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Doing business in kazakhstan
Doing business in kazakhstan
Doing business in kazakhstan
Doing business in kazakhstan
Doing business in kazakhstan
Doing business in kazakhstan
Doing business in kazakhstan
Doing business in kazakhstan
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Doing business in kazakhstan

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Summary of the lecture for #techmeetupkz, Guide for investment, incorporation and doing business in Kazakhstan

Summary of the lecture for #techmeetupkz, Guide for investment, incorporation and doing business in Kazakhstan

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  • 1. Guide for investment, incorporation and doing business in Kazakhstan.
  • 2. Legal Forms - Comparison The most popular legal forms of business in Kazakhstan are as follows: Limited Liability Company (LLC) Joint Stock Company (JSC) Simple partnership (SP) Sole Proprietorship Number of owners Min. 1 owner, either individual or business entity Min. 1 owner, either individual or business entity Min. 2 owners, either individual or business entity 1 individual owner Extent of liability Owners are not liable for company’s obligations and bear risks to the extent of their equity contributions Owners are not liable for company’s obligations and bear risks to the extent of their equity contributions Participants are jointly and severally liable for obligations unless agreement on joint activity provides otherwise Full personal ownership, therefore unlimited liability Min. paid-up capital 100 monthly index factors or approx. $1,000 50,000 monthly index factors or approx. $500,000 No requirements No requirements Availability of transfer of ownership or exit opportunities Allowed only to the extent of LLC’s founding documents Full freedom in transferring ownership to third parties Participant may transfer its rights and obligations to a third party only with the approval of all other participants Not available Access to capital markets Only bank loans, private placements or government supported programs Full availability of debt and equity instruments including placements on stock exchange No access to capital markets, participants finance fully on their own Only bank loans or government supported programs
  • 3. Legal Forms - Comparison Colored are the most preferred legal forms for small investors, business angels, VC and PE firms, development institutions, etc.: Limited Liability Company (LLC) Joint Stock Company (JSC) Simple partnership (SP) Sole Proprietorship Number of owners Min. 1 owner, either individual or business entity Min. 1 owner, either individual or business entity Min. 2 owners, either individual or business entity 1 individual owner Extent of liability Owners are not liable for company’s obligations and bear risks to the extent of their equity contributions Owners are not liable for company’s obligations and bear risks to the extent of their equity contributions Participants are jointly and severally liable for obligations unless agreement on joint activity provides otherwise Full personal ownership, therefore unlimited liability Min. paid-up capital 100 monthly index factors or approx. $1,000 50,000 monthly index factors or approx. $500,000 No requirements No requirements Availability of transfer of ownership or exit opportunities Allowed only to the extent of LLC’s founding documents Full freedom in transferring ownership to third parties Participant may transfer its rights and obligations to a third party only with the approval of all other participants Not available Access to capital markets Only bank loans, private placements or government supported programs Full availability of debt and equity instruments including placements on stock exchange No access to capital markets, participants finance fully on their own Only bank loans or government supported programs
  • 4. Legal Forms - Comparison Colored are the most preferred legal forms for investment banks, PE firms, strategic investors, large institutions etc.: Limited Liability Company (LLC) Joint Stock Company (JSC) Simple partnership (SP) Sole Proprietorship Number of owners Min. 1 owner, either individual or business entity Min. 1 owner, either individual or business entity Min. 2 owners, either individual or business entity 1 individual owner Extent of liability Owners are not liable for company’s obligations and bear risks to the extent of their equity contributions Owners are not liable for company’s obligations and bear risks to the extent of their equity contributions Participants are jointly and severally liable for obligations unless agreement on joint activity provides otherwise Full personal ownership, therefore unlimited liability Min. paid-up capital 100 monthly index factors or approx. $1,000 50,000 monthly index factors or approx. $500,000 No requirements No requirements Availability of transfer of ownership or exit opportunities Allowed only to the extent of LLC’s founding documents Full freedom in transferring ownership to third parties Participant may transfer its rights and obligations to a third party only with the approval of all other participants Not available Access to capital markets Only bank loans, private placements or government supported programs Full availability of debt and equity instruments including placements on stock exchange No access to capital markets, participants finance fully on their own Only bank loans or government supported programs
  • 5. Kazakhstan taxation highlights for 2014 Source: Deloitte Touche Tohmatsu Limited. Corporate Taxation: Residence - registered in Kazakhstan or permanent establishment (PE) location in Kazakhstan; Basis - Residents are taxed on worldwide income. Nonresidents are generally taxed only on Kazakhstan-sourced income. Taxation of dividends - Dividends received (except from risk investment funds) are effectively exempt from income taxation. Capital gains - Capital gains are treated as normal income and taxed at the standard tax rate. Rate - The main corporate income tax rate of 20% applies to domestic and foreign companies. Withholding Taxes: Dividends, Interest and Royalties - A withholding tax of 15% is levied on dividends, interest and royalties paid to nonresidents without a PE in Kazakhstan. A 20% tax rate applies to dividends, interest and royalties paid to nonresidents registered in tax haven jurisdiction. Technical service fees - Same as royalties stated above. However, if the service is regarded as income of a nonresident from the provision of general technical services, rather than as royalty, then a 20% tax rate is applied. For payments to nonresidents registered in tax haven jurisdictions rules are similar to royalties. Value Added Tax: Taxable transactions - VAT is levied on supply of goods and services and imports. Rate - 12%. Certain exemptions exist for exports and financial transactions. Registration - Compulsory for entities whose turnover exceeds KZT 55,560,000 in a calendar year period. Filing - Payment is due by the 25th day of the month following the reporting quarter. Should be reported by the 15th day of the second month following the reporting quarter. Other taxes: Payroll tax - 11% rate of social tax is applied to employee’s gross salary (both local and foreign). As tax agents, employers must withhold and remit a 10% individual income tax and obligatory pension fund contributions on behalf of employees. Contributions are equal to 10% of monthly salary with a cap of KZT 149,745 per month. Social security - Employer must pay social security contributions at a rate of 5% (with an income cap of KZT 199,660) in addition to local employee’s salaries. Real property tax - Property tax is levied on immovable property located in Kazakhstan at progressive rates of 0.1% to 1.5%, depending on taxpayer’s activities. Stamp duty - No standalone stamp duty regime exists. Transfer tax - No. Capital duty - No. Administration and Compliance: Tax year - Calendar year. Consolidated returns - Consolidated returns are not permitted. Each company must file a separate return. Filing requirements - The corporate income tax return is due by March 31 of the year following the reporting year. Penalties - Penalties are assessed at 2.5 times the official refinancing rate established by the national bank for each day of delay.
  • 6. Kazakhstan incorporation guide Source: Doing Business in Kazakhstan, 2014 Basic Incorporation Procedure: * - Time to complete can last longer depending on how fast you submit required documents. ** - Add consulting costs if you’re hiring a legal consultant (approx. $1,000 to $10,000 depending on a consultant, chosen legal structure and business). In case if you decide to change your legal structure, time completed and associated costs can be different depending on your activities, audit requirements, obligations, etc. No. Procedure Time to complete* Associated costs** 1 Pay registration fee into the account of the Ministry of Justice 1 day no charge 2 State registration of legal entity and tax registration at the Public Registration Center 7 days KZT 3,462 3 Make a company seal 1 day KZT 2,000 - KZT 4,500 4 Notarize certificate of state registration and other post-registration documents 1 day 10% MIF per page 5 Open the current account in the bank 1 day no charge 6 Register for the obligatory insurance of life and health for employees 1 day no charge
  • 7. For further reference: 1. Doing Business in Kazakhstan, 2014. URL: http://www.doingbusiness.org/data/exploreeconomies/kazakhstan 2. Kazakhstan Tax and Investment Highlights 2014, Deloitte. URL: http://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax- kazakhstanhighlights-2014.pdf 3. Doing Business in Kazakhstan: An Introductory Guide to Tax and Legal Issues, Ernst&Young. URL: http://invest.gov.kz/upload/docs/en/fe7b5ae9e350a23a97174ac289889332.pdf 4. Investment Guide, KPMG. URL: https://www.kpmg.com/KZ/en/IssuesAndInsights/ArticlesAndPublications/Documents /Investment%20guide.pdf
  • 8. • Created by Gaziz Seilkhanov, Berik Dossayev • Inspired by Start Ups and Venture Capital lecture by Gunter Festel, ETH Zurich, Spring 2012

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