This CLIENT UPDATE includes amendments to the legislation of the Republic of Kazakhstan and appointments in September 2009.
The following 372 legislative acts were adopted in September 2009:
• Decrees of the President of the Republic of Kazakhstan – 7;
• Resolutions of the Government of the Republic of Kazakhstan – 191 (9 of which have not been enacted);
• Other regulatory legal acts.
Most of these regulatory legal acts are concerning public sector, but among them there are some which may attract your attention and effect your business in Kazakhstan in a certain way.
We would like to draw your attention to the following regulatory legal acts:
Resolution of the Board of the Agency of the Republic of Kazakhstan on Regulation and Control over Financial Market and Financial Organizations dated 7 July 2009 № 140 «On Amendments to Resolution of the Board of the Agency of the Republic of Kazakhstan on Regulation and Control over Financial Market and Financial Organizations dated 25 December 2006 № 296 «On Approval of Asset Classification, Contingent Liabilities and Creation of Provisions (Reserves) against them and Amendments to Resolution of the Board of the Agency of the Republic of Kazakhstan on Regulation and Control over Financial Market and Financial Organizations dated 26 March 2005 № 116 «On Amendments to Some Regulatory Legal Acts of the Republic of Kazakhstan on Issues of Regulation and Control over Financial Market and Financial Organizations » (effective from 01.09.2009)
This resolution was elaborated for improvement of legal acts regulating activity of second-tier banks and organizations carrying out some banking operations. Requirements to creation of provisions for loans granted to loan recipients having no foreign currency earnings as well as loan recipients registered in the offshore zone were tightened.
Resolution of the Government of the Republic of Kazakhstan dated 7 September 2009 № 1314 «On Introduction of Temporary Ban for Export of Petrol and Diesel Fuel» (effective from 08.09.09)
For stabilization of local market of oil products it was prohibited to export from the territory of the Republic of Kazakhstan of:
• petrol until 1 January 2010 (code TN VED 2710 11 410 0 – 2710 11 590 0);
• diesel fuel until 1 November 2009 (code TN VED 2710 19 410 0 – 2710 19 490 0) except for home heating oil.
Resolution of the Government of the Republic of Kazakhstan dated 14 September 2009 № 1370 «On Amendments to the Resolution of the Government of the Republic of Kazakhstan dated 17 August 2006 № 778» (effective from 14.09.2009)
These amendments were introduced to the Rules of State Registration of Regulatory Legal Acts, more specifically, to the procedure of refusal in state registration and return without conduction of legal due diligence of regulatory legal acts, in accordance with which it can be refused to make state registration of regulatory legal act if such act effects interests of private entrepreneur and has no appendices in the form of experts’ reports issued by accredited associations of private entrepreneurs.
Resolution of the Board of the National Bank of the Republic of Kazakhstan dated 4 September 2009 № 88 «On Establishment of Official Refinancing Rate of the National Bank of the Republic of Kazakhstan »
Starting from 4 September 2009 official refinancing rate of the National Bank of the Republic of Kazakhstan was established on the level of 7,0 per cent per annum.
Order of the Minister of Finance of the Republic of Kazakhstan dated 7 September 2009 № 368 «On Amendments to Order» of the Minister of Finance of the Republic of Kazakhstan dated 18 December 2008 № 586 «On Approval of Rules of Submission of Financial Reporting to Depository»
Deadline of submission of annual financial reporting by Organizations to the depository institution was extended until 30 October of the year following the reporting year.
Agreement between Government of the Republic of Kazakhstan and Government of the Russian Federation On Cooperation in the Sphere of Joint Control in Kazakhstani and Russian State Boarder (Orenburg, 11 September 2009 )
The present Agreement was aimed for simplification of procedure of Kazakhstani and Russian state boarder crossing by persons and movement of cargo, goods, transport means and animals across the boarder, reduction of formalities, time of control as well as improvement of effectiveness by means of joint control.
Draft Agreement between Government of the Republic of Kazakhstan and Government of Kuwait on Avoidance of Double Taxation and Prevention of Tax Avoidance in respect of Revenue-Based Taxes
Agreement is extended to the following existing taxes:
a) in respect of the Republic of Kazakhstan: corporate income tax; individual income tax;
b) in respect of Kuwait State: corporate income tax; net income tax from shareholders of Kuwait companies paid to the Kuwaiti Fund of Science Development (KFSD); Zakat; tax collected in accordance with national legislation of provision of material needs of employees.
DRAFT REGULATORY LEGAL ACTS
Also we would like to provide additional information about forthcoming regulatory legal acts.
Brief on Draft Law of the Republic of Kazakhstan «On Amendments to the Law of the Republic of Kazakhstan «On Natural Monopolies and Regulated Markets» (18 September 2009)
Draft law is aimed at improvement of tariff policy and stimulation of activity of natural monopolies holders and regulated markets. Draft law establishes differential tariffs for water subject to volumes of its consumption. Draft Law also proposes to give right to predominant entity to increase and decrease prices for its services independently, but not higher than justified price with submission only of this information to the authorized body.
Brief on Draft Law of the Republic of Kazakhstan «On Amendments to Some Legislative Acts of the Republic of Kazakhstan on Issues of Electronic Funds»
Main objective of the Draft Law is legislative consolidation of notion and legal status of «electronic funds». In case of adoption of this Draft Law it is expected that competitive environment will be developed in the market of financial services, conditions for entry of business entities to market segment of electronic business by means of cost minimization due to participation in the system of «electronic funds», development of e-commerce in Kazakhstan and development of Internet use for trade activity by means of use of alternative payment method that differs from traditional payment instruments.
LETTERS OF TAX COMMITTEE
Letter of the Tax Committee of the Ministry of Finance of the Republic of Kazakhstan dated 25 September 2009 № NK-09-27/9272 «On Some Issues of Cameral Control»
In the process of formation of notification on elimination of violations discovered by tax services bodies in result of cameral control, taxpayers that classify costs for CIT as deductions and take VAT amounts as an offset in respect of operations with taxpayers recognized in the court as false enterprise should specify norms of Tax Code correctly. In accordance with sub-item 2) Article 115 of the Tax Code costs on operations with taxpayer recognized as false enterprise on the basis of effective court decision or resolution incurred from the beginning of criminal activity recognized by the court should not be subject to deduction. In accordance with sub-item 5) item 1 Article 258 of the Tax Code VAT previously taken as an offset should be excluded from offset on operation with taxpayer recognized as false enterprise on the basis of effective court decision or resolution.
Letter of the tax Committee of the Ministry of Finance of the Republic of Kazakhstan dated 26 September 2009 № NK-06-20/9307 «Regarding Requisites of Certificate on VAT Registration subject to Specification in Invoices; costs subjects to deduction for CIT purposes»
In accordance with sub-item 5) item 5 of Article 263 of the Tax Code one of mandatory requisites required to be specified in invoice is number of certificate of supplier – VAT payer on VAT registration. In VAT Declaration (form 300.00) in the section «General Information about Taxpayer» VAT payer should specify series and number of Certificate of VAT Registration. In invoices and VAT tax reporting including for past periods it is necessary to specify requisites of certificate, which taxpayer has on the date of invoice issue or drawing of tax reporting. Deductions should be made in case of availability of documents confirming costs related to its activity aimed at income gaining. These costs should be subject to deduction in the tax period when they were actually incurred determined in accordance with international standards of financial reporting and requirements of the legislation of the Republic of Kazakhstan on Accounting and Financial Reporting.
The following appointments were made in September 2009:
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.