Monthly Legal Alert: July-August 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 August 2023 related to:

1.     Digital mining;

2.     New work permits rules;

3.     Double taxation matters;

4.     Rules for transition to subsoil use licence regime;

5.     Prohibition on liquefied gas filling stations;

6.     Completion of customs transit procedure;

7.     Rules for maintaining and using business entities register;

8.     Rules for  tourist fee payment.

1.     Digital mining

The Ministry of Energy[1] of the RK approved, the wholesale limit prices for commodity gas on the domestic market intended for sale to large commercial consumers and persons engaged in digital mining.

Thus the most expensive gas price would be in Almaty, Almaty region and Zhetisu region, which is KZT 53,254 per 1,000 cubic meters excluding VAT. The least is in East Kazakhstan region, KZT 9,076 per 1,000 cubic meters excluding VAT. 

2.     New work permit rules

By way of Order[2] the Minister of Labor of the RK approved new work permit rules.

Below we have highlighted the following novelties:

1)     If there are grounds for refusal, a local executive body (Akimat) sends its preliminary decision to an employer’s “personal account”. Such preliminary decision may be objected within 2 business days from the date of receipt of the decision.

2)     Local content of citizens is now taken into account together with employees of the sending party under the contract for rendering personnel services.

3.     Double taxation matters

By way of Order[3] the Minister of Finance of the RK approved the List of countries that ratified the international treaty on avoidance of double taxation and prevention of tax evasion and whose nominal income tax rate exceeds 75% of the CIT rate in the RK. You may find the full list at the following link: https://adilet.zan.kz/rus/docs/G23E0000680

4.     Rules for Transition to Subsoil Use Licence Regime

According to the new rules for transition to the subsoil use licence regime[4], a service recipient, a subsoil user under the exploration/combined exploration and production contract (during the exploration period) of solid minerals files an application for reissuance of the subsoil use right and the necessary documents through the unified platform of subsoil users "Minerals.gov.kz" or delivers the same to the registry office of the solid minerals service provider .

The aforementioned application form for reissuance of the subsoil use right is set out in Appendix 1 of the Order[5] to the List of Basic Requirements for Provision of the State Service "Issuance of a License under the Transition to a Subsoil Use Licence Regime" .

5.     Prohibition on Liquefied Gas Filling Stations

The Law[6] prohibits as from 30 August 2023:

1)     operation of the same gas filling stations simultaneously by two or more individuals and (or) legal entities;

2)     owners of gas filling stations and gas filling points to transfer technologically interrelated production and other facilities, engineering structures designed for storage, discharge and loading of liquefied petroleum gas into possession and (or) use of third parties.

6.     Completion of Customs Transit Procedure

The customs transit completion procedure[7] was amended.

Upon registry of documents filed for completion of the customs transit procedure, the latter is finalized by placing the goods for temporary storage, releasing the goods in accordance with the declared customs procedure, save for customs transit procedure, departure of goods from the customs territory in the following cases:  

1)     placement of goods for temporary storage - if there are signs of violation of the customs legislation of the EAEU[8] and the RK;

2)     release of goods in accordance with the declared customs procedure - in case of preliminary customs declaration;

3)     loss of goods when such goods are transported by air.

7.     Rules for Maintaining and Using Business Entities Register

As from 1 August 2023, amendments were made to the rules for maintenance and use of the business entities register with regard to information on licences in the state electronic register of permits and notifications[9].

For example, information on licences for lottery and gambling activities, as well as certain digital mining activities became publicly available.

At the same time, information on activities related to the extraction, processing and sale of oil, oil products, gas, electricity and heat was excluded from the register.

8.     Rules for Foreign Tourist Fees

The Order[10] introduces tourist fees for foreigners.

Tourist fee for foreigners is a payment charged from tourists for each day of stay in tourist accommodation, except for hostels, guest houses, rental accommodation in cities and districts. Tourist fee is paid by foreigners or individuals or legal entities paying for the foreigner's accommodation (inviting party, travel operator).

The tourist fee rates are set by the local executive body which are then approved by the relevant Maslikhat[11].

Fixed rates ranging from 0.2 to 0.5 MCI are applied to the tourist fee at accommodation sites[12].

The tourist fee is a non-tax contribution to the budget of the city of national status, the capital and the district (city of regional status)[13].

1. Order of the Minister of Energy of the Republic of Kazakhstan No. 246 dated 30 June 2023 «On Approval of Marginal Prices of Wholesale Sales of Commodity Gas in the Domestic Market of the Republic of Kazakhstan, Intended for Subsequent Sale to Large Commercial Consumers, Persons Engaged in Digital Mining, or Persons Producing Electricity for Digital Mining». Entered into force on 30 June 2023.
2. Order of the Deputy Prime Minister - Minister of Labor and Social Protection of the Republic of Kazakhstan No.279 dated 30 June 2023 «On Approval of the Rules and Conditions of Issuance or Extension of Permits to Employers to Attract Foreign Labor, as well as the Implementation of Intra-Company Transfer». Entered into force on 1 July 2023.
3. Order of the Deputy Prime Minister - Minister of Finance of the Republic of Kazakhstan No. 680 dated 19 June 2023 «On Approval of the List of Countries with which the International Treaty Regulating the Avoidance of Double Taxation and Prevention of Tax Evasion Came Into Force, the Nominal Income Tax Rate Exceeds 75 Percent of the Corporate Income Tax Rate in Kazakhstan». Entered into force on 19 June 2023.
4. Order of the Minister of Industry and Infrastructure Development of the RK dated 14 June 2023 No. 442 "On Amendments to the Order of the Minister of Investment and Development of the RK dated 24 May 2018 No. 379 "On Approval of the Rules of Transition to a Subsoil Use Licence Regime and the Rules of the Commission on Transition to the Subsoil Use Licence Regime". Entered into force from 21 August 2023.
5. Order of the Minister of Investment and Development of the RK dated 24 May 2018 No. 379 "On Approval of the Rules of Transition to the Subsoil Use Licence Regime and the Rules of Work of the Commission on Transition to the Subsoil Use Licence Regime". Appendix 1 to the List of Basic Requirements for the Provision of the State Service "Issuance of a License in the Framework of Transition to the Subsoil Use Licence Regime". Entered into force from 21 August 2023.
6. Law of the RK dated 29 June 2023 No. 13-VIII "On Amendments and Additions to Some Legislative Acts of the RK on Regulation of Liquefied Gas Turnover and Housing and Communal Services". Entered into force on 1 July 2023.
7. Order of the Minister of Culture and Sports of the RK dated 14 July 2023 No. 181 "On Approval of the Rules of Payment of Tourist Fee for Foreigners". Entered into force on 1 August 2023.
8. EAEU is the Eurasian Economic Union.
9. Order of the Acting Minister of Finance of the RK dated 19 July 2023 No. 777 "On Amendments to the Order of the Minister of Finance of the RK dated 16 February 2018 No. 216 "On Some Issues of Arrival and Customs Transit of Goods and Vehicles". Entered into force on 7 August 2023.
10. Order of the Minister of Culture and Sports of the RK dated 14 July 2023 No. 181 "On Approval of the Rules for Payment of Tourist Fee for Foreigners". Entered into force on 1 August 2023.
11. The Law of the RK dated 23 January 2001 No. 148-II "On Local Government and Self-government in the RK"
12. 1 MCI for 2023 – KZT 3,450 (approximately USD 7.5).
13. In accordance with the Budget Code of the Republic of Kazakhstan No. 95-IV dated 4 December 2008.