Legislative News

The present Client Update includes Legislative News and key appointments in April 2009.

The following documents were adopted in April 2009:

• Laws of the Republic of Kazakhstan -24

• Decrees of the President of the Republic of Kazakhstan – 13;

• Resolutions of the Government of the Republic of Kazakhstan – 109 (7 of which have not been enacted);

• Other regulatory legal acts.

Among new legal acts, there are some legal documents that can attract your attention and have certain impact on your business in Kazakhstan.

We would like to draw your attention to the following regulatory legal acts:

Resolution of the Government of the Republic of Kazakhstan dated 20.05.2009 №367«On Approval of Unified Methodology for the Calculation of Kazakh Content in Procurement of Goods, Works and Services» (effective from 14th of April 2009)

In accordance with the Resolution methodology for the calculation of Kazakh content in procurement of goods, works and services has been introduced.

Highlights of this Methodology are as follows:

• there is a definition of the term “Kazakh content”;

• there are certain entities which must follow the procedures to determine the amount of Kazakh content in the supply of goods, works and services (sub-surface users and/or legal entities authorized by sub-surface users to procure goods, services and works, national holding companies, their affiliated companies and etc.);

• There are formulas for calculation of Kazakh content in the supply of goods, works and services.

Order of the Minister of Finance of Republic of Kazakhstan dated 12.02.2009 №63 «On Confirmation of the Rules on Conclusion of the Transfer Pricing Agreement» (effective from 13th of April 2009)

According to approved Rules there is certain procedure of Conclusion of the Transfer Pricing Agreement, responsibilities of Parties, unilateral termination of the Agreement and obligatory conditions which should be foreseen in Transfer Pricing Agreement. Some of them are i)description of the method and ii) information sources which are used for defining the price of the deal and etc.

Rules stipulate that the Transfer Pricing Agreement may be concluded for the term of not more than three years.

Resolution of the Government of the Republic of Kazakhstan dated 12.03.2009 №292 «On Confirmation of the List of Officially Recognized Publications on Market Prices» .

In accordance with transfer pricing legislation there is a list of officially recognized publications on market prices. Officially recognized publications are:

• Crude Oil Market Wire Basic Service

• Clean Tanker Wire Basic Service

• Metal Bulletin

• 3000Extra, RTC Advanced и другие.

Resolution of the Government of the Republic of Kazakhstan dated 14 April 2009 № 513«On Approval of Licensing Rules on Activity in the Sphere of Telecom, Rules on Holding Tenders for Obtaining the Licenses in the Sphere of Telecom and Qualification Requirements for Rendering Services in the Sphere of Telecom»

In accordance with this Resolution Government approved the Rules on holding tenders for obtaining the licenses in the sphere of telecom.

The Licenses and (or) Appendixes to the License on carrying out services in the sphere of telecom with usage of radio-frequency spectrum and numeration resource is granted on a competitive basis if:

• Telecom services with usage of radio-frequency spectrum will be granted in diapason where International Liaison Committee recommends to limit the quantity of operators on certain territory in case the insufficient volume of radio-frequency spectrum;

• Telecommunication links of general use on certain territory has limited recourses for network access.

INTERNATIONAL LAW

In accordance with Law of the RK № 148-IV dated 3 April 2009, RK ratified Agreement between Government of the Republic of Kazakhstan, Government of the Republic of Belarus and Government of the Russian Federation on cooperation in the sphere of levy of indirect taxes in case of export and import of goods, carrying out works, rendering services in custom union.

DRAFT LAWS

Also we would like to draw your attention to forthcoming legislative acts.

Brief on Draft Law of the Republic of Kazakhstan «On State Regulation of Production and Turnover of Separate Types of Oil Products»

This draft law establishes legal mechanism of purchase of crude oil and (or) gas condensate by oil producers allowing exporters to sell crude oil on domestic market on equal profitable basis same as import of crude oil. Highlights of this draft law are as follows:

• Analysis and approval of investment components which are applicable for the period of implementation of investment projects for oil producers is the subject to control by the state side;

• Activity on wholesale services of oil products is subject to licensing;

• There are requirements on ownership of material base for entities which will carry out wholesale activity of oil products;

• There is strict sharing the powers of authorized state bodies which carry out management in the sphere of production and oil products turnover.

Please, note that it is only draft document.

Brief on Draft Law of the Republic of Kazakhstan «On Code on Administrative Procedure»

Draft law was elaborated for further realization of Plan of legislative work of the Government for 2009 year. Main innovations are:

• differentiation of responsibility for small and medium-sized business entities;

• Implementation of common frame procedure of defining the size of fine;

• Review of size of fine, components of crime by the way of its dividing for the separate components of crime in order of social danger degree;

Please, note that it is only draft document.

KEY APPOINTMENTS:

• Tusupbekov Rashid Toleutaevich was appointed to the position of Minister of Justice of the RK;

• Mami Kairat Abdrazakuly was appointed to the position of General Prosecutor of the RK;

• Alimbekov Musabek Turginbekovich was appointed to the position of Chairman of Supreme Court of the RK.

Information contained in this Client Update is of general nature and cannot be used as legal advice or recommendation. Please seek for a specific advice in relation to any questions. Please note that Kazakhstan and Turkmenistan are emerging economies and their legislation and legal systems are in constant development. Should you have any questions or would like to discuss subjects addressed in this Client Update please contact us.