Monthly Legal Alert: April 2021

SIGNUM regularly provides Legislative/Regulatory Alerts to keep Clients informed about important laws and regulatory changes in the Republic of Kazakhstan (“RK”). This Alert includes recent developments introduced in April 2021 related to:

1.     EAEU trademarks;

2.     Renewable energy sources;

3.     State re-registration of legal entities;

4.     Investment tax credit.

1) EAEU Trademark Agreement[1]

On 1 April 2021, the Republic of Kazakhstan ratified the Treaty on Trademarks, Service Marks and Appellations of Origin of Goods of the Eurasian Economic Union, signed in Moscow on 3 February 2020[2].

This Treaty provides for the following:

1)     The introduction of the definition of “EAEU Trademark” which is granted a simultaneous protection in all EAEU member states.

2)     The EAEU Unified Trademark Register, which is available at the official website of the EAEU at https://docs.eaeunion.org/ru-ru.

3)     The applicant is entitled to file its application with any patent office of the EAEU countries.

2) Renewable Energy Sector Developments

The following amendments were introduced to the Rules for the purchase and sale of electrical energy produced by renewable energy facilities[3], Rules for the tariff definition for the support of renewable energy sources[4], as well as the Standard forms of contracts in the renewable energy field[5]:

New definitions:

 1)     "Energy producing organization using energy waste disposal" - a legal entity that produces energy from energy waste disposal.

2)     "Flood electric energy" - electric energy generated by energy producing organizations (hydroelectric power plants) during the period of environmental water releases in the volume according to the actual balance of production and consumption of electric energy and sold by the financial settlement center ("FSC") at ceiling tariff.

Additional commitments for the energy producing organization:

1)     Following execution of the purchase agreement, submitting to the FSC of a copy of the commissioning act of an automated system for commercial metering of electrical energy within 5 business days following the date of the comprehensive test.

2)     Following completion of the comprehensive testing of electrical installations, submitting to the FSC on a regular basis of the information on i) the timing and nature of repair work in case of the output of generating equipment for scheduled maintenance (a week before the start of repair work) and ii) the nature of violations in case of forced deviations from the daily schedule of electrical energy in case of an emergency or improper operation of devices, their damage or deviation of parameters from the normalized indicators that affect the generation rate of the renewables object (during the day).

3)     Submitting to the FSC of 18-bit identification codes of the automated commercial accounting system 5 business days prior to the comprehensive tests.

4)     Entering the information on the forecast volumes of electricity supply to the network for the upcoming operational day into the automated information system of the system operator, on a day-to-day basis before 10 AM.

The following Standard forms of contracts have been approved:

1)     On purchase of electric energy by the FSC from an energy producing organization using energy waste disposal at auction prices;

2)     On purchase of electric energy by the FSC from an energy producing organization that produces and supplies flood electric energy to the network at ceiling tariffs.

Other amendments:

1)     With the proportional distribution of electric energy by the FSC between conditional consumers, the volume of electricity supply to the network of conditional consumers supplying flood electric energy to the FSC is reduced by the corresponding volume of flood electric energy according to the actual balance of production and consumption of electric energy in the wholesale electricity market.

2)     The introduction of procedure for the centralized purchase by the FSC of electric energy produced by energy waste disposal facilities.

3)     The introduction of procedure for the centralized purchase of flood electric energy by the FSC.

4)     FSC makes the respective calculations based on actual and forecast data annually until 15 January of the forecast year.

3) State re-gistration of legal entities[6]

The law now requires an agreement on the alienation (assignment) of the participation interest in the partnership to be appended to the rest of the documents filed with the NJSC State Corporation “Government for Citizens” during the state re-registration of the partnership associated with the change of participant(s). The said agreement entered into individuals is subject to notarization.

4) Investment tax credit

The rules for concluding an investment tax credit agreement for obtaining an investment tax credit as part of an investment contract[7] have been introduced.

Investment tax credit means a change of terms for paying taxes for upcoming periods, whereby taxpayers shall be given the opportunity to reduce their tax payments by 100% within a certain period, followed by a phased payment of the loan amount. An investment tax credit can be granted for corporate income tax and property tax for a period of up to 3 years. The procedure for reducing tax payments is determined by the investment tax credit agreement.

In order to obtain an investment tax credit an applicant applies to the state revenue authority in Kazakh and Russian languages ​​with the attachment of the following documents:

1)     an identity document of the applicant or PoA for a representative with an identity document of the authorized person;

2)     a copy of the investment contract with all attachments, certified by the seal of the legal entity (if any);

3)     payment schedule.

Terms:

Ø  Reviewing of an application and preparation of an agreement - up to 15 business days;

Ø  Signing of an agreement by the parties - up to 30 calendar days;

Ø  Registration of an agreement by the authorized body - up to 5 business days;

Ø  Sending a copy of the agreement to the state revenue authority - up to 5 calendar days.

[1]Agreement on Trademarks, Service Marks and Appellations of Origin of Goods of the Eurasian Economic Union (Moscow, 3 February 2020).

[2]Law of the Republic of Kazakhstan No. 28-VII dated 1 April 2021 "On Ratification of the Agreement on Trademarks, Service Marks and Appellations of Origin of Goods of the Eurasian Economic Union."

[3]Order of the Minister of Energy of the Republic of Kazakhstan No. 124 dated 7 April 2021 "On Amendments and Additions to the Order of the Minister of Energy of the Republic of Kazakhstan No. 164 dated 2 March 2015 " On Approval of the Rules for the Centralized Purchase and Sale of Electric Energy Produced by the Renewable Energy Sources Facilities, Recalculation and Redistribution by the Settlement and Financial Center of the Corresponding Share of Electric Energy per Qualified Conventional Consumer Based on the Results of the Calendar Year ”. Entered into force on 19 April 2021.

[4]Order of the Minister of Energy of the Republic of Kazakhstan No. 125 dated 7 April 2021 "On Amendments to the Order of the Minister of Energy of the Republic of Kazakhstan No. 118 dated 20 February 2015 "On Approval of the Rules for Determining the Tariff for Support of Renewable Energy Sources". Entered into force on 19 April 2021.

[5]Order of the Minister of Energy of the Republic of Kazakhstan No. 123 dated 7 April 2021 "On Amendments and Additions to the Order of the Minister of Energy of the Republic of Kazakhstan dated 28 December 2017 No. 480 "On Approval of Standard Forms of Contracts of the Settlement and Financial Center with Energy Generating Organizations Using Renewable Energy Sources, Conditional Consumers and Qualified Conditional Consumers”. Entered into force on 19 April 2021.

[6]Order of the Minister of Justice of the Republic of Kazakhstan No. 259 dated 5 April 2021 "On Amendments to the Order of the Vice Minister of Justice of the Republic of Kazakhstan dated 29 May 2020 No. 66 "On Approval of the Rules for the Provision of Public Services with respect to State Registration of Legal Entities and Record Registration of Branches and Representative Offices ". Entered into force on 18 April 2021.

[7]Order of the Minister of Foreign Affairs of the Republic of Kazakhstan No. 11-1-4 / 106 dated 26 March 2021 "On Approval of the Rules for Concluding an Agreement on Investment Tax Credit for Obtaining Investment Tax Credit". Entered into force on 6 April 2021.