Kazakhstan

Economic and Legal Climate

Kazakhstan, the largest landlocked country in the world, is known for its rich natural resources, particularly in oil, gas, and minerals. The country has a rapidly developing economy and offers a stable political environment. Kazakhstan’s legal system is based on civil law, and the government has implemented numerous reforms to create a business-friendly environment, including the establishment of the Astana International Financial Centre (AIFC) which operates under a separate legal framework based on English common law.

Official Languages

The official languages of Kazakhstan are Kazakh and Russian. Russian is widely used in business, government, and everyday communication. While English is becoming more prevalent, especially in business and financial sectors, proficiency can vary, and it is advisable to engage local experts fluent in Kazakh and Russian for legal and administrative matters.

Banking System

Kazakhstan has a well-regulated banking system overseen by the National Bank of Kazakhstan. The country hosts a variety of local and international banks offering comprehensive financial services. The banking sector is known for its stability and growing emphasis on digital banking services, supporting both domestic and international business operations.

Maintenance Costs

Maintenance costs for companies in Kazakhstan are moderate. Annual compliance requirements include renewing business licenses, filing tax returns, conducting audits, and maintaining proper accounting records. These processes can involve some administrative efforts and costs, but they are generally manageable with the assistance of local professionals.

Setting Up Costs

Setting up a company in Kazakhstan involves several costs, including incorporation fees, legal fees, and registration with the Ministry of Justice and the Tax Committee. The process includes drafting the company’s charter, obtaining a tax identification number, and registering for VAT if applicable. The incorporation process is relatively efficient and can typically be completed within a few weeks if all documentation is in order.

Corporate Tax Rate

Kazakhstan offers a competitive corporate tax regime with a standard corporate tax rate of 20% on taxable profits. The country provides various tax incentives and deductions for investments in specific sectors, particularly in energy, agriculture, and technology, enhancing tax efficiency for businesses.

Territorial or Non-Territorial Principles

Kazakhstan operates a worldwide tax system, meaning resident companies are taxed on their global income. However, specific incentives and tax treaties are available to help mitigate the impact of double taxation and enhance tax efficiency for foreign investors.

Currency Regulation

Kazakhstan imposes some regulations on foreign exchange transactions to maintain economic stability. The currency used is the Kazakhstani tenge (KZT). While the regulatory framework supports international trade and investment, engaging local experts can help navigate any specific currency regulations.

Advantages of Setting Up a Company in Kazakhstan

1. Rich Natural Resources: Abundant natural resources, particularly in oil, gas, and minerals, offer significant business opportunities.
2. Strategic Location: Kazakhstan’s location provides access to markets in Central Asia, Russia, China, and Europe.
3. Competitive Tax Regime: Reasonable corporate tax rate and various tax incentives enhance profitability.
4. Government Incentives: Various tax incentives and support programs for investments in priority sectors.
5. Stable Political Environment: Political stability and ongoing economic reforms create a conducive environment for business.

Disadvantages of Setting Up a Company in Kazakhstan

1. Bureaucratic Complexity: Navigating Kazakhstan’s regulatory and bureaucratic landscape can be challenging and time-consuming.
2. Language Barrier: While English is increasingly spoken, proficiency in Kazakh or Russian is essential for many legal and administrative matters, necessitating local expertise.
3. Infrastructure Development: Some aspects of Kazakhstan’s infrastructure may not be as developed as in other major international business hubs.

Conclusion

Kazakhstan offers a unique environment for setting up a company, with its rich natural resources, strategic location, and competitive tax regime. Despite challenges such as bureaucratic complexity and infrastructure development, the overall advantages make Kazakhstan a compelling choice for international investors. Global Expand can assist you in navigating the complexities of setting up a company in Kazakhstan, ensuring a smooth and successful entry into this dynamic and emerging market.