Monthly Legal Alert: April 2023
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 April 2023 related to:
1. Digitalization of granting the land plots;
2. Ban on export of petroleum products;
3. Auction for the sale of debtor’s property;
4. Labor issues;
5. New Social Code of the RK;
6. Special tax regime of retail tax;
7. Digital mining.
1. Digitalization of Granting the Land Plots[1]
The land legislation has been revised with the focus on digitalization of governmental services. The changes concern the following:
Ø Electronic procedure for granting land plots has been simplified - it will now take up to 30 business days.
Ø The land commission is excluded and all the related documents, such as the protocol decision of the land commission, land management project, etc., are no longer required. The documents will be reviewed in turn by all interested governmental authorities.
Ø Online monitoring of the progress of approval of documents in governmental authorities and other organizations has been established.
Ø The concept of a public cadastral map has been introduced. A public cadastral map is a digital map that contains information from the land, legal and urban cadasters of the RK, as well as other information from governmental authorities and (or) organizations.
2. Ban on Export of Petroleum Products
The Order of the Minister of Energy of RK[2] introduced a ban on export of the following petroleum products from the territory of the RK outside the EAEU from 8 April 2023 to 31 December 2024:
- jet fuel;
- diesel fuel;
- gas oils;
- toluene;
- xylenes;
- petroleum bitumen.
3. Auction for the Sale of Debtor’s Property
Following our publication on bankruptcy of individuals, we would like to inform on adoption of new rules[3] (hereinafter referred to as the "Rules") for holding an electronic auction for the sale of property of a debtor.
An electronic auction:
1. Is held by the financial manager in accordance with the plan for the sale of the debtor's property. The plan is drawn up on the basis of an inventory and assessment of the debtor's property mass.
2. The starting price is set by the seller at a level not lower than 75% of the appraised value of the property.
3. The price change step is set from 10 to 0.5% depending on the starting price. In order to participate in the auction one must submit an electronic application signed with an EDS and make a guarantee fee of 10% of the starting cost of the lot, but not less than 20 MCI[4].
4. An electronic auction is held up to the maximum offered price by one of the participants.
The parties conclude a sale and purchase agreement in electronic format on the electronic portal of the registry within 10 business days from the date of signing the protocol on the results of the auction. The parties sign the agreement using their EDS.
4. Labor Issues
Entering into an employment agreement by foreigners
According to the introduced amendments to the Labor Code [5], foreigners and stateless persons temporarily residing in the territory of the RK will not be able to conclude an employment agreement without a temporary medical insurance contract covering primary health care and specialized medical care in a hospital in an emergency form on conditions established by the laws of the RK.
Regulation of workers hired through Internet platforms
The Labor Code has been amended[6] with provisions that regulate the work of employees hired by an individual entrepreneur or a legal entity carrying out activities using Internet platforms and (or) a mobile application. Those include taxi drivers and couriers who use mobile applications. An employment agreement must be concluded between an employee and an individual entrepreneur or legal entity for a fixed period. The current minimum term of an employment contract of 1 year according to the Labor Code is not applicable to this category of employees, and after the conclusion of the contract, all social obligations, including tax withholding, shall be applicable.
5. New Social Code of the RK
On 20 April 2023, the President of the RK signed the Social Code of the RK [7] (hereinafter referred to as the “Code”). The Code consists of general and special parts, totaling in 263 articles. The Code repeals the Law of the Republic of Kazakhstan dated 21 June 2013 "On Pension Provision in the Republic of Kazakhstan" and the Law of the Republic of Kazakhstan dated 26 December 2019 "On Compulsory Social Insurance". Most of the provisions of the Code will enter into force on 1 July 2023.
The general part is devoted to the provisions related to governmental regulation in the field of social security, social rights and principles for the provision of governmental social support, the legal status of social workers. The special part regulates the procedure for the implementation and direction of social security, compulsory social insurance, pension contributions, etc.
The main novelties include:
Ø Increase in the maximum amount for sick leave from 15 MCI to 25 MCI;
Ø Introduction of mandatory payment of social contributions under civil contracts;
Ø Introduction of obligations for individual entrepreneurs to pay mandatory pension contributions and social contributions from the same amount of income;
Ø Introduction of the possibility of establishing a 4-day working week;
Ø Cancellation of the single social payment from 1 January 2024.
6. Special Tax Regime of Retail Tax
The Decree of the Government of the RK approved the types of activities for the application of the STR of the retail tax. You can find the full list at the following link: https://online.zakon.kz/Document/?doc_id=38081235&pos=6;-106#pos=6;-106
The STR of retail tax provides for a special procedure for calculating corporate or individual income tax, with the exception of taxes withheld at the source of payment.
The STR of the retail tax may be applied by taxpayers meeting the following criteria:
Ø The average number of employees for the tax period does not exceed 200 people;
Ø Income for a calendar year does not exceed 600,000 MCI established by the law on the republican budget and effective as of 1 January of the corresponding financial year;
Ø Carry out exclusively one or more of the types of activities determined by the Government of the RK for the purposes of applying this regime;
Ø Legal entities, in which the founder or participant is simultaneously the founder or participant of another legal entity applying the STR of retail tax, are not entitled to apply the STR of retail tax.
7. Digital Mining
Licensor
By the Decree[8] of the Government of the RK, the Ministry of Digital Development, Innovation and Aerospace Industry is determined as the licensor for licensing digital mining activities. An application for a license is submitted through the electronic portal www.elicense.kz.
Accreditation of digital mining pools
The rules for accreditation of digital mining pools [9] have been approved.
Digital mining pool is a legal entity that provides the service of combining the capacities of a hardware and software complex for digital mining of digital miners, distributing digital assets obtained as a result of their joint activities between digital miners. Accreditation is carried out by the governmental authority in electronic format by submitting an application through the electronic portal www.elicense.kz.
During the process of applying for accreditation, the documents to be provided are as follows:
Ø A document confirming the physical location of the hardware and software complex of the digital mining pool on the territory of the RK;
Ø An act with a positive test result for compliance with the information security requirements of the hardware and software complex of a legal entity subject to accreditation as a digital mining pool;
Ø A document confirming the presence of at least 1 backup hardware and software complex at another location in the RK;
Ø A document confirming the provision of each of the hardware and software complex of the digital mining pool (main and backup) with two dedicated communication channels from different providers (providers) of communication services;
Ø A document confirming the presence in the information system of a digital mining pool of a technical support service;
Ø A document confirming the availability of a user interface in the state, Russian and English languages of the digital mining pool information system.
- Law of the Republic of Kazakhstan No. 221-VII dated 5 April 2023 “On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Digitalization of Public Services in the Field of Land Relations”. Enters into force on 1 July 2023 with certain exceptions.
- Order of the Minister of Energy of the Republic of Kazakhstan No. 118 dated 24 March 2023 "On Approval of the List of Petroleum Products Prohibited or Restricted for Export from the Republic of Kazakhstan Outside the Customs Territory of the Eurasian Economic Union". Entered into force on 8 April 2023.
- Order of the Deputy Prime Minister - Minister of Finance of the Republic of Kazakhstan No. 231 dated 2 March 2023 "On Approval of the Rules for Holding an Electronic Auction for the Sale of the Debtor's Property and Determining its Organizer". Entered into force on 8 March 2023.
- 1 MCI for 2023 – KZT 3,450 (approximately USD 7,5). 20 MCI = KZT 69,000 (approximately USD 150).
- Law of the Republic of Kazakhstan No. 223-VII dated 19 April 2023 "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Administrative Reform in the Republic Of Kazakhstan". Entered into force on 1 May 2023.
- Law of the Republic of Kazakhstan dated 20 April 2023 No. 226-VII “On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan On Social Security Issues”. Enters into force on 1 July 2023.
- Code of the Republic of Kazakhstan No. 224-VII dated 20 April 2023 "Social Code of the Republic of Kazakhstan". Enters into force on 1 July 2023, with certain exceptions.
- Decree of the Government of the Republic of Kazakhstan No. 293 dated 13 April 2023 “On Determining the Licensor for Licensing Digital Mining Activities”. Entered into force on 17 April 2023.
- Order of the Minister of Digital Development, Innovation and Aerospace Industry of the Republic of Kazakhstan No. 142/НҚ dated 11 April 2023 "On Approval of the Rules for the Accreditation of Digital Mining Pools". Entered into force on 1 April 2023.
