Legislative News

This CLIENT UPDATE includes amendments to the legislation of the RK and key appointments in September 2010.

The following 183 legal acts were adopted in September 2010:

• Laws of the Republic of Kazakhstan – 1;

• Decrees of the President of the Republic of Kazakhstan – 10 (of which 1 is not effective yet);

• Resolutions of the Government of the Republic of Kazakhstan – 124 (of which 11 are not effective yet);

• Other regulatory legal acts.

Most of these regulatory legal acts concern the public sector, but among them there are some which may attract your attention and affect your business in Kazakhstan in a certain way.

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

REGISTER OF GOODS, WORK AND SERVICES/LOCAL CONTENT

Resolution of the Government of the Republic of Kazakhstan dated 25 September 2010 №978

«On Approval of Rules of Formation and Maintenance of Register of Goods, Work and Services used for Conduction of Subsurface Use Operations and their Producers including Criteria of their Assessment for Entering into Register »

This Resolution approves new Rules of Formation and Maintenance of Goods, Work and Services used for Conduction of Subsurface Use Operations and their Producers including Criteria of their Assessment for Entering into this Register that determine procedure of formation and maintenance of register of goods, work and services used upon conduction of subsurface use operations and their producers including criteria of their assessment for entering into this register.

TRANSITION TO OVERALL DECLARING

Resolution of the Government of the Republic of Kazakhstan dated 23 September 2010 №975

«On Concept of Transition to Overall Declaring of Income and Property by Citizens of the Republic of Kazakhstan and Persons with Permanent Resident Card and Approval of Action Plan for Transition to Overall Declaring of Income and Property by Citizens of the Republic of Kazakhstan and Persons with Permanent Resident Card»

This Resolution approves Concept on Transition to Overall Declaring of Income and Property by Citizens of the Republic of Kazakhstan and Persons with Permanent Resident Card and Action Plan for Transition to Overall Declaring of Income and Property by Citizens of the Republic of Kazakhstan and Persons with Permanent Resident Card.

For example, in accordance with Concept and Action Plan transition to overall declaring will be implemented within 7 years on a staged basis. It is planned that transition to overall declaring will consist of the following stages:

1 stage (2010-2011): activities on determination of methodological principles of transition to overall declaring and introduction of amendments to the legislation of the Republic of Kazakhstan on issues of overall declaring;

2 stage (2012-2013): activities on elaboration of some sublegislative regulatory legal acts, fitting-out state bodies for acceptance, processing and analysis of declarations of physical persons, establishment of system notifying population about deadlines of declarations submission and development of programs of methodological assistance of state on preparation and submission of declarations, which will result in full readiness to acceptance of declarations by the beginning of 2014.

3 stage (2014-2015): submission of declarations by employees of state institutions, state enterprises and companies with state shares.

4 stage (2016): submission of primary declarations by other physical persons. State bodies shall update their databases with regard to information used upon overall declaring in the specified period, while tax authorities shall provide methodological assistance to physical persons upon submission of declaration.

5 stage (2017): full transition to overall declaring, that is all physical persons shall be obliged to submit declarations. Starting from the specified period there will be overall tax control over income and property of physical persons.

PROGRAM OF PROCUREMENT OF GOODS, WORK AND SERVICES OF SUBSURFACE USERS

Resolution of the Government of the Republic of Kazakhstan dated 20 September 2010 №965 «On Approval of Forms and Rules of Preparation and Submission of Annual, Medium-Term, Long-Term Programs of Procurement of Goods, Work and Services, Reports of Subsurface Users on Purchased Goods, Work and Services and on Fulfillment of Obligations on Kazakhstani Content in Personnel»

This Resolution approves:

1) form of annual procurement program of goods, work and services;

2) form of medium-term procurement program of goods, work and services;

3) form of long-term procurement program of goods, work and services;

4) form of subsurface users’ report on purchased goods, work and services;

5) form of subsurface users’ report on fulfillment of obligations on kazakhstani content in personnel ;

6) Rules of Preparation and Submission of Annual, Medium-Term, Long-Term Programs of Procurement of Goods, Work and Services, Subsurface Users’ Reports on Purchased Goods, Work and Services and on Fulfillment of Obligations on Kazakhstani Content in Personnel.

METHODS OF KAZAKHSTANI CONTENT CALCULATION

Resolution of the Government of the Republic of Kazakhstan dated 20 September 2010 №964 «On Approval of Uniform Calculation Methods of Kazakhstani Content by Organizations upon Procurement of Goods, Work and Services»

This Resolution approves uniform methods of calculation of Kazakhstani content by organizations upon procurement of goods, work and services.

GOODS EXEMPTED FROM VAT ON IMPORT

Resolution of the Government of the Republic of Kazakhstan dated 9 September 2010 №919 «On Approval of List of Goods, Temporary Import of Which to the Territory of the Republic of Kazakhstan is Exempted from Payment of Value Added Tax»

This Resolution specifies that goods included into Uniform Foreign Economic Activity Nomenclature of Customs Union temporary imported to the territory of the Republic of Kazakhstan from the territory of member-states of Customs Union shall be exempted from payment of value added tax, except for specific types of goods, list of which is given in this Resolution.

In particular, this list includes:

• spare parts and component items (in cases, when they are not designed for temporary imported transport vehicles), consumable materials and samples, raw materials, half-finished materials, except for temporary import for advertising and (or) demonstration purposes in single samples;

• foodstuffs, drinks, including alcoholic and non-alcoholic drinks, tobacco goods, except for temporary import for advertising and (or) demonstration purposes in single samples;

• precious metals and basic metals, except for goods made of them;

• electrical, heating and other types of energy;

• goods transported by trunk pipelines and oil pipelines;

• mineral commodity;

• products of chemical industry and industries associated with it;

• raw hide;

• goods imported by legal entities – non-residents without permanent establishment, etc.

SWITZERLAND IS EXCLUDED FROM THE LIST OF «OFFSHORE ZONES»

Resolution of the Government of the Republic of Kazakhstan dated 1 September 2010 №870 «On Amendments to Resolution of the Government of the Republic of Kazakhstan dated 31 December 2008 № 1318»

In accordance with this Resolution Swiss Confederation is excluded from list of states with preferential tax treatment.

REFINANCING RATE OF THE NATIONAL BANK

Resolution of the Board of Directors of the National Bank of the Republic of Kazakhstan dated 27 September 2010 № 79 «On Establishment of Official Rate of Refinancing of the National Bank of the Republic of Kazakhstan »

This Resolution establishes official rate of refinancing of the National Bank of the Republic of Kazakhstan starting from 1 October 2010 at the level of 7,0 percent per annum.

INTERNATIONAL LAW

Resolution of the Government of the Republic of Kazakhstan dated 4 September 2010 №895 «On Signing of Agreement between Government of the Republic of Kazakhstan and Government of the Russian Federation on Joint Activity on Geological Study and Exploration of Trans-border Imashevskoye Gas-condensate Field»

This Resolution approves Draft Agreement between the Government of the Republic of Kazakhstan and Government of the Russian Federation on Joint Activity on Geological Study and Exploration of Trans-Border Imashevskoye Gas-Condensate Field, and Minister of Oil and Gas of the Republic of Kazakhstan (S.M.Mynbayev) is authorized to sign it.

DRAFT REGULATORY LEGAL ACTS

Also we would like to provide additional information about forthcoming regulatory legal acts.

Brief on the Draft Law of the Republic of Kazakhstan “On Gas and Gas Supply»

This Draft Law specifies that provisions of this Law shall not be applied to relations arisen upon conduction of subsurface use operations.

In particular, Draft Law determines competence of state bodies, specifies priority right of the state for acquisition of assets of integrated system of commercial gas supply, stipulates issues of associated gas circulation owned by state, etc.

Draft Amendments to the Rules of Quota Determination, Terms and Procedure of Issue of Permits for Engagement of Foreign Labor Force to the Republic of Kazakhstan (September 2010)

It is expected to increase period of business trips to the RK for foreign citizens from 60 calendar days up to 120 calendar days. Draft Law broadens and clarifies many notions, simplifies procedure of permit obtaining for some categories, establishes maximum limits of foreign labor force engagement. For example, number of foreign specialists of first category should not increase 30 % from total number of employees of first category. Limit for specialists of second and third category is 10% from total number of employees of second and third category. Draft Law specifies opportunity and procedure of expansion of sphere effect of previously issued permit for engagement of foreign labor force to other administrative-territorial units.

KEY APPOINTMENTS

The following appointments were made in September 2010:

Mr. B.T.Zhumagulov was appointed to the position of Minister of Education and Science of the Republic of Kazakhstan.

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.