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 May-June 2023 related to:
1. Digital mining and digital assets;
2. State fee for lawsuits;
3. Unified Purchaser of Electricity;
4. Schedule and plan of the RES auctions;
5. The law on online platforms and online advertising;
6. “One stop shop” for investors;
7. Price for cigarettes increased.
1. Digital Mining and digital assets
Licensing and Application Form
The rules for licensing of digital mining activities were approved. According to the rules, there are 2 subtypes of license:
Ø I subtype – performing digital mining activities by a digital miner who has a digital mining data center by virtue of ownership or other legal grounds;
In other words, I subtype is carried out by miners who have their own warehouses and other non-residential premises for digital mining.
Ø II subtype - performing digital mining activities by a digital miner who does not have a digital mining data center by virtue of of ownership or other legal grounds and performing digital mining by a digital miner using the hardware and software complex owned by such miner and located in the data center digital mining.
Subtype II is essentially cloud mining, when mining activities can be carried out with remote rental of accommodation in a digital mining data center.
Application is submitted electronically through the e-gov.kz or elicense.kz portal in the form approved by the Order of the acting Minister of National Economy of the RK. The term for review is 15 business days. The amount of the state fee for I subtype – 2,000 MCI, II subtype - 5 MCI. The applicant must meet the requirements described below.
You can find the application form for obtaining a license at the following link: https://adilet.zan.kz/rus/docs/V2300032431.
Reporting on income
The rules for providing information on income of digital miners and digital mining pools for tax purposes were approved.
According to the rules, a digital mining pool distributes digital assets among digital miners obtained as a result of their joint activities. No later than the 25th day after the distribution, the digital mining pool submits to the authorized bodies an application and information on income of digital miners for the corresponding calendar month.
In case of change of information about the income of digital miners and digital mining pools, the digital mining pool files an application with the updated information with the authorized bodies within 10 business days.
The following qualification requirements for obtaining a license for digital mining activities were approved:
Ø information on inclusion in the register of hardware and software complex for digital mining;
Ø information on the right of ownership or other legal basis of the digital mining data center;
Ø information about the location of the digital mining data center outside the residential area;
Ø information on implementation of digital mining activities through a digital mining pool;
Ø information on availability of an automated system for commercial accounting of electrical energy, telecommunications systems that ensure their unification with systems, load disconnection devices installed at the system operator and at the power transmission organization when connected to their networks in accordance with Article 9-4 paragraph 3 of the Law of the RK " On the electric power industry” (this provision enters into force on 1 January 2024);
Ø information on technical conditions for connecting to electrical networks for digital miners, issued by energy transmission organizations exclusively from transformer substations with a voltage of 35 kilovolts and higher with a permitted power of at least one megawatt in accordance with the legislation of the RK on the electric power industry (does not apply to service recipients using electricity generated by autonomous generating installations not connected to the unified electric power system of the RK).
Ø information on inclusion in the register of hardware and software complex for digital mining;
Ø information about the placement in the data center of a hardware and software complex for digital mining, owned by him on the right of ownership;
Ø information on implementation of digital mining activities through a digital mining pool.
The rules for provision of services for issuing permission for the issuance and circulation of secured digital assets were approved. The authorized governmental authority is the Ministry of Digital Development, Innovation and Aerospace Industry of the RK. The service is provided in electronic format on the e-gov.kz portal. The period for issuing a permit is 5 business days.
The application must include the following package of documents:
Ø An electronic copy of an extract from the Register of Trademarks and (or) an electronic copy of an extract from the Register of Appellations of Origin of Goods or an electronic copy of a contract for the sale of property (goods) or an electronic copy of a contract for the retail sale of goods or an electronic copy of a contracting agreement or an electronic a copy of an exchange agreement or an electronic copy of a donation agreement or an electronic copy of an agreement on creation and use of the results of intellectual creative activity or an electronic copy of the certificate of entering information into the State Register of rights to objects protected by copyright;
Ø A letter of guarantee in any form on lease of server equipment or purchase and sale of at least 5 (five) nodes of the blockchain network of a distributed data platform and (or) on algorithm for confirming data writing to the nodes.
You can read more about digital assets in our previous Legal Alert at the following link https://signumlaw.com/en/posts/monthly-legal-alert-april-2023.
2. State Fees for Lawsuits
Amendments to Article 610 of the Tax Code regarding the upper limit of the state fee for lawsuits are introduced. The state fee is imposed as follows:
for property claims:
ü for individuals - 1 %of the amount of the claim, but not more than 10,000 MCI;
ü for legal entities - 3 % of the amount of the claim, but not more than 20,000 MCI.
for applications for review of judicial acts in cassation and rulings on the cancellation of arbitration awards and the issuance of writ of execution for the enforcement of arbitration awards and foreign court rulings, decisions of courts on disputes of a non-property and property nature, the state fee is imposed in the amount of 50 percent of the relevant state fee specified above for the subject of circulation.
It should be noted that there was no upper limit of the state fee in the past.
3. Unified Purchaser of Electricity
The Financial and Settlement Center for the Support of Renewable Energy Sources has been designated as Unified Purchaser of the Electricity. According to representatives of the Ministry of Energy, this model is approved due to imbalances in the energy system, the predicted shortage of electricity and unequal conditions for competition due to different tariffs of energy producing organizations. According to their forecasts, the Unified Purchaser model will allow:
ü exclude speculative transactions when buying and selling electricity;
ü reduce inefficient intermediaries;
ü minimize deviations of interstate balances of electric energy flows at the border with adjacent energy systems, by avoiding the formation of daily schedules based on the technical capabilities of power plants to the actual schedules of consumers;
ü ensure balancing of high tariffs of newly introduced generation sources, and prices of imported electricity in times of shortage and current tariffs of existing stations, and also, in the future, to equalize electricity tariffs between regions.
4. Schedule and Plan for RES Auctions
By order of the Minister of Energy of the Republic of Kazakhstan, the schedule of auctions for renewable energy sources for 2023 approved. RES Auctions will run from 31 August 2023 to 30 November 2023.
Furthermore, this order approved a plan for auctions for 2024-2027.
You can learn more about the schedule and plan at the following link: https://vie.korem.kz/rus/uchastie_v_torgah/uchastie_vie/ .
5. The law on online platforms and online advertising
The draft Law of the Republic of Kazakhstan on online platforms and online advertising was approved by the Mazhilis and sent to the Senate for further consideration.
An online platform is an Internet resource and (or) software operating on the Internet, and (or) an instant messaging service designed to receive, produce and (or) host, and (or) distribute, and (or) store content on the online platform by the user of the online platform through an account created by him, a public community, with the exception of an Internet resource and (or) software operating on the Internet, and (or) an instant messaging service designed to provide financial services and electronic commerce.
The law provides for the following innovations:
Ø introduction of the required Kazakh language interface of online platforms;
Ø conducting desk-top audits and sending notifications to the owners of online platforms, which must cure violations within 3 business days;
Ø owners of online platforms that have an average daily access of more than 100,000 users on the territory of the RK per month appoint a representative included in the register to communicate with authorized governmental authorities;
Ø online platforms are required to make publicly available information on the average monthly number of users in the territory of the RK for the last six months of the operation of the online platform;
Ø online advertising must be identifiable and marked, must contain text and (or) graphic and (or) other designations indicating that the content is online advertising;
Ø sponsored content must contain text and (or) graphic and (or) other designations indicating the sponsor;
Ø sponsored content should not discredit individuals or legal entities, their goods, works, services and contain opinions and (or) audio recordings and (or) photo and video images of third parties without their prior consent;
Ø if sponsored content contains recommendations, testimonials and supporting documents, they must be authentic and verifiable.
6. “One stop shop” for investors
The rules for arranging a "one stop shop" for investors were approved. The provision of services is carried out through a system of front offices of the external, central and regional levels.
The provision of services is carried out by:
Ø Task Force in relation to investors implementing investment projects with an investment volume of 7,500,000 MCI (approximately USD 57 million) in all sectors of the economy;
Ø The National Company, its regional representatives and representative offices in relation to investors implementing investment projects with an investment volume of 150,000 MCI (approximately USD 1,150,000) in all sectors of the economy.
Ø Regional organizations in relation to investors implementing investment projects in all sectors of the economy with an investment of less than 150,000 MCI.
The functions of the front offices include extensive powers, including information and advisory functions, organizing visits, etc. You can find more details about the functions of front offices in the Order of the Minister of Foreign Affairs of the Republic of Kazakhstan No. 11-1-4/327 dated 26 June 2023.
7. Increasing the price of cigarettes
By order of the Minister of Finance of the RK, the minimum prices for 20 filtered and non-filtered cigarettes, cigarettes, cigarillos and products with heated tobacco are approved in the amount of KZT 710 from 1st July 2023 to 31 December 2023 inclusive, and KZT 770 from 1st January 2024.