Kazakhstan company registration

This exposition expounds upon the commencement of an enterprise in Kazakhstan, delving into the pivotal juridical aspects of the enlistment process and the corporate formations accessible.

Registering a firm in Kazakhstan 2024: main advantages of the jurisdiction

The monetary composition of the Republic of Kazakhstan (hereinafter alluded to as RK) exists as the most sizable within Central Asia. Pursuant to the valuations for the year 2022, this realm achieved the ensuing standings:

• 55th locale in the Global Competitiveness Report.
• 25th situation in the Ease of Doing Business ranking (founded on 2020 figures).
• 64th rank in the Index of Economic Freedom.

Much like any other sovereign entity, there exist procedures to adhere to when aiming to enroll a corporation in Kazakhstan. However, let's begin by examining several merits associated with the investment ambiance.

• Strategically Positioned. Kazakhstan, ranking as the 9th most expansive country globally, boasts a regional market spanning over 19 million consumers. Entrepreneurs venturing into business in Kazakhstan gain access to the expansive Eurasian Economic Union (EEU) marketplace, encompassing over 180 million consumers. The nation's geographical location facilitates connections among European, Asian, and Middle Eastern markets, contributing to 65 percent of the world's GDP.
• The land is intersected by momentous global barter passageways, ascribed to unswerving endeavors in augmenting infrastructure and zealous engagement in the "Sole Circuit, Sole Route" proposition. The origination of undertakings within Kazakhstan's designated specific economic domains is feasible. Additionally, the genesis of the Astana International Financial Centre (AIFC) designates it as a pecuniary core for the zone. Affiliation with Astana Hub, an international technopolis tending to IT fledglings, prolongs non-indigenes absolutions from corporate toll, VAT, and communal toll. The AIFC governs its securities exchange (AIX), cooperating with bodies such as the Shanghai Securities Exchange, NASDAQ, Goldman Sachs International, the Silk Road Fund, amid other illustrious entities.
• The Realm of Kazakhstan (RoK) surfaces as a pivotal center for barter, logistics, and trade, displaying extensive investment chances and vigorous pecuniary establishments. The fiscal sector encounters kinetic expansion, harboring duo trade banks. The amalgamated holdings of the quintet preeminent banks (Halyk Bank, Sberbank-Kazakhstan, Kaspi Bank, Otbasy Bank, and First Heartland Jusan) personify beyond 66 percent of the absolute fiscal realm. Initiating a fiscal ledger within Kazakhstan can be executed via indigenous banks or dependent branches of alien banks, conducting in indigenous (Tenge) or outlandish currency.
• The administration has sanctioned 48 investment concords to safeguard investor prerogatives. With a design to heterogenize the domestic fiscal system, the RoK proffers far-reaching openings spanning varied arenas like husbandry, petrochemicals, metallurgy, exploration, and healing art. The administration unremittingly embarks upon stratagems to cultivate an enticing investment milieu. Significantly, it has instituted 12 particular fiscal domains that present toll enticements. Furthermore, KAZAKH INVEST expedites investment endeavors within Kazakhstan via a systematized course of action.
• A Proficient and Skilled Workforce. The country extends a visa-free regime to citizens from over 65 nations, considerably streamlining employment processes for foreign nationals.

Other advantages for foreign investors:

• To institute a corporation in Kazakhstan, the arrangement necessitates a minimum of 1 executive and 1 initiator. The presence of residency is not mandatory for both the executive and initiator.
• The nation extends backing to those who channel investments into pivotal sectors of the economy. These enterprises are excused from income tax (20%) and land tax for a decade. Additionally, they are relieved from property tax for 8 years subsequent to investing in tangible assets.
• Enrollment of a company in Kazakhstan is feasible without the requirement of personal attendance.

Foreign direct investment

The government formulates domestic policies while accounting for international investment norms. In April 2019, a Coordination Council was instituted to supervise foreign investment within Kazakhstan. Authorities have prioritized enhancing the investment milieu on a national scale, leading to recent reforms aligning Kazakhstan with international benchmarks across multiple indicators. Notably, constraints on foreign capital involvement in air transport have been revoked.

Assisting the utilization of outlandish citizens has likewise been optimized in recent times. The governance has assiduously pursued the augmentation of external investment safeguard and the institution of efficacious discord resolution methods in Kazakhstan. Streamlined protocols pertinent to licensing and enterprise inauguration have impelled an enriched stance in the World Bank's annual dossier. Enacted statutory variations, incorporating an innovative Law on Public-Private Collaboration and enhanced dispensations regulations, are envisaged to incite magnified investments in infrastructural advancement.

As underscored previously, the Astana Monetary Hub, modeled after Dubai's DIFC, has been instituted. It extends foreign investors tax exemptions, pliable labor statutes, and leeway to transact in any currency. Outlandish investors can employ AIFC to culminate accords with Kazakhstani partners. It is germane to recognize that while no arenas are utterly obstructed to FDI here, definite domains do impose curbs on outlandish possession. For instance, a 20 percent boundary on external ownership is imposed on the media realm, while telecom amenities are subjected to a 49 percent peak.

The governance is swiftly augmenting the nation's allure for investors through ongoing development endeavors. A pivotal facet is the institution of legal investment mechanisms. These mechanisms encompass investment compacts wherein investors could hypothetically procure a comprehensive gamut of investment privileges. The prevailing Kazakhstani legal composition encompasses 4 distinct agreement classifications:

• Model investment pact.
• Model specialized investment pact.
• Investment accord (excluding a model structure).
• Model pact concerning investment commitments.

To understand the differences between the two, we provide an overview of the main differences in the table below.

Registering a company for a non-resident: types of companies

Presently, Kazakhstan stands as a "realm welcoming the inception of investment endeavors." When coupled with the absence of customs barriers and a relatively moderate tax load, it can be inferred that Kazakhstan positions itself among the most appealing nations for initiating business undertakings within Asia or broadening the scope of international corporations. In spite of the fact that domestic legislation encompasses a range of corporate structures, entrepreneurs frequently gravitate towards Limited Liability Partnerships (analogous to LLCs) or Joint Stock Companies (JSCs).

Enrollment of an LLP in Kazakhstan

A limited liability partnership stands as the prevailing form of legal entity established by one or more participants, whose liability in regard to the LLP's commitments is confined to the extent of their individual contributions. The minimal initial capital requisite for small-scale enterprises is set at 0 tenge, while medium and substantial enterprises require 100 MRP.

Below we consider the governance structure of an LLP:

• The highest authority lies with the solitary participant or the general assembly of participants, wielding exclusive authority in vital determinations such as disbursing net revenue, dissolution of the company, and more.
• The administrative entity can either be a director or the Board of Directors/Board of Management. A foreign national can serve as an LLP director, contingent upon obtaining the requisite authorization from the authorized entity. The jurisdiction of the administrative entity must be delineated in the LLP's founding documents.
• The LLP may also incorporate a Supervisory Board.

Enrollment of a joint stock company in Kazakhstan

A Joint Stock Company (JSC) stands as a legal entity that releases shares to gather capital for its operations. A JSC is permitted to encompass an unrestricted number of participants (with no stipulations on founder residency), who bear no responsibility for the company's liabilities but do assume the potential loss risk corresponding to their corporate entitlements (with specific exclusions). The mandated minimum authorized capital is 50,000 MSEK, which must be settled within 30 days subsequent to the JSC's registration within Kazakhstan.

Management structure of the JSC:

• The supreme body is the sole founder or the general meeting.
• The governing body is the Board of Directors (carries out general management of the JSC on behalf of shareholders).
• The competence of the sole founder/general meeting includes decision-making on priority issues, such as amendments to the Charter, increasing the share, selecting an external auditor, etc.
• The day-to-day activities of a JSC are managed by the executive body, which has the right to make decisions on matters not within the exclusive competence of other officials.
• Such a company must necessarily undergo a financial audit and submit financial statements to the regulator.

Foreign enterprises may also:

• Establish a branch in Kazakhstan or enter the local market through the establishment of a representative office.
• Enroll a subsidiary within Kazakhstan..

The main list of documents for registration of a branch of a foreign company in Kazakhstan:

• Authorization letter issued by the parent corporation for a director.
• Resolution made by the parent entity to establish a branch within Kazakhstan.
• An extract from the commercial registry containing details about the initiators of the parent enterprise.
• Evidentiary documentation verifying tax registration within the country of origin of the parent organization.
• Reproduction of the passport belonging to the chief executive officer of the parent company.
• Replicated form of identification card for the director of the branch.
• Duplicates of the foundational records of the parent enterprise.

Requirements for company registration in Kazakhstan

Prior to initiating the registration process, it is imperative to acquaint oneself with the fundamental prerequisites.

• Nomination of directors, corporate secretary, and other pivotal personnel. An LLP must appoint no less than 1 director, while a JSC requires a minimum of 2 directors (absence of residency prerequisites).
• A sole founder is sufficient to establish a corporation in Kazakhstan (without any residency prerequisites).
• The appointment of a secretary is obligatory for joint stock companies.
• Under prevailing AIFC regulations, the relevant individual is obligated to discern and divulge the ultimate beneficial proprietors and uphold a Record of Beneficial Owners.
• A localized registered address is compulsory.
• Commencement of operations mandates the contribution of minimum authorized capital (determined based on the chosen OFP).
• Submission of annual financial reports is mandatory.
• Conducting a founders' meeting on an annual basis is a requirement (this gathering can transpire outside the nation).

Stages of company registration in Kazakhstan

To initiate a business endeavor in Kazakhstan, the ensuing steps should be taken:

1. Select an appropriate corporate structure that aligns with business circumstances and aspirations.
2. Enlist an exclusive business name.
3. Establish a registered office within the country, serving as the actual location of the company.
4. Compile a set of incorporation documents.
5. Acquire an electronic digital signature. This is a requisite if remote participation in specific phases of company enrollment within Kazakhstan is desired.
6. Finalize the Registration Process with levy and SSA. Notably, to inaugurate a bank account in Kazakhstan, all foreign nationals necessitate a Kazakhstan tax identification number or RNN number. This number can be procured at the tax office by furnishing your passport and migration card.
7. Initiate a bank account with a Kazakhstan financial institution under your company's name.
8. If your activities fall within the purview of licensing prerequisites, proceed to solicit the applicable licenses and permissions.

When choosing a name, you should familiarise yourself with the general requirements:

• The designated name must refrain from incorporating terms that could suggest an affiliation with a governmental entity in Kazakhstan, unless authorized in writing by the pertinent authority.
• Furthermore, the usage of terms like "bank," "insurance," and "trust" in the name is prohibited unless authorized by the pertinent regulatory body.
• Additionally, a legal entity is prohibited from adopting a name that could mislead or contrast with another name, including the designation of an established company.

The State Registration Centre scrutinizes the proposed name and, upon its approval, registers the name in the National Register of Enterprise Identification Numbers. In the case of foreign-owned entities opting for a name in a foreign language, it is obligatory to furnish a translation into the national language as stipulated by the law.

Key constituent documents for registering a company in Kazakhstan:

• Replicated identity card copies of executive officers, duly translated into Russian or Kazakh.
• Duplicated identity card copies of founders.
• Details regarding business operations.
• Memorandum of Association and Articles of Association.
• Proof of office lease within the Republic of Kazakhstan.
• Documentary evidence of tax registration.

We would also like to mention some of the most popular RK banks that you may want to consider:

• Company account with Halyk Bank in Kazakhstan.
• Corporate bank account with Bank CentreCredit in Kazakhstan.
• Business account with ATF Bank in Kazakhstan.
• Company account with Capital Bank in Kazakhstan.

Foreign business opportunities in Kazakhstan

Kazakhstan holds the distinction of being the largest nation in Central Asia by geographical extent. It harnesses the advantages of its strategic positioning, forging connections between the burgeoning markets of Asia and Europe via an extensive network of roadways, railways, and maritime routes. Commencing from the year 2021, the country is progressively witnessing enhancements in the performance of its fundamental economic domains. Notably, as of 2021, a stable and affirmative momentum has been observed. This is evident in the upswing across various sectors, including manufacturing (+7.5%), construction (+13.1%), agriculture (+2.8%), machine building (+21.8%), pharmaceuticals (+9.1%), chemical industry (+14.2%), and metallurgy (+2.3%). The sectors of particular interest to international entities are explored in greater detail below.

Enrollment of a Mining Enterprise

Kazakhstan boasts abundant natural resources, rendering the mining sector a pivotal component, contributing to 14.1% of the overall GDP and 17.5% of export figures. The nation persists as an alluring destination for suppliers of mining machinery and equipment. Particularly promising are the sales and service prospects for providers delivering geological, geochemical, and geophysical survey services. Within this context, there exist prospects for foreign enterprises in the following domains:

• geological exploration;
• development of software and systems for mining;
• consulting and engineering services.

Production in the oil sector is expected to double by 2025.

Enlistment of an Information Technology Enterprise in Kazakhstan

The IT sector of Kazakhstan is experiencing substantial backing from the government. This nation in Central Asia inaugurated the Digital Kazakhstan program in 2018 and has set up domestic technological hubs to bolster technology-focused firms. Within this locale, IT enterprises encounter a relatively accessible entry point into the industry, coupled with the presence of a proficient and adept workforce. Preeminent sub-sectors encompass:

• Digital innovations for the advancement of e-government services, intelligent transportation systems, urban infrastructure enhancements, and financial sector applications.
• Technological automation processes tailored for the oil and gas, mining, and agricultural sectors.
• Cutting-edge 5G mobile communication technologies.
• Equipment and technologies encompassing the Internet of Things (IoT).

To foster foreign investment in the sector, formal restrictions on foreign ownership of telecommunications companies were officially lifted in 2022, albeit with certain exemptions. Other incentives for international corporations to select Kazakhstan encompass a specialized tax framework, contemporary infrastructure, and measures facilitating visa procedures.

Financial Services

Gaining a financial institution license within Kazakhstan confers enterprises the authority to engage in an extensive array of activities, encompassing payment services, forex trading, e-wallet provisions, cryptocurrency exchanges, foreign exchange and securities transactions, financial consultancy, depository agent responsibilities, trading services, facilitating currency and cryptocurrency trading platforms, in addition to software development.

It is imperative to highlight the exceptional character of the financial institution license within Kazakhstan, being the sole license that encompasses such an extensive spectrum of activities. The Astana Financial Centre stands as a worldwide nucleus for finance and trade. The AIFC, fortified with its autonomous court and arbitration center, presently operates as a regional center and an ingress to Central Asia. Moreover, the AIFC has instituted a Legal Services Board (LSB). Enrolling with the Astana International Financial Centre extends access to novel projects and clientele spanning various legal domains, coupled with ensuing tax advantages:

• 0% corporate, property, and land levies until 2066.
• Adaptable terms for attracting overseas workforce.

Agriculture

Stands as a pivotal foundation of Kazakhstan's economy. Over the initial 7 months, spanning January to July 2022, the nation's GDP experienced a 3.3% upsurge, attributable to entities within this domain. Drawing from the National Project designed for the enhancement of the agro-industrial complex during the period 2021-2025 in Kazakhstan, the following is envisioned:

• Doubling the exports of agro-industrial commodities, thereby elevating the proportion of processed items to 70%.
• Augmenting labor productivity by 2.5-fold.
• Drawing forth a higher influx of investment projects into Kazakhstan, with an aggregate sum exceeding 4 trillion tenge.

Prominent domains for exploration encompass:

• Supplying agricultural equipment and cultivating software solutions for the sector.
• Dispensing agricultural consultancy services.
• Implementing water-conservation technologies and establishing sustainable water provisioning systems.

Clean Energy

Kazakhstan is a signatory to the Paris Agreement on Climate Change and has committed to achieving carbon neutrality by 2060. The government aims to phase in 50% renewable energy in the total energy mix by 2050, with an interim target of 3% by 2020 (achieved) and 10%-15% by 2030. In 2018, a selection mechanism for the most efficient renewable energy projects was introduced. Opportunities for foreign companies and entrepreneurs include:

• Design, procurement, construction and financing.
• Wind and hydroelectric power plants, solar and bioelectric power plants, combined heat and power plants, energy storage, power grids and water supply projects.

Transport and Logistics

This domain stands as a significant realm witnessing consistent upsurge in interest from foreign investors. The international transit corridor "Western Europe - Western China" traverses the nation's territory. Moreover, the capital city of Kazakhstan, Nur-Sultan, maintains connections with 37 countries. These factors notably amplify the allure for investors to register logistics firms within Kazakhstan. The city's expansion and the concurrent growth of the market underscore the appeal of establishing transport and logistics centers.

Real Estate

This sector garners considerable attention from investors, constituting over half of all investments in Kazakhstan. This pronounced interest is attributed to the rapid pace of societal development and the broader consumer market. Trade is equally attractive to investors, with its role as a catalyst and driver of economic progress widely acknowledged. In recent years, this segment alone has attracted approximately $1.6 billion in foreign direct investments, a testament to its robust expansion. The sector's dynamic evolution is underscored by the presence of foreign and oil and gas company headquarters.

Cryptocurrency Landscape

It's pertinent to delve into the crypto sector separately. In recent times, the nation has emerged as a global frontrunner in total cryptocurrency transactions. This growth is partly attributable to the government's policy of incentivizing cryptocurrency mining. Kazakhstan's appeal in this domain rests on its establishment of legitimate and transparent channels for exchanging cryptocurrency for fiat currency or tangible goods and services.

Government Initiatives and Legislative Changes

The government introduced a "regulatory sandbox" for cryptocurrency enterprises to register with the AIFC. Recent legislative revisions underscore the nation's commitment to combat tax and financial fraud involving virtual currency. The principal legislative amendments center around ensuring that providers of virtual assets possess the requisite permits from authorized bodies. Concurrently, entities holding cryptocurrency exchange licenses will be subject to regulatory oversight under the prevailing national AML Law. These revisions are slated to become effective from April 1, 2023.

Registration of companies in free zones of Kazakhstan

A distinct economic enclave constitutes a segment of the Republic of Kazakhstan's territory endowed with a distinct legal framework and advanced infrastructure to facilitate endeavors in focal domains. Across the nation's expanse, 13 specialized economic zones of varied sectoral alignment exist:

• Astana - New City.
• Astana - Technopolis.
• ICBC Khorgos.
• SEZ TURKISTAN.
• Qyzyljar.
• Chemical Park Taraz.
• Saryarka.
• Pavlodar.
• National Industrial Petrochemical Technopark.
• Seaport Aktau.
• Park of innovative technologies.
• Khorgos - East Gate.
• Ontustik.
• Alatau.

To attain benefits subsequent to the enrollment of a corporation within the liberated economic zone of Kazakhstan, a juridical person ought to satisfy these criteria:

1. Requires registration by tax authorities within the limits of the FEZ jurisdiction.
2. Restricted from establishing operational branches outside the geographic boundaries of the FEZ.
3. Compelled to participate in recognized priority undertakings within the designated zone's vicinity.

Universal advantages accessible to juridical entities within free zones:

• Income tax: decrease by 100% (conditional on particular conditions).
• Value-Added Tax (VAT): 0% rate (pertinent to products entirely employed within actions aligned with FEZ's objectives and enlisted in the commodities inventory authorized by the Republic of Kazakhstan government).
• Land levy and land plot usage fee: 0%.
• Property levy: 0%.
• Complete waiver of 100% (contingent on distinct prerequisites).

Tax rates

General information on taxation is provided below:

• Corporation tax - 20%.
• VAT - 12%.
• Property tax - 1.5%.
• PIT - 10%.
• ST - 9.5%.

Kazakhstan visa programme for investors

The Executive Body of the Republic of Kazakhstan has endorsed the proposed migration policy spanning until 2027. As part of this initiative, the investment criterion will be lowered to 300,000 USD. The Kazakhstan investor visa extends the privilege to establish a business, possess real estate, recruit personnel, engage in financial transactions, and undertake any activities tantamount to entrepreneurial pursuits.

Anticipations are set on the Astana International Financial Centre (AIFC) evolving into a pivotal investment hub for affluent investors seeking a residency permit in Kazakhstan. The avenues for investing in the AIFC encompass the ensuing investment avenues:

• a fund listed on the Astana Stock Exchange;
• purchase of listed securities;
• purchase of property within the AIFC boundaries.

Conclusion

Kazakhstan serves as a magnet for foreign investors owing to its economic resilience, investment regulations calibrated in accordance with international benchmarks, and the potential for unrestricted movement of goods bridging Europe and Asia. A transparent tax framework, coupled with the avenue to access tax advantages and incentives, augments the mounting allure for foreign entrepreneurs aiming to penetrate the Kazakhstani market.