Investment activity - Tax preferences

The conclusion of an investment contract for the implementation of an investment project that provides for the implementation of investments and the provision of investment preferences is a state free automated service that is provided electronically on the e-government portal www.egov.kz or through public service centers at the place of registration of the legal entity - the service recipient.

In order to receive the public service “conclusion of an investment contract for the implementation of an investment project that provides for the implementation of investments and the provision of investment preferences”, the applicant submits an application for the provision of investment preferences (hereinafter referred to as the application) in the form established by law (link to Annex 1  to the Rules) in state and Russian languages ​​with  the  following documents attached :

When filing on paper at Citizen Service Centers:

1) identity document of the service recipient or representative of the service recipient (for identification purposes);

2) a copy of the charter of the service recipient, certified by the signature of the head;

3) a business plan for an investment project drawn up in accordance with the requirements for drawing up a business plan for an investment project in accordance with  Appendix 2  to these Rules;

4) if the application provides for the provision of a state in-kind grant, it is required to provide a document confirming the amount (cost) of the state in-kind grant requested by the service recipient (estimation of the in-kind grant);

5) if the application provides for the provision of a state in-kind grant, preliminary approval of the provision of a state in-kind grant by the local executive body is required with the provision of the original document for verification;

6) if the application provides for the provision of tax preferences and (or) investment subsidies, the service recipient submits the conclusion of a comprehensive non-departmental examination of construction projects in the manner prescribed  by Article 64-1  of the Law of the Republic of Kazakhstan "On architectural, urban planning and construction activities in the Republic of Kazakhstan" (hereinafter - the Law), certified by the signature of the head;

7) if the application provides for the granting of the right to attract foreign labor, the service recipient submits copies of the passport or identity document of the attracted foreign worker (with translation into Kazakh or Russian), the employment contract concluded between the employer and the attracted foreign worker (with translation into Kazakh or Russian), documents confirming his qualifications and (or) education (with translation into Kazakh or Russian);

8) in the case of the implementation of an investment priority project in priority tourist areas, a letter from the central executive body exercising the functions of state administration in the field of tourism activities is attached, confirming the implementation of the investment priority project in priority tourist areas.   

When submitting an electronic form on the e-government portal www.egov.kz , from where the applicant is automatically directed to the website www.elicense.kz :

1) an application in the form of an electronic document certified by an electronic digital signature (hereinafter - EDS) of the service recipient;

2) an electronic copy of the charter of the service recipient, certified by the digital signature of the head of the legal entity;

3) an electronic copy of the business plan of the investment project, drawn up in accordance with  Appendix 2  to these Rules, certified by the EDS of the head of the legal entity;

4) electronic certificate of state registration (re-registration) of a legal entity;

5) if the application provides for the provision of a state in-kind grant, the service recipient submits an electronic copy of documents confirming the amount (cost) of the state in-kind grant requested by the service recipient (estimation of the in-kind grant);

6) if the application provides for the provision of a state in-kind grant, the service recipient submits an electronic copy of the preliminary approval of the provision of a state in-kind grant by the local executive body;

7) if the application provides for the provision of tax preferences and (or) investment subsidies, the service recipient submits an electronic copy of the conclusion of a comprehensive non-departmental examination of construction projects in the manner prescribed  by Article 64-1  of the Law, certified by the EDS of the head of the legal entity;

8) if the application provides for the granting of the right to attract foreign labor, the service recipient submits an electronic copy of the passport or identity document of the attracted foreign worker (with translation into Kazakh or Russian), the employment contract concluded between the employer and the attracted foreign worker ( with translation into Kazakh or Russian), documents confirming his qualifications and (or) education (with translation into Kazakh or Russian);

9) in the case of the implementation of an investment priority project in priority tourist areas, a letter from the central executive body exercising the functions of state administration in the field of tourism activities is attached, confirming the implementation of an investment priority project in priority tourist areas.

The list of basic requirements for the provision of public services, including the characteristics of the process, the form, content and result of the provision, as well as other information, taking into account the specifics of the provision of public services, are set out in the public service standard "Conclusion of an investment contract for the implementation of an investment project that provides for investments and the provision of investment preferences "(hereinafter referred to as the Standard) in accordance with  Appendix 5  to these Rules.

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.

Participation 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 is no more than five years from the date of registration of the investment contract, with the exception of priority investment projects in the engineering industry, including production of foundry products, where the participation 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 is not more than twenty years from the date of registration of the investment contract.

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.

TAX PREFERENCES FOR

INVESTMENT PRIORITY PROJECT

In accordance  with Article 290 of the Entrepreneurial Code of the Republic of Kazakhstan  , tax preferences are granted to legal entities of the Republic of Kazakhstan in the manner and on the terms provided for by the  tax legislation  of the Republic of Kazakhstan.

Types of tax preferences:

• reduction of the amount of calculated corporate income tax by 100 percent;
• application of coefficient 0 to land tax rates;
• calculation of property tax at a rate of 0 percent to the tax base;

CPN

An organization implementing an investment priority project for the creation of new industries and (or) for the expansion, renewal of existing industries reduces corporate income tax by 100 percent on income received from the implementation of priority activities through the operation of fixed assets that were introduced as new industries, expanded or updated as part of an investment priority project. Income of an organization implementing an investment priority project from carrying out other types of activities not related to priority ones is subject to corporate income tax in accordance with the generally established procedure.

An organization implementing an investment priority project is not entitled to apply other provisions of tax legislation for such a project that provide for a reduction in corporate income tax by 100 percent;

Deadline for applying such CIT reduction:

• when creating new production facilities from January 1 of the year in which an investment contract for the implementation of an investment priority project is concluded until the expiration of ten consecutive years, which are calculated starting from January 1 of the year following the year in which an investment contract for the implementation of an investment priority project is concluded;
• when expanding and (or) updating existing production facilities from January 1 of the year following the year in which the last fixed asset producing products was put into operation under an investment contract for the implementation of an investment priority project until the expiration of no later than three consecutive years, which are calculated starting from January 1 of the year following the year in which the last fixed asset producing products was commissioned under an investment contract for the implementation of an investment priority project.

However, when expanding and (or) updating existing production facilities with a phased commissioning of fixed assets producing products, provided for by the investment contract for the implementation of an investment priority project, the application period begins on January 1 of the year following the year in which the fixed asset is put into operation, producing products under the investment contract until the expiration of three consecutive years, which are calculated starting from January 1 of the year following the year in which the commissioning of a fixed asset producing products put into operation under the investment contract was made.

The deadline applies to each fixed asset that produces products and is provided for in the investment contract for the implementation of an investment priority project to expand and (or) upgrade existing production facilities.

LAND TAX

An organization implementing an investment priority project for the creation of new industries, when calculating land tax on land plots used for the implementation of an investment priority project, applies a coefficient of 0 to the corresponding land tax rates.

Deadline for the application of the first part of this paragraph:

1) begins on the 1st day of the month in which an investment contract for the implementation of an investment priority project for the creation of new industries was concluded;

2) ends no later than ten consecutive years, which are calculated starting from January 1 of the year following the year in which the investment contract for the implementation of the investment priority project for the creation of new industries was concluded.

The provisions of part one of this paragraph shall not apply in cases of property lease (lease), for use on other grounds of a land plot used for the implementation of an investment priority project, or part of it (together with buildings, structures, structures located on it or without them) .

PROPERTY TAX

An organization implementing an investment priority project for the creation of new industries, for facilities first put into operation in the territory of the Republic of Kazakhstan, calculates property tax at a rate of 0 percent to the tax base.

Deadline for the application of the first part of this paragraph:

1) starts on the 1st day of the month in which the first asset is accounted for as fixed assets in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

2) ends no later than eight consecutive years, which are calculated starting from January 1 of the year following the year in which the first asset is accounted for as fixed assets in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting.

The provisions of part one of this paragraph shall not apply in cases of transfer of objects of taxation for use, trust management or lease.