Novelties in Legislation

This Client Update covers the key amendments to the laws of the Republic of Kazakhstan (“RK”) and various legal developments introduced in March 2018.

NOVELTIES IN LEGISLATION

The laws covered by the present Client Update are related to both public and private sectors. Some of them may be of interest to you as they may affect your business in Kazakhstan.

We would like to draw your attention to the following legal acts.

INTERNATIONAL AGREEMENTS

EES Import Customs Duties

On 29 May 2014, the Kyrgyz Republic joined the Eurasian Economic Union Treaty (“the Treaty”). On 23 December 2014, a Protocol on Application of Certain Provisions of the Treaty (“the Protocol”) was signed. Kazakhstan ratified the Protocol on 14 March 2018 pursuant to the Law No. 143-VI .

The Protocol regulates the distribution of import customs duties for each member state of the Eurasian Economic Union:

  • The Republic of Armenia - 1.220 per cent;
  • The Republic of Belarus – 4.560 per cent;
  • The Republic of Kazakhstan - 7.055 per cent;
  • The Kyrgyz Republic - 1.900 per cent;
  • The Russian Federation - 85.265 per cent.

The Protocol will come into force from the 1st day of the month following the month when the last written notification required for the enactment of the Protocol is received by the depositary through diplomatic channels.

Specific EEU Subsidies

On 14 March 2018, the President of the RK signed the Law No. 144-VI, which ratifies the Agreement of the Eurasian Economic Union (“the EEU”) concerning specific subsidies The Agreement was signed in Kazan city on 26 May 2017 .

The Agreement among others:

  • Provides for interaction between member states of the EEU and the Eurasian Economic Commission (the “Commission”) in connection with specific subsidies for industrial goods granted by the member states;
  • Determines the procedure for voluntary coordination with the Commission of the specific subsidies granted by member states, as well as the outline of proceedings initiated by the Commission in relation to those specific subsidies.

The Agreement will come into force from the date of obtaining by the depositary through diplomatic channels of the written notification that the EEU member states have fulfilled the domestic procedures required for the enactment thereof.

Free Trade Zone Between the EEU and Its Member States and the Islamic Republic of Iran

On 7 March 2018, members of the Council of the Commission signed the Resolution No. 17 “On the Draft Interim Agreement Leading to the Establishment of the Free Trade Zone between the Eurasian Economic Union and Its Member States, on the One Hand, and the Islamic Republic of Iran, on the Other Hand”.

The document came into force on 17 March 2018.

DECREES

Privatization for 2016-2020

On 3 March 2018, the Prime-Minister of the RK signed the Decree “On Amendments to Decree No. 1141 of the Government of the Republic of Kazakhstan dated 30 December 2015 "On Certain Issues of Privatization for 2016-2020” (the “Decree”).

The Decree excludes a number of enterprises from the Integrated Privatization Plan for 2016-2020:

I. Subsidiary organizations of NC KazMunayGas JSC:

  1. KMG Automation LLP;
  2. TH Kazmunaigaz N.V.

II. Subsidiary organizations of NC Kazakhstan Temir Zholy JSC

  1. Baggage transportation JSC;
  2. Wagon service JSC;
  3. Suburban transportations JSC.

III. Subsidiary organizations of Kazakhtelecom JSC:

  1. KT-AiIks LLC;
  2. Nursat+ LLP;

IV. The State Revenue Committee of the Ministry of Finance of the RK:

  1. Rehabilitation and assets management company JSC.

The Decree came into force on 15 March 2018.

Promotion of Entrepreneurship

On 27 March 2018, the Prime-Minister of the RK signed the Decree No. 138 “On the Approval of the Basic Conditions for Financing the Regional Budgets, Budgets of the Cities of Astana and Almaty for the Promotion of Entrepreneurship in the Regional Centers, the Cities of Astana, Almaty, Turkestan, Semey and Monocities for 2018” (the “Decree No. 138”).

The major financing conditions under the Decree 138 include:

  • Loans are provided to borrowers, which are local executive bodies;
  • The total amount is 3,200,000,000 (three billion two hundred million) tenge;
  • The period is 7 (seven) years at 0.01% interest rate;
  • The aim is to promote entrepreneurship in the regional centers, the cities of Astana, Almaty, Turkestan, Semey and monocities for 2018;
  • Drawdown period is 6 months from the moment the loan is transferred to the local executive body;
  • The beneficiaries must quarterly, not later than the 10th day of the month following the reporting period, report to the Ministry of Finance of the RK and the Ministry of National Economy of the RK on disbursement of a loan.

The Decree came into force on 27 March 2018.

Re-financing Rate of the National Bank

On 5 March 2018, the Chairman of the National Bank of the RK signed the Decree of the Board of Directors of the National Bank “On the Establishment of the Official Re-financing Rate of the National Bank of the Republic of Kazakhstan”.

The refinancing rate of the National Bank of the RK was set at 9.5% per annum as from 6 March 2018.

DRAFT LAWS

Double Tax Treaty with the Republic of Belarus

The Agreement on Avoidance of Double Taxation between the two states was signed back in April 1997 in Minsk and ratified by the Law of the RK dated 31 October 1997 (“the Agreement”).

On 29 March 2018, the Draft Law on ratification of a Protocol that amends the initial Agreement (the “Draft Law”) was sent to the President of the RK for signing.

The Draft Law, among other things:

  • Revises several terms and names of Kazakhstan taxes;
  • Expands the term “permanent establishment (representative office)”;
  • Provides for measures against tax evasion, such as expansion of cooperation between the tax authorities of the two states;
  • Releases professors, teachers and researchers who are residents of one of the states from taxation for 24 consecutive months from the date of arrival in the other state.

On Advocacy and Legal Assistance

The Draft Law “On Advocacy and Legal Assistance” (the “Draft Law”) is currently being considered by the Majilis. The necessity to reform the legislation on the legal profession in general and advocacy in particular has been escalating following the recent reforms of the judicial and law enforcement systems. In addition, the Draft Law introduces the institution of legal consultants and grants the legal status to them.

SIGNUM will present a detailed review of the Law “On Advocacy and Legal Assistance” after its official publication.