with

professional trainings, retraining and skills development courses.Obligations of the employer with regard to the professional trainings, retraining and skills

development courses for employees may be included in the labor agreements and collective labor

agreements.

B. Employment Regulations

1. Must the investor hire nationals of the country?

Investor must hire nationals as long as the human resources are available; if they are not, then

investor can bring in foreign employees.

2. Is there a minimum wage?

There is a minimum wage set by the legislation of Kazakhstan. Monthly salary of an employee

may not be lower than the minimum monthly wage of 14 952 Tenge for year 2010(approximately USD 100).

3. Is there a maximum number of hours an employee can work each week?

Maximum working hours are 40 hours per week

4. Is there a minimum number of vacation and sick days to be given?

The minimum payable vacation is 24 calendar days (excluding official holidays).

C. Hiring and Firing Requirements

1. Must the investor employ a minimum number of people?

There is no such criterion. However, amount of employed personal may influence the status of alegal entity (small, medium or large size business).

2. Must the investor employ a minimum number of nationals?

Kazakhstani law does not provide with a direct requirement to employ a minimum number of

nationals.

3. Must nationals hold certain positions in the company?



41

As a general rule, if there are nationals qualified to hold a position within the company they have

priority over expatriate employees.

4. Are there rules to follow in hiring/dismissing personnel (e.g. notice)?

Kazakhstani legislation recognizes the difference between fair/justified and unfair/unjustified

dismissals. Labor Code provides with an exhaustive list of grounds for dismissal that could begrouped as follows (1) caused by economical reasons (winding up of the employer and

redundancy); (2) caused by faulty actions of an employee (violation of trade discipline,

divulgence of state/commercial secrets and etc.); and (3) caused by personality of employee butnot connected to his/her faulty actions (inaptitude to the position held due to health related

reasons, inaptitude to the position held due to lack of experience and etc.).

Depending on the ground for dismissal there are different requirements to be fulfilled by theemployer. For example, when the dismissal is caused by economical reasons the employer is

obliged to notify the employee in writing one month prior to termination of the contract of

employment, unless a longer period of notification is stated in the contract of employment or incollective agreement. In most of the cases when dismissal is caused by faulty actions of the

employee the employer is obliged to take disciplinary penalties and only upon recurrence of such

faulty actions of employee the employer may dismiss this employee.

In case of unfair/unjustified dismissals the employee, upon his/her discretion, may file a claim tothe court or mitigation committee organized by representatives of the employer and employees

on principles of parity.

5. Does the investor have a continuing obligation towards dismissed employees?

The investor shall have no continuing obligation towards dismissed employees.

D. Labor Availability

1. Is adequate skilled or unskilled labor available for the anticipated business?

Both skilled and unskilled labor is available for the anticipated business: experienced employeesand workers, graduates of Kazakhstan and foreign universities, working students.

E. Labor Permits

1. Are labor permits required?

According to the Law on Migration, the labor permits for foreign workers fall under four categories:

1) Category 1 – for engaging senior managers with higher education and at least 5 years of work experience on the executive positions in the respective industry;

2) Category 2 – for engaging managers and specialists, who meet qualification requirements

set by the Qualifications Sourcebook of Positions of Executive, Specialists and Other Employees;

3) Category 3 – for engaging high skilled workers with respective professional education and

work experience in accordance with the Common Sourcebook of Tariffs and Qualifying



42

Requirements for Occupations and Professions, tariff and qualifying characteristics of

workers;

4) Category 4 – for engaging workers occupied with seasonal agricultural works in accordancewith agreements on cooperation in labor migration and social security of labor migrants.

The competent authority shall grant permits if there are available vacancies within quota

distributed by the central governmental authority and it is not possible to meet demands in alabor force at the domestic labor market.

To search for respective candidates at the domestic labor market, the employer must publish

announcements about available vacancies in national and local periodicals.

2. If so, how are they obtained?

To obtain a labor permit for a foreigner an employer should submit rather wide scope of relateddocuments and information to the Employment Office. The labor permits are primarily issued for

one year and may be prolonged for another year. For the prolongation of the term the employer

should submit the same scope of documents and information as for issuance of the labor permitto the Employment Office not later than one month prior to the expiration of the issued labor

permit.

3. How long does the process take?

As a rule, the process of receipt of the labor permit takes from 2 to 3 months.


N/A

F. Safety Standards

1. Are there safety codes that must be followed?

The Labor Code of Kazakhstan provides the general scope of safety and health standards that

need to be complied with. It contains general information on creation of safe work conditions,issue of state legislative acts and regulations with regard to safety codes control over employers

and employees’ compliance with safety regulations and etc. Detailed safety codes for almost

every economy sector can be found in regulations adopted by the respective state authorities

G. Unions

1. Are unions recognized?

2. What are the unions in the investor's business?3. What are these unions' political affiliations, if any?

4. Is there an obligation on the part of the employer to organize unions?

The legislation of Kazakhstan recognizes professional unions. They are created voluntarily by

individuals on the basis of community of their professional interests for presenting and

protecting labor and other social, economical rights and interests of its members and for improving labor conditions.

There is no obligation on the part of the employer to organize unions.



43

Unions may be freely established and act. Establishment of a union does not require registration

with or obtainment of any permit from the state authorities. In addition, there is no political

affiliations exist.

5. Are there mandatory collective bargaining agreements for the business

involved?

The Labor Code of Kazakhstan provides with liability of one party (the employer or employees)

receiving a notification from another party (the employer or employees) to participate in

negotiations on entering a collective labor agreement. The notified party has to decide on itwithin 10 days and enter into negotiations.

XII. TAX ON CORPORATIONS

Taxation in Kazakhstan is imposed on legal entities (companies) and individuals.

Resident companies and foreign entities conducting business in Kazakhstan through their permanent establishments are taxed based on their worldwide profits at 20% rate.

Non-resident companies are taxed based on their Kazakhstan-source income; worldwide income

gained inter alia through employees or hired personal; and income gained in other jurisdictions

by non-residents and their business units though conducting business activity analogous to theactivity of the permanent establishment in Kazakhstan.

A. Deductible Items and Allowances

In general, all business-related expenses incurred by a taxpayer are deductible unless the

deduction is specifically disallowed.Expenses which are not deductible for Kazakhstan tax purposes include any expenses which are

not related to the taxpayer’s business activity or not supported by relevant documents.

Deductibility of certain expenses is limited. Illustrative list of cases when deduction is not

available or limited is below:

• Expenses which are not related to the business activity;

• Payments to the enterprises recognized as “fake” enterprises by the court

decision;

• Payments to the taxpayer recognized as “idle” enterprise according to the tax

legislation;

• Payments under contracts recognized by the court as conducted without intentionto carry out entrepreneur activity;

• Penalties and fines paid to the state budget except for the penalties and fines paid

under state procurement contracts;

• The positive difference between allowable size of the deduction and the factual

size of the expenses;

• The positive difference between the mandatory payments paid to the budget andthe size of such mandatory payments set by the legislation;



44

• Expenses in relation to purchase, production, building, assembly, installation andother expenses which shall be included in the cost of the social facilities as well

as exploitation costs;• Cost of the property passed by the taxpayer free of charge, cost of the free of

charge rendered services and executed works unless otherwise is stated by thetax legislation;

• Excess of the input VAT over the output VAT (this applies to the companies processing agricultural raw materials);

• Contributions to the reserve funds unless otherwise is not clearly stated by the

tax legislation;

• Cost of the inventory passed under the contract of purchase and sale of the

enterprise as a property complex;

• Amount of the additional transfer made by the subsoil user acting under

production sharing contract;• Expenses included in the initial cost of the assets exempt from depreciation.

Fixed assets as they are determined by the tax legislation are subject to depreciation.

Depreciation allowance is assessed on monthly basis and is computed using reducing-balance

method. Depreciable assets are pooled in four groups with depreciation rates from 10%(buildings) to 40% (computers) per year.

B. Calculation of Taxes

Taxable income of resident companies is determined as an “adjusted” gross income of a taxpayer

less deductible expenses and depreciation allowances.

C. Capital Gains

Capital gains are taxed as business ordinary income.

D. Tax Losses

Tax losses may be carried forward to further 10 taxable years except for the short list of the taxlosses which are treated differently by the tax legislation.

E. Filing and Payment Requirements

Taxable period is one calendar year (from January 01 until December 31 inclusively). Corporate

income tax returns are filed until March 31 of the year following the taxable year. The tax duemust be paid within 10 days after the deadline for filing the tax return. Tax is paid in the amount

exceeding amount of the corporate tax advance payments paid to the budget on monthly basis

throughout the taxable period.



45

The following entities are entitled to not account and to not make the corporate tax advance

payments:

• Taxpayers if their annual income does not exceed 325000 MCI;

• Recently registered taxpayers in the taxable period when they are registered bythe Ministry of Justice as well as during the next taxable period;

• Foreign entities recently registered as taxpayers conducting business inKazakhstan through their permanent establishments without creating a

representative office or a subsidiary within the period when they are registered by the tax bodies as well as during the next taxable period.

F. Withholding Tax (WHT)

WHT at 20% standard rate applies to payments of Kazakhstani source income to non-residententities conducting business in Kazakhstan not through a permanent establishment. WHT taxableincome includes: income from any business activity conducted in Kazakhstan; management,

consulting, finance, audit and legal services rendered outside of Kazakhstan rendered to

Kazakhstan legal entities or to foreign entities if such services are connected to the activity

conducted by the registered in Kazakhstan permanent establishment of such foreign entity;capital gains from sale of property located in Kazakhstan, sale of securities issued by a

Kazakhstani legal entity, sale of equity share in legal entities, consortium located in Kazakhstan

as well as sale of equity shares of non-Kazakhstani legal entity or consortium if 50% or more of such equity shares consists of property located in Kazakhstan, income from international

transportation services and transport services rendered in Kazakhstan, personal income of non-

residents (salary, bonus, relocation compensation and so on).Starting January 01, 2013 until January 01, 2014 WHT rate will be 17,5% and after January 01,

2014 it will vary from 5% to 20% depending on the type of income.

Withholding tax can be reduced or eliminated under a relevant income tax treaty.

G. Value Added Tax (VAT)

VAT is applicable to (1) the disposal of goods and services in Kazakhstan; (2) purchase by theVAT-payers services rendered by the non-residents which are not VAT-payers and do not act

through branch or subsidiary offices, and (3) import of goods into Kazakhstan.

VAT-payers are those Kazakhstani legal entities, entrepreneurs, non-residents acting inKazakhstan through branch or subsidiary offices and entrusted administrators registered as VAT-

payers in Kazakhstan.

The rates are as follows:

• Standard rate on domestic supplies of goods and services and the importation of

goods and services is 12%;

• Export of goods and limited range of services and disposal of goods are zero-

rated.



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Some important transactions exempted from VAT include financial services, transactions with

securities, insurance services and others listed by the tax legislation.

H. Other Taxes

Other taxes applicable to Kazakhstani businesses include:

• Excise tax on certain products (alcohol, tobacco products, beer, petrol and dieselfuel, cars, crude oil and gas condensate);

• Resource rent tax is paid by those individuals and legal entities who export crude

oil, gas condensate and coal, except for subsoil users exporting crude oil and gascondensate under production sharing agreements concluded prior January 01,

2009 or contracts on subsoil use approved by the President of Kazakhstan;• Special payments and taxes imposed on subsoil users (lumpsum bonus for the

right to work on the contract territory or commercial discovery bonus;

compensation of past costs; mineral resources extraction tax; excess profit tax);

• Social tax;

• Tax on transport vehicles payable by owners of the transport vehicles;

• Land tax payable by landowners;

• Property tax paid by the owners of the immovable property;

• Gaming tax imposed on entities rendering casino, slots arcade, totalizator and betting office services;

• Fixed tax payable by entities rendering services using gambling machines without

gain, personal computers for gaming; bowling alleys; carts and billiard tables; • Environmental pollution charges for emissions of contaminants and other charges.

Filing and payment requirements are set by the tax legislation and vary depending on the type of

tax.

I. Registration Duties

1. Are there registration duties due upon the incorporation of a company?

Incorporation of a company requires payment of certain duties, including:

- state duty of approximately USD 62 (EUR 45) except for small business company

(annual average amount of employees is no more than 50 persons and annualaverage value of assets is no more than approximately USD 573 000 (EUR 418

000) state duty of approximately USD 19 (EUR 14);

- cost of a corporate seal of approximately USD 37 (EUR 27);- notary fees of approximately USD 7 (EUR 5) for notarization of each signature.

2. Are there registration duties due upon an increase in capital?

Charter capital increase requires payment of certain costs, including:



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- notary fees of approximately USD 7 (EUR 5) for notarization of each signature.

3.

Are there registration duties due upon the transfer of the company's shares?The transfer of the company's shares, except for the cases when maintenance of the register of

the participants is handled by the professional market player licensed to conduct maintenance of

the register of the security holders, requires payment of certain duties, including:- state duty of approximately USD 62 (EUR 45) except for small business company

(annual average amount of employees is no more than 50 persons and annual

average value of assets is no more than approximately USD 573 000 (EUR 418000) state duty of approximately USD 19 (EUR 14);

- notary fees of approximately USD 7 (EUR 5) for notarization of each signature.

4. Are there registration duties due upon a transfer of corporate assets?

There are registration duties due upon a transfer of real estate objects, land plots, transport and

certain rights the amount whereof depends on the object of transfer.

5. Are there any other registration duties due?

There are registration duties due for registration of changes to the charter such as reduction of the

charter and change of the name. Other changes to the charter will be handled without collectionof the duties.

J. Social Security Contributions

Payment of social contributions is executed by the employers on monthly basis. It is paid from

the employers’ budget and accounted as 5% of the employees’ income. However, the maximumtaxable income is approximately USD 95 500 (EUR 69 600).

XIII. PERSONAL INCOME TAX AND OTHER PAYROLL TAXES

A. Personal Income Tax

Resident individuals are subject to personal income tax (“PIT”) on their worldwide income. Mosttypes of income are taxed at the standard rate of 10% except for the income in the form of

dividends which is taxed at the rate of 5%.

Non-resident individuals are taxed on most types of Kazakhstani source income at a double PITrate (i.e. 20%). However, a lower rate under tax treaty may apply, also all the employment

income of the non-residents working under employment contracts is taxed the same 10 % rate asthe resident individuals’ income.

B. Tax Residence

An individual is a tax resident of Kazakhstan if he resides in Kazakhstan or if his center of vital

interest is in Kazakhstan.

Individual is considered a non-resident for tax purposes if he does not qualify as a resident under

applicable rules of days of residence.



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It is considered that individual has the center of vital interest in Kazakhstan if (1) the individual

is the citizen of Kazakhstan or has a resident permit; (2) family or relatives of the individual

reside in Kazakhstan; and (3) the individual or his relatives possess or in any time have an accessto the property for living.

C. Taxable Income. Exemptions

Residents are subject to tax on any type of income received or accrued in Kazakhstan or abroad

except for certain items that are specifically excluded from taxable income.Some important items of income that are not subject to PIT include:

• Interest on deposit bank accounts;

• Interest on debt securities;

• Interest on state equity securities and agency bonds, capital gains from sale of

state equity securities and agency bonds;• Dividends from non-resident entity if share ownership has lasted over 3 years and

50% or more of the shares is not possessed by subsoil users;

• Prizes in state lotteries and so on.

D. Employment Income

Salaries, wages and any other remuneration of resident employees (“employment-relatedincome”) are subject to 10% PIT. Tax is withheld by the employer and paid to the budget on

monthly basis.

As a rule, benefits in kind are taxable as employment income except for some items which are not

considered as income for the PIT purposes ( for example: cost of the distributed work wear, safetyshoes, personal protection equipment, first aid means and so on; benefit in form of transportation from

the place of residence in Kazakhstan to the place of work and back) and some non-taxable items (for example: payments by employers for education of employees; payments by employers for

transportation expenses of employees to the place of study and back).

The standard personal allowance is equal to the minimum wage and in 2010 is approximately USD100 (EUR 74).

Besides the standard personal allowance, the tax legislation provides with an exhaustive list of other

available deductions. They are:

• amount of obligatory pension contributions;

• amount of the voluntary pension contributions;

• amount of the insurance premiums paid under accumulative insurance contracts;• amount of loan fees paid under loan agreements concluded in accordance with

legislation on residential building savings;

• amount of medical services within applicable limits.Salary of non-tax resident employees earned in Kazakhstan under employment contracts is

subject to 10% PIT which is withheld by the employer and paid to the budget on monthly basis.

Taxable income of non-tax resident employees also includes such in kind benefits as feeding,housing, vacation expenses and so on.



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E. Pension Contributions

Tax residents make pension contributions at 10% from their taxable income. Amount of the

pension contribution is withheld by the employers on monthly basis.

F. Capital Gains

Generally, gains from transactions with immovable property, land plots, securities, equity share and

motor vehicles are subject to PIT at 10% or 20% rate depending on residency of the taxpayer;

exceptions from this rule are expressly stated by the tax legislation.

G. Taxation of Inheritance

As a general rule, there is no income tax on inheritance.

H. Miscellaneous Taxes Due

Other material taxes applicable to individuals include:

• Tax on transport vehicles payable by owners of the transport vehicles. This tax is payable on annual basis and its amount depends on the volume of the vehicle’s

engine;

• Land tax payable by landowners is paid on annual basis and its amount isdependent on a number of criteria (e.g. size of the plot, location);

• Property tax paid by the owners of the immovable property is paid on annual basis

and its amount is dependent on a number of criteria (e.g. location, floor).

I. Filing and Payment Requirements

Employers and other legal entities which pay salary or other types of income to individuals are

defined as tax agents responsible for withholding PIT and payment to the budget. Tax agents who failto withhold the tax are, in certain cases, responsible for payment of tax liability and are responsible for

payment of taxes.

Individual is required to file personal income tax return only if the income was not received from taxagents.

XIV. GENERAL TAX CONSIDERATIONS

A. Tax Systems



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Kazakhstan tax system is quite simple. The main legislative act governing tax relations is the Tax

Code adopted on December 10, 2008 and intended to replace the previous Tax Code of June 12, 2001.

However, in the present time tax legislation is facing transitional period when not all the provisions of the new Tax Code are in force. It is always necessary to verify status of the provision with the law on

enactment of the tax code.

Tax accounting rules do not follow rules of financial accounting.The World Bank study “Paying Taxes 2009” ranked Kazakhstan as 49 (the highest rank among CIS

countries) in terms of the ease of paying taxes.

B. Anti-avoidance

The new Tax Code was initially aimed to promote diversification of the Kazakhstan’s economy and tointerest the business to end using tax evasion schemes. Thus, the tax legislation follows the line of

reducing the tax burden on the non-extractive sectors of economy to make them more attractive for the

businessmen.At this point reducing of the tax burden is accompanied by activization of the applicable measures by

the law enforcement bodies (e.g. tax committees, department for economic and corruption-related

crime control). Thus, there are administrative and criminal penalties foreseen for breach of the tax

legislation. Further development and enforcement of anti-avoidance measures is expected.

C. Tax Rulings

Tax authorities are required to issue tax rulings upon taxpayer’s request. Such rulings are not legally

binding but are intended to provide with information and clarification if there is uncertainty regarding

application of the tax law.

There is no system of advanced tax rulings in their traditional meaning.

D. Tax Treaties

Kazakhstan has entered into double taxation treaties with nearly 40 countries, including France,

Germany, Italy, the Netherlands, Switzerland, the UK and the US.

XVI. IMMIGRATION REQUIREMENTS

A. Immigration Controls

1. Are there immigration quotas?

Yes, there are immigration quotas set from time to time by the President of the Republic of

Kazakhstan. Immigration quota for 2009 - 2011 is established with regard to the immigration of Kazakh nationals living outside of Kazakhstan who are stateless or are citizens of another state

seeking citizenship of Kazakhstan. It is 20 000 of families per year.

Also, there are quotas for foreign labor force. It is set annually by the Government of Kazakhstan and

accounted as percentage of active population of the country. According to Order of the



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Government of the Republic of Kazakhstan, in 2010 the ratio of the permitted foreign labor is

0.75% of the national workforce.

2. Are vaccinations required?

No, vaccinations are not specifically required.

3. Are medical certificates required?

No, medical certificates are generally not required in order to enter the Republic of Kazakhstan.

However, a medical certificate will be requested when obtaining a permanent residence permit.

4. Are entry permits required?

5. If so, must you apply for an entry permit before entering the country?

6. Are exit permits required?

7. Are re-entry permits required?

No entry, re-entry or exit permits for foreign citizens or stateless persons are required. Instead,they need to obtain an entry visa in accordance with the procedure established by the

Kazakhstani legislation.

Entry visas are required for foreign citizens coming to the Republic of Kazakhstan for the

purpose of investment, education, business, tourism, medical treatment and permanent residence.There are certain exceptions for CIS citizens.

An application for a new visa prior to arrival to the Republic of Kazakhstan should be made at

the nearest Consulate or Embassy. Legislation of the Republic of Kazakhstan provides with anopportunity to obtain multiple entrance visas.

B. Immigration Requirements/Formalities

1. Is a residence permit required?

Foreign citizens may enter and stay in Kazakhstan without any residence permit on the basis of avisa and their passport duly registered at the state border of Kazakhstan. Residence permits are

required if the foreign citizens will to stay in Kazakhstan on the permanent basis.

2. If so, does the investor have to apply for one before entering the country?

If a residence permit is required, foreign citizen shall apply for the residence permit after

entering the country.

3. What information must be supplied to the immigration authorities?

The following supporting documents are required:1) An application form;

2) A written agreement of a country of citizenship: list of departure or another document

confirming permission on permanent departure abroad;

3) Autobiography;4) A valid passport;

5) Official medical certificate;



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6) Documents confirming solvency for a period of staying in the Republic of Kazakhstan in

an appropriate form;

7) Receipt confirming payment of the state duty;8) Two 35х45 mm photos.

4. How long does it take to receive authorization?

The period for examining materials by the territorial authorities of internal affairs and by the

national security authorities must not exceed a month each, and, in general, receipt of

authorization can not exceed 2 months.

C. Visas

1. Is a visa required for travel or stay in the country?

2. If so, for how long is the visa valid?

Currently, Kazakhstani legislation provides with 11 types of visas, including: diplomatic;official; investor; business; private, tourist, student, work, medical, permanent residence, and

transit visa. The procedures for obtaining a visa are therefore dependant on duration and nature

of the visit as well as citizenship of the individual. Multiple entrance visas of the categories

«diplomatic», «official», «business» and «investment» are issued for a period up to 3 years.However, considering the principle of mutuality, visas of these four categories may be issued for

a longer period of time.

Student visas are issued for a period of up to 1 year. Work visas are issued for a period of thework permit’s validity but no longer than for 3 years.

Tourist visas are issued for the following periods of time depending on the amount of the

permitted entries:

• One-entry visa for citizens of countries specified by the legislation of Kazakhstan(Canada, Japan, the USA, the United Kingdom of the Great Britain and the Northern

Ireland and another 42 countries) – up to 30 days;

• Double entry visa for citizens of countries specified by the legislation of Kazakhstan

(Canada, Japan, the USA, the United Kingdom of the Great Britain and the NorthernIreland and another 42 countries) – up to 60 days;

• One-entry, double-entry or triple-entry visas for the citizens of the countries whichare not specifically mentioned by the Kazakhstani legislation – up to 90 days,

however, duration of each visit can not exceed 30 days.

3. How does the investor apply for a visa?

The investor should apply for a visa at the respective Kazakhstan's diplomatic mission or

consular office abroad by registered mail or in person with all the required documents andinformation.

4. What documents are required?

The scope of documents depends on the type of visa and the issuing authority. As a rule, the

following documents are required for any type of visa: visa application, passport, receipt

confirming payment of the applicable state duty and photos.



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5. How long does it take to receive a visa?

The processing time depends on the respective Kazakhstan's diplomatic consular offices.Pursuant to the legislation of Kazakhstan issuance of a visa cannot exceed 5 business days.


Decree of the Government of Kazakhstan on minimum and maximum rates of the consular duties

provides that the amount of the state duty varies depending on the visa type (one-entry or

multiple, labor or business, etc.).

XVII. EXPATRIATE EMPLOYEES

A. Cost of Living and Immigration

1. How does the cost of living compare to that in the investor's home country?

Generally, salaries tend to be relatively low, and day-to-day living costs in Kazakhstan are high.

The expensive cities in Kazakhstan in terms of cost of living are Astana and Almaty. Cost of

living in other cities and towns of Kazakhstan is considerably lower.

2. What is the rate of inflation?

The National Bank of Kazakhstan provides a forecast of the rate of inflation for 2010 - 7.1% and

for 2011 - 7.5%

B. Drivers' Licenses

1. Must the investor obtain a driver's license for that country?

According to the Convention on Road Traffic ratified by the Republic of Kazakhstan investor

must obtain a Kazakhstani driver’s license unless he is in possession of an international driver’s

license. If a foreigner does not possess an international driver’s license then he may apply for one in Kazakhstan under the national procedure.

2. How does the investor obtain a driver's license?

The investor wishing to obtain a license for driving a vehicle of a certain category or type must

undergo a medical examination, training in accordance with the standard study program, pass the

theoretical (written) and practical examinations.


Fees for obtaining driver’s license in Kazakhstan include cost of studying in the driving school

(exact amount depends on the school), fees for examination and issuing of the driver’s license

4. Is an examination, either practical or written, required?

Yes, both practical and written examinations are required (please refer above).

C. Education



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1. What types of schools are available for the investor's family?

All kinds of schools are available in Kazakhstan. Kazakhstan has a well developed public school

system and a rather good private school network. School attendance is compulsory from the ageof 7. Any foreign child living in Kazakhstan may choose in which school to study.


Education in public schools is free of charge in Kazakhstan. One of the few fees that may apply

is the school meals. Contrary to the public schools private schools shall be paid.

3. What is required for enrollment?

Every school has its own requirements depending on the school’s specialization and status.

Usually certain tests and interview are to be passed prior to enrollment. Requirements of privateschools are usually higher and include tuition fees.

D. Housing

1. What type of housing is available for the investor?

The investor can either own or rent a house (apartment).

2. Can the investor own property?

Yes, the investor may own property with certain restrictions foreseen by the Kazakhstanilegislation.

3. Must the investor have housing before entering the country?

No, there are no such direct requirements.

E. Importing Personal Possessions

1. How can the investor import personal belongings?

2. Are import duties payable?

3. Are there requirements for clearing the belongings through customs?

The investor may import into Kazakhstan in accompanied or unaccompanied luggage personal belongings allowed for import under the Kazakhstani laws. Such personal belongings are free of

customs duties. As a general rule, they are not subject to mandatory clearing through customs.

F. Medical Care

1. What level of medical care is available?

All levels of paid medical care are available for foreign citizens and stateless persons. They alsomay receive the guaranteed free medical aid (first aid and so on).

2. Is there national health care?

Yes, there is national health care in Kazakhstan.



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G. Moving Costs

1.

What costs are involved in moving?Foreign citizens and stateless persons staying in Kazakhstan on legal grounds enjoy freedom of

movement within the territory of Kazakhstan. The costs involved in moving within the territory

of Kazakhstan vary widely subject to distance and type of vehicle.

H. Tax Liability

1. What is the expatriate's tax liability? (See also Section XIII)

2. What are the allowances?

3. Are there any applicable tax treaties?

Please see Section XIII regarding information on Employment Income.

There are no allowances when assessing taxable base for personal income tax. Personal income

tax can be reduced under a relevant double taxation treaty.

I. Work Contracts

1. Does the investor need a work contract to work in the country?

2. If so, does the contract have to be for certain duration, for the performance

of a specific job or for a specific position?

3. Does the contract have to be with a national or resident of the country or

related state?

4. Does the contract have to be with a national or resident of the country or

related state?

A work contract is an agreement between an employer and an employee defining rights and

obligations of these two parties. It is required for obtaining a labor permit for the investor

employed by a Kazakhstani company. The contract should be executed for a specific position

with a legal entity incorporated in Kazakhstan or a private entrepreneur registered in Kazakhstan.A contract can be concluded for the period of the work permit but usually for a period not

exceeding one year.

J. Work Permits

1. Does the investor need a work permit to work in the country?

Two main legislative acts, the Labor Code of the Republic of Kazakhstan, and the Rules onDetermining Quota, Conditions and Procedure of Issuing to Employers of Permits to AttractForeign Labor force into the Republic of Kazakhstan, regulate the use of foreign labor in the

country. The Rules require every Kazakhstani employer (including branch and representative

offices) to obtain a work permit for each foreign employee to be employed in Kazakhstan.Employers must receive one of the four work permits available to foreign laborers prior to their

employment in Kazakhstan. These include: (1) management, (2) highly-educated specialist, (3)

highly-qualified worker, and (4) seasonal agricultural worker .



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2. How and where does the investor apply for the permit?

Work permits are issued to the Kazakhstani employers by territorial departments of the Ministryof Labor and Social Protection of Kazakhstan.

3. What documents are required?

The process of obtaining the permit requires the submission of: 1) an employment contract; 2)notarized copy of documents indicating state registration of the company (including a notarized

copies of the charter, certificate of state registration, certificate of the tax payer registration, etc.);

3) original position announcement published in specified newspapers for the available vacancies(published in both Kazakh and Russian no less than 1 month and no more than 3 month prior

submission of the application); 4) documents indicating the education level and work experience

of the employees; 5) information detailing the employer’s previously received work permits (if

any); 6) information regarding current employees (type of activity, number of employees); and 7)documents verifying the employer’s intention comply with labor regulations in regards to the

foreign employee.


Notary fees and fees for publication of the announcements are involved.

5. How long does it take to receive the permit?

The process takes between one and two months.

6. For how long is the permit valid?

The law stipulates that permits are issued by the authorized state body for a period not to exceed

one year for general employees. Members of the board and general directors of entities,

established under the Kazakhstani law by foreigners where the foreign capital exceeds 50%, are

permitted to obtain work permits for the duration of their contract (in practice permits are notissued for more than 3 years). Senior management of representative or branch offices of foreign

legal entities, employees traveling on business for a period not to exceed 60 days during one

calendar year, foreigners domiciled in Kazakhstan, etc., are generally not required to obtain work permits.