Doing business in Kazakhstan
- How quickly can I set up a business?
- What is the minimum investment needed?
- How can I raise finance?
- What are the legal requirements for setting up my business?
- What structure should I consider?
- What advice can you give me in regards to payroll and taxation requirements?
- Is there anything else that I should know?
How quickly can I set up a business?
A minimum of 14 days.
What is the minimum investment needed?
Investments depends on the scale of the project. Finance could be provided by investors. Taking a bank loan can be problematic, but it is possible.
How can I raise finance?
Finance could be provided by investors. Taking a bank loan can be problematic, but it is possible.
What are the legal requirements for setting up my business?
If you want to open a company in Kazakhstan remotely, you are highly recommended to stick with a Limited Liability Partnership. What makes it popular with foreign businesspeople is that it places minimum registration requirements on applicants. Also, an LP is easy to manage and the tax burden that an LP owner must bear isn’t that heavy.
- Come up with a name; if a name is in Latin, it must be translated into Kazakh/Russian;
- Have at least one founder (legal entities)
- Have at least one director (preferably a resident of EAEU countries)
- Have at least one shareholder (legal entities)
- Have a minimum authorized capital
- Have a registered office and address.
What structure should I consider?
According to the legislation of the Republic of Kazakhstan, legal entities whose primary activity is deriving of profit, can be established in the form of the following types of companies:
Joint Stock Company (JSC)
The Kazakhstan joint stock company (JSC) requires a minimum paid-up share capital, and must have at least 1 director who must be a natural person. Only one shareholder of any nationality is required to complete the incorporation process. All incorporation documents must be translated and submitted in Kazakh or Russian and notarizes by the nearest Kazakh notary public;
A Kazakhstan JSC is legally required to submit audited financial statement annually. It also must issue shares to raise funds to support its business activities.
Limited Liability Partnership (LLP)
LLP is the most common form of legal entity used by foreigners and locals
Kazakh limited partnerships do not subject their owners to unlimited liability for the partnership’s losses.
Can be set up by a single partner, who can be of any nationality. Our Client must also i) invest a minimum partnership’s capital and ii) appoint one director, who must be an individual;
All legal documents must be translated into either Kazakh or Russian. All translations also have to be notarized before submission for incorporation.
Representative Office (RO)
while the Kazakhstan representative office can be 100% foreign owned, it is not allowed to make direct sales within Kazakhstan. Consequently, this entity can only engage in i) market research and ii) promoting the business of the parent company.
Foreign companies may establish branch offices in Kazakhstan by appointing a local representative. A branch does not require capital injection from its parent company to commence operations in Kazakhstan. The branch office must maintain a registered office in Kazakhstan.
What advice can you give me in regards to payroll and taxation requirements?
Salaries in Kazakhstan are subject to the taxation of:
- Mandatory Pension Contributions – 10%
- individual income tax – 10%
- compulsory social health insurance contributions – 2%
As for the employer, he/she needs to pay:
- a social tax of 9.5%
- social health insurance – 2%
- social contributions – 3,5% of their payroll.
- Frequent changes in Kazakh law make it important to have robust tax planning to enable businesses to cope with changes in the law and implement structural changes as required without significant tax costs.
- Corporate and personal income tax rates in Kazakhstan are low by international standards, but penalties for non- payment and non-reporting, whether intentional or not, are high. The first focus of tax planning in Kazakhstan should be to confirm that all tax that ought to be paid in Kazakhstan is paid and reported.
- The scope of withholding taxes (WHTs) on cross-border payments is wide, and rates are high (sometimes even when the recipient has never entered Kazakhstan).
- According to currently enacted tax law, income received by foreign individuals (cash and in-kind) for work performed in Kazakhstan (regardless of where the income is paid) is treated as Kazakh- source income and is subject to Kazakh personal income tax (PIT)
- Corporate Income Tax is 20%.
- VAT is 12% or 0% (when exporting goods)
- Dividend tax is 5-15%
Is there anything else that I should know?
If you are going to register a company in Kazakhstan remotely, you should definitely consider doing it in one of the country’s free economic zones:
- Astana, New City (Nur-Sultan) — construction of industrial facilities and infrastructure
- National Industrial Petrochemical Technopark (Atyrau region) — manufacture of petrochemical products and construction of industrial facilities
- Morport Aktau (Mangystau region) — metallurgy, construction of industrial facilities
- Innovative Technologies Park (Almaty) — IT services
- Ontustik (South Kazakhstan region) — production of textile and other materials
- Saryarka (Karaganda region) — metallurgy, construction of industrial facilities
- Khorgos Eastern Gates
(Almaty region) — production of food, textiles, non-metallic minerals, and other materials
- Pavlodar (Pavlodar) — manufacture of chemical and petrochemical materials and construction of industrial facilities
- Taraz Chemical Park (Taraz) — manufacture of chemicals and non-metallic minerals
- Astana-Technopolis (Nur-Sultan) — production of food, pharmaceuticals, machinery and other products and construction and commissioning of infrastructure facilities
- Turkistan (Turkistan) — construction of infrastructure, industrial and social facilities
- ICBC Khorgos (Almaty region) — development of cross-border trade and economic cooperation, development of export-oriented manufacturing
- Qyzyljar (Petropavlovsk) — production of food, electronics, mechanical engineering and medical services
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