Legal Alert September - November
SIGNUM regularly provides Legislative/Regulatory Alerts to keep Clients informed about important laws and regulatory changes in the Republic of Kazakhstan (“RK”). This Alert covers recent developments introduced in September – October 2024 related to:
1. Decriminalization of Certain Types of Economic Offences
As of 5 September 2024, amendments on decriminalization of certain types of economic offenses have come into force1.
Thus, the following articles were excluded from the Criminal Code of the RK:
1) Article 219 - Illegal receipt of credit or misuse of budget credit;
2) Article 241 - Violation of the legislation of the RK on accounting and financial reporting.
It is assumed that investigations on tax evasion will be conducted under the following articles of the Criminal Code of the RK:
1) Article 216 - Committing actions on issuing an invoice without actual performance of work, rendering of services, shipment of goods;
2) Article 244 - Evasion of a citizen from payment of tax and (or) other obligatory payments to the budget;
3) Article 245 - Evasion of tax and (or) other obligatory payments to the budget from organizations.
2. List of Transactions Which Are Not Subject to Certification by Means of a Simple Electronic Signature
The List of transactions which are not subject to certification by means of a simple electronic signature was approved2.
The List includes:
1) Transactions made in accordance with the requirements of the Law of the RK “On Public Procurement”;
2) Transactions made within the framework of creation, maintenance, implementation of informatization objects, the owner of which is the governmental, as well as non-governmental information systems integrated with the information system of the governmental body;
3) Transactions with quasi-governmental sector entities;
4) Transactions related to fulfillment of governmental assignments;
5) Transactions (agreements) on purchase/sale of governmental property by direct targeted sale;
6) Transactions (agreements) on purchase/sale of governmental property at a tender through two-stage procedures;
7) Transactions in the sphere of turnover of medicines, land relations, activities of defense enterprises and critical infrastructure.
A simple electronic signature may be used since July 2024 when interacting with foreigners, foreign legal entities, and legal entities with foreign participation3.
3. Notification of Personal Data Breaches
At the end of August 2024, the Rules for the implementation of notification of personal data subjects on personal data security breaches came into force4.
These Rules provide for immediate notification - within 1 (one) business day from the moment of detection of personal data security breaches by the owner and (or) operator to the authorized authority about this breach, indicating the following information:
1) contact details of the person responsible for organization of personal data processing (if any);
2) measures taken to eliminate the breach;
3) personal data of subjects necessary for further notification: surname, name, patronymic (if any) and (or) individual identification number and (or) cellular subscriber number.
The authorized authority shall, within 1 (one) business day from the moment of receiving the notification on personal data security breaches, send the relevant information to the operator of the information and communication infrastructure of “eGov”, which in its turn shall notify the subjects about the personal data security breaches by sending information about it to the user's cabinet on the eGov portal or to their cellular subscriber number in the form of SMS.
4. Digital VAT Pilot Project
The tax authorities are planning to launch a pilot project to modernize and improve the service of VAT refund from the budget using a digital tenge (“Digital VAT”)5.
According to the Rules, the participants of the pilot project are:
1) Governmental Revenue Committee;
2) governmental revenue authorities for regions, cities of republican significance and the capital city - the service provider;
3) VAT payers - service recipients voluntarily participating in the pilot project:
selling goods for export, except for producers of exported goods;
selling fuel and lubricants to foreign airlines performing international flights, international air transportation, for refueling of aircrafts;
direct suppliers of these entities, as well as suppliers of subsequent levels, who have tax obligations to pay VAT to the budget at the end of the reporting period and (or) to pay VAT on imported goods;
4) National Bank of the RK;
5) National Payment Corporation of the National Bank of the RK JSC;
6) second-tier banks voluntarily participating in the pilot project;
7) Treasury Committee of the Ministry of Finance of the RK;
8) legal entities engaged in the development of accounting systems and voluntarily participating in the pilot project.
Participation of VAT payers in the pilot project is voluntary. Consent to participation of a taxpayer in the pilot project is the opening of a digital account by a second-tier bank in the digital tenge system to a taxpayer participating in the pilot project and confirmation of payment in digital tenge.
A taxpayer participating in the pilot project purchases a digital tenge, makes payments with suppliers using them and settles VAT obligations with the governmental budget also using them.
The refund of the excess VAT shall be made within 15 (fifteen) business days after the last date established by the Tax Code for submission to the governmental revenue authorities of the VAT declaration for the tax period, in which the request for refund of the excess VAT is indicated in accordance with Chapters 48 and 49 of the Tax Code, without tax audits.
The following taxpayers participating in the pilot project are eligible for VAT refunds under the pilot project:
1) selling goods for export, except for producers of exported goods;
2) selling fuel and lubricants to foreign airlines performing international flights, international air transportation, for refueling of aircrafts.
The Digital VAT pilot project is expected to run until 31 December 2025.
5. Administrative violation in the mass media
An article for violations in the mass media sector has been added6 to the Code of the Republic of Kazakhstan on Administrative Offenses. Starting from 1st October, distribution of conditional access cards to the services of television and radio broadcasting operators and equipment intended for individual reception of television and radio signals of television and radio broadcasting operators who do not have a license in the sphere of television and radio broadcasting and do not have their own satellite broadcasting systems on the territory of the RK entails a fine of up to 100 MCI7 with confiscation of conditional access cards.
6. Activities in non-ferrous and ferrous metals sector
A new permit has been added8 to the Law of the Republic of Kazakhstan "On Permits and Notifications" issued for the activity of collecting (procuring), storing, processing and selling scrap and waste of non-ferrous and ferrous metals by legal entities. Let us remind you that previously only a notification had to be submitted for this above-mentioned activity. Now, a permit is required to engage in this activity.
The issuance of a permit for the activity of collecting, storing, processing and selling scrap and waste of non-ferrous and ferrous metals by legal entities is a public service and is provided by local executive bodies (LEB) of regions, cities of republican significance, and the capital.
To receive the service, you need to send the following documents to the service provider (local executive body) through the e-government web portal:
an electronic application signed with an EDS;
confirmation of payment of the permit fee, except in cases of payment through the PSHEP;
information about the identity document of an individual, about the governmental registration of a legal entity, individual entrepreneur of the Republic of Kazakhstan, the service provider receives from the relevant governmental information systems;
documents on the service recipient’s compliance with permitting requirements (except for documents and information that can be obtained from information systems).
The amount of the governmental fee for the service is 10 MCI9.
7. Judicial jury at the Supreme Judicial Council
Disciplinary cases against judges will be reviewed10 by the Judicial Jury of the Supreme Judicial Council. Judges are appointed to the Judicial Jury on the recommendation of an extended plenary session of the Supreme Court in accordance with paragraph 2-1 of Article 22 of the Constitutional Law, and representatives of the legal community on the recommendation of organizations in accordance with their charter - by the Supreme Judicial Council. The Supreme Judicial Council has the right to reject candidates for the Judicial Jury by a reasoned decision.
The Chairman of the Judicial Jury is elected by the Judicial Jury itself from among its members.
The grounds for the Judicial Jury to consider materials regarding a judge are:
a motion by the Chairman of the Supreme Court regarding a judge for committing a discreditable offense contrary to judicial ethics, against a court chairman or the chairman of the judicial panel of a court for improper performance of official duties;
decisions of plenary sessions of regional courts and the Supreme Court to transfer materials to the Judicial Jury regarding a court chairman or the chairman of the judicial panel of a court for review of his/her actions within the framework of disciplinary proceedings for improper performance of official duties;
a motion on the issue of bringing a judge to disciplinary responsibility for a gross violation of the law during the consideration of court cases and materials;
decisions of the Judicial Ethics Commissions on the transfer of materials to the Judicial Jury regarding a judge to verify his actions within the framework of disciplinary proceedings for committing a discreditable offense contrary to judicial ethics, as well as information contained in the mass media, on online platforms, in appeals from individuals and legal entities, the results of which confirm the fact that the judge committed a discreditable offense contrary to judicial ethics.
8. Lottery activities
According to the amendments11, the lottery conditions, amendments and additions thereto are agreed upon by the lottery operator in the authorized body. The procedure for holding electronic lotteries has been detailed, including requirements for electronic lottery tickets.
Electronic lottery tickets must contain the following information:
name of the lottery operator;
electronic lottery ticket number;
price of the electronic lottery ticket;
link to access extended information about the location, telephone numbers and Internet resource of the lottery operator, name of the lottery, number or name of the draw, date and place of the drawing of the prize fund, place and terms of receipt of the winnings, the amount of the prize fund.
Expertise of winning electronic lottery tickets is carried out by the lottery operator if the amount of the winnings exceeds 190 MCI.
The lottery operator sells lottery tickets independently or through a distributor (agent) of the lottery.
Lottery tickets are distributed through:
lottery terminals;
non-stationary trading facilities;
post offices of the National Postal Operator;
offices of the lottery operator (lottery center).
Lottery tickets may not be distributed, and lottery terminals may not be installed in:
apartment buildings, dormitories;
educational institutions and within a hundred meters of them;
healthcare institutions and within a hundred meters of them;
religious buildings (structures);
detached buildings and structures in which cultural organizations are located.
Distribution of lottery tickets, electronic lottery tickets, installation of lottery terminals in any manner and by any means other than those provided for by law is prohibited.
9. Information from e-invoices classified as tax secrecy
On 8 November 2024, the Ministry of Finance and the Supreme Audit Chamber of Kazakhstan issued a joint Order12 amending the Rules13 f for providing taxpayer information constituting tax secrecy. These amendments expand the list of data that governmental revenue authorities may share with external governmental audit and financial control bodies without the taxpayer's written consent.
The amendments now classify information from electronic invoices (e-invoices) as part of tax secrecy. Specifically, the list of data includes:
Details of the supplier and recipient;
Details of the consignor and consignee;
Information about goods, works, and services:
Name;
Origin of the goods;
Code of the Eurasian Economic Union (EAEU) commodity nomenclature;
Unit of measurement, quantity, price, value;
Excise tax, VAT;
Reference to the customs declaration (for imports);
Date of the transaction.
These changes aim to enhance transparency and efficiency in external governmental audit and financial control.
The joint order and regulatory resolution came into effect on 8 November 2024.
2. Employment of foreign labor
The Ministry of Labor and Social Protection of the Population of the Republic of Kazakhstan has developed amendments14 to the List of Persons exempt from requiring local executive bodies’ permits to employ foreign labor.
Key amendments:
(1) New Categories:
The list now includes foreign nationals holding the positions of:
Chief Executive Officer,
Deputy Chief Executive Officer.
This applies exclusively to legal entities in Kazakhstan with 100% foreign ownership, provided their charter capital is equivalent to at least USD 300,000.
(2) Quantity limitations:
Each company is permitted to employ no more than one foreign national for each of the specified positions.
These amendments aim to support foreign investors establishing businesses in Kazakhstan while curbing illegal immigration by clarifying the requirements for targeted individuals.
- Law of the RK dated 5 July 2024 No. 113-VIII “On Amendments and Additions to Some Legislative Acts of the RK on Decriminalization of Certain Types of Economic Offenses and Improvement of the Legislation of the RK on Combating Legalization (Laundering) of Proceeds of Crime and Financing of Terrorism”. Entered into force on 5 September 2024.
- Order of the Minister of Digital Development, Innovation and Aerospace Industry of the RK dated 2 September 2024 No. 531/НҚ “On Approval of the List of Transactions Which Are Not Subject to Certification by Means of a Simple Electronic Signature”. Entered into force on 21 September 2024.
- Article 20-1 of the Law of the RK dated 24 November 2015 No. 418-V “On Informatization”.
- Order of the Acting Minister of Digital Development, Innovation and Aerospace Industry of the RK dated 9 August 2024 No. 481/HҚ “On Approval of the Rules for Notification of Personal Data Subjects on Personal Data Security Breaches”. Entered into force on 26 August 2024.
- Joint Order of the Minister of Digital Development, Innovation and Aerospace Industry of the RK dated 23 September 2024 No. 575/НҚ and the Minister of Finance of the RK dated 16 September 2024 No. 628 “On Approval of the Rules and Terms of Implementation of the Pilot Project to Modernize and Improve the Provision of Public Service “Return of Value Added Tax from the Budget” (“Digital VAT”)”. To be effective from 7 October 2024.
- Law of the Republic of Kazakhstan dated 8 July 2024 No. 117-VIII "On Amendments and Additions to the Code of the Republic of Kazakhstan on Administrative Offenses". Entered into force on 9 September 2024.
- KZT 369,200 in 2024.
- Law of the Republic of Kazakhstan dated 6 April 2024 No. 71-VIII "On Amendments and Supplements to Certain Legislative Acts of the Republic of Kazakhstan on Business Matters". Entered into force on 8 June 2024.
- KZT 36,920 in 2024.
- Constitutional Law of the Republic of Kazakhstan dated 5 July 2024 No. 109-VIII "On Amendments and Additions to Certain Constitutional Laws of the Republic of Kazakhstan". Entered into force on 17 July 2024.
- Order of the Minister of Tourism and Sports of the Republic of Kazakhstan dated 23 September 2024 No. 165 "On Amending the Order of the Minister of Culture and Sports of the Republic of Kazakhstan dated 8 February 2023 No. 45 "On Approval of the Rules for Conducting Lotteries". Entered into force on 6 October 2024.
- Joint Order of the Minister of Finance of the RK dated 08.11.2024 №758 and normative resolution of the Supreme Audit Chamber of the RK dated 08.11.2024 №14-N-K «On Amendments to the Joint Order of the Ministry of Finance of RK dated 30.11.2018 №1040 and the Normative Resolution of the Supreme Audit Chamber for Control Over the Execution of the Republican Budget Dated 04.03.2019 №3-NҚ...»
- Joint order of the Ministry of Finance of the Republic of Kazakhstan dated 30.11.2018 № 1040 and the normative resolution of the Supreme Audit Chamber for control over the execution of the republican budget dated 04.03.2019 № 3-N K «On Approval of the Rules of Submission by Governmental Revenue Authorities to the Authorized Body of External Governmental Audit and Financial Control of Information in the Field of Customs Regulation and Information about the Taxpayer (Tax Agent), Constituting a Tax Secret, without Obtaining Written Permission of the Taxpayer and the List of Information to be Submitted».
- Resolution of the Ministry of Labor and Social Protection of Population of the Republic of Kazakhstan dated 26.11.2024 «On Amendments to the Resolution of the Government of the Republic of Kazakhstan dated 24 November 2023 № 1041 «On Determining the List of Persons who do not Require Permits of Local Executive Bodies to Attract Foreign Labor for Labor Activities».
