Investment activity - Tax preferences

Investment preferences for an investment priority project are granted subject to the following conditions:

1) the recipient is a legal entity of the Republic of Kazakhstan;

Investment size

2) a legal entity makes investments in the amount of at least two million times (for the creation of new industries) or five million times (for the expansion and (or) renewal of existing industries) the size of the monthly calculation index established by the law on the republican budget and effective on the date of filing an application for the provision of investment preferences .

When creating new objects of investment activity in the areas of food and light industry, the amount of investments of a legal entity is not less than a million times the monthly calculation index established by the law on the republican budget and valid on the date of filing an application for investment preferences;

When creating facilities that can satisfy the needs of a tourist in priority tourist areas, the amount of investments of a legal entity is at least two hundred thousand times the monthly calculation index established by the law on the republican budget and valid on the date of filing an application for investment preferences;

Activities

3) a legal entity carries out activities included in the list of priority activities determined for the implementation of investment priority projects;

4) a legal entity is not:

an autonomous organization of education in accordance with the tax legislation of the Republic of Kazakhstan and the legislation of the Republic of Kazakhstan on education;

an organization operating in the territory of the special economic zone;

State participation

5) the share of the state and (or) a subject of the quasi-public sector - a legal entity of the Republic of Kazakhstan as a founder and (or) participant (shareholder) of a legal entity of the Republic of Kazakhstan does not exceed twenty-six percent, with the exception of a legal entity of the Republic of Kazakhstan in the engineering industry, including the production of a foundry products and in case;

the share of the state and (or) subject of the quasi-public sector - a legal entity of the Republic of Kazakhstan as a founder and (or) participant (shareholder) of a legal entity of the Republic of Kazakhstan in the engineering industry, including the production of foundry products, does not exceed fifty percent.

Участие государства и (или) субъекта квазигосударственного сектора – юридического лица Республики Казахстан в качестве учредителя и (или) участника (акционера) юридического лица Республики Казахстан составляет не более пяти лет с даты регистрации инвестиционного контракта, за исключением инвестиционных приоритетных проектов в отрасли машиностроения, включая производство литейной продукции, где участие государства и (или) субъекта квазигосударственного сектора – юридического лица Республики Казахстан в качестве учредителя и (или) участника (акционера) юридического лица Республики Казахстан составляет не более двадцати лет с даты регистрации инвестиционного контракта.

Within five years, the state and (or) the subject of the quasi-public sector are required to withdraw from the founders and (or) participants (shareholders) of the legal entity of the Republic of Kazakhstan. If this condition is not met, the application of investment preferences is suspended until his (their) complete withdrawal from the founders and (or) participants (shareholders) of the legal entity of the Republic of Kazakhstan, but not more than one year.

Failure to comply with the condition of withdrawal from the founders and (or) participants (shareholders) of a legal entity of the Republic of Kazakhstan during the suspension period shall entail early termination of the investment contract and the return of previously granted investment preferences.

The provisions of this subparagraph shall not apply in the event that a quasi-public sector entity in which the share of the state and (or) a quasi-public sector entity as a founder and (or) participant (shareholder) of a legal entity of the Republic of Kazakhstan is less than fifty percent, carries out its activities as part of the implementation an investment priority project for the production of coal-bed methane;

6) investment activities are carried out not within the framework of a public-private partnership agreement, including a concession agreement.

7) investment activities are carried out not within the framework of a public-private partnership agreement, including a concession agreement.

Investment preferences are provided only to Kazakhstani legal entities under investment contracts, as well as legal entities registered in the jurisdiction of the Astana International Financial Center under investment agreements that plan to implement investment projects in priority activities in accordance with the list of priority activities established by the Government of the Republic of Kazakhstan .

EXEMPTION OF IMPORTS FROM VAT

under an investment contract

Exemption from value added tax on imports of raw materials and (or) materials under an investment contract for investment projects, with the exception of priority investment projects, while meeting the following conditions:

• raw materials and (or) materials are included in the  list of   raw materials and (or) materials, the import of which is exempt from value added tax under the investment contract, approved by the authorized state body for investments in agreement with the central authorized body for state planning and the authorized body;
• the import of raw materials and (or) materials is formalized with the documents provided for by the  customs legislation of the Eurasian Economic Union  and (or)  the customs legislation of the Republic of Kazakhstan ;
• imported raw materials and (or) materials will be used by the payer of the value added tax within the limitation period only when carrying out activities under the investment contract.

Exemption from value added tax on imports of raw materials and (or) materials under an investment contract is granted to legal entities of the Republic of Kazakhstan for a period of five consecutive years, starting from the 1st day of the month in which fixed assets are put into operation, provided for in the work program, which is annex to the investment contract concluded in accordance with the legislation of the Republic of Kazakhstan in the field of entrepreneurship. If the work program provides for the commissioning of two or more fixed assets, the calculation of the period for exemption from value added tax on imports of raw materials and (or) materials under the investment contract is made starting from the 1st day of the month in which the first fixed asset is put into operation according to the work program.

In case of violation within five years from the date of release of goods for free circulation or domestic consumption on the territory of the Republic of Kazakhstan of the requirements established by this subparagraph, the value added tax on imported raw materials and (or) materials is subject to payment with the accrual of penalties from the period established for payment value added tax on imported goods when they are imported, in the manner and amount determined by the  customs legislation of the Eurasian Economic Union  and (or)  the customs legislation of the Republic of Kazakhstan ;