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Kazakhstan adopted a new tool to support strategic investors

investors and introducing a strategic investment agreement, since the beginning of this year in Kazakhstan, investors have been able to directly conclude an investment agreement with the Government without its ratification in the Parliament.

A set of amendments have been made to the Entrepreneurial and Tax Codes of the Republic of Kazakhstan aimed at improving the business environment and expanding investment incentives. The Government has also identified priority activities for investment agreements, as well as set out the standards that allow investors and the Government to come to a general agreement to regulate the procedure and a package of preferences in a targeted manner for each project.

The agreement provides for the stability of the legislation for a period of 25 years, with a particular focus on the tax and labor legislation. The investment agreement is an opportunity to effectively implement large projects involving investments of at least 7,5 million MCI ($51 million) in strategically important industries such as pharmaceuticals, agriculture, food production, medical devices, etc. Unlike the existing investment contract, large investors will be able to enter the agreements with the Government without following the standard or model form. The procedure and support tools will also be set out individually in the agreement.

Under the investment agreement, strategic investors will be able to receive tax holidays in respect of corporate income tax, property tax, land tax, and value added tax if the project is implemented in the territory of the FEZ. Moreover, investors can reduce their tax liabilities by up to 20 per cent. In addition to tax holidays, the state will recover up to 20% of the cost of building and installation works and purchase of equipment.

It is worth noting that tax preferences under the investment agreement is prohibited for subsoil users and producers of excisable goods.