Monthly Legal Alert: September-December 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 period from September to December 2021 related to:

1. Trading activities;

2. Personal data and their protection;

3. The declaration of income and property of an individual (form No. 270.00);

4. A threshold value to ensure access to communication services for holders of the radio frequency spectrum permission;

5. Pricing rules for exported crude oil and gas condensate;

6. Rules for the implementation of extended obligations of manufacturers (importers).

1.     Trading Activities[1]

“Dark Store” 

Kazakhstan laws define Dark Store as wholesale distribution center - a multifunctional infrastructure trade and logistics complex. The latter consists of warehouses, pavilions and (or) other premises with special equipment, designed for the appropriate storage and (or) execution of procurement, preparation, distribution and (or) other operations with food products, the share of which is at least 60% of the total range of goods, and non-food products, the list of which is determined by the requirements for wholesale distribution centers, for their subsequent wholesale and (or) retail trade in the domestic and (or) foreign markets. 

Exchange Trading

The definitions “exchange trading”, “exchange trading”, “exchange goods”, "license for the right to engage in the activities of commodity exchanges" etc. have been introduced into the laws.

• exchange trading - entrepreneurial activity for the sale of exchange goods, carried out on a commodity exchange by conducting exchange trading in electronic form, registering and processing transactions in accordance with the legislation of the RK on commodity exchanges;

• exchange trading - a process carried out within the framework of the rules of exchange trading, aimed at making transactions in exchange goods on the basis of electronic orders submitted to the electronic trading system of the commodity exchange, which automates the process of concluding exchange transactions;

• exchange trading participants - clients, brokers, dealers and market makers interacting on the commodity exchange according to the established rules of exchange trading;

• exchange commodity - a standardized or non-standardized commodity admitted by the commodity exchange to exchange trading subject to certain restrictions.

Entrepreneurship Stimulation Agreement[2]

An agreement to stimulate entrepreneurship is concluded by authorized bodies in the field of hydrocarbons, uranium mining and solid minerals with the National Chamber of Entrepreneurs of the RK and subsoil users on a voluntary basis. This agreement aimed at supporting local producers. The agreement will contain commitments for local content in goods. When these agreements are executed, subsoil users will be able to purchase goods without applying the rules of the regulated procurement procedure.

Social Entrepreneurship[3]

We have mentioned earlier that a new chapter named “social entrepreneurship” was introduced into the Entrepreneurial Code. Social entrepreneurship is the entrepreneurial activity of subjects of social entrepreneurship, contributing to the solution of social problems of citizens and society. More detailed information about the concept of "social entrepreneurship" was disclosed by us earlier in the previous review, access to which is possible at the following link: https://signumlaw.com/posts/obzor-zakonodatelstva-leto-2021-g.

The government resolution approved the rules for maintaining the register of a social entrepreneurship entities. The register of subjects of social entrepreneurship is an electronic database that contains information about individual entrepreneurs and legal entities that are subjects of social entrepreneurship. The activities for the formation and maintenance of the register are carried out by the authorized body for entrepreneurship. According to the rules, individual entrepreneurs and legal entities, in order to include it in the register, submit a list of certain documents to the local executive bodies of regions, cities of republican significance and the capital for consideration by a special commission.

2.     Personal Data and Their Protection[4]

The following amendments were introduced to the legislation of the RK in the personal data regulation:

1)     New definitions:

• “state service for controlling access to personal data” - a service that provides information interaction of owners and (or) operators, third parties with the subject of personal data and the authorized body when accessing personal data contained in the objects of informatization of state bodies and (or) state legal entities, including obtaining from the subject of personal data consent to the collection, processing of personal data or their transfer to third parties;

• “non-state personal data access control service” - a service that provides information interaction of owners and (or) operators, third parties with the personal data subject when accessing personal data contained in non-state informatization objects, including obtaining consent from the personal data subject for the collection, processing of personal data or their transfer to third parties. 

2)     Consent to the collection and processing of personal data will include:

• name (surname, name, patronymic (if it is indicated in the identity document), business identification number (individual identification number) of the operator;

• surname, name, patronymic (if it is indicated in the identity document) of the subject;

• the term or period during which the consent to the collection, processing of personal data is valid;

• information about the possibility of the operator or its absence to transfer personal data to third parties;

• information about the presence or absence of cross-border transfer of personal data in the process of their processing;

• information about the dissemination of personal data in public sources;

• list of collected data related to the subject;

• other information determined by the owner and (or) operator.

3.     Income and Asset Declaration of an Individual (form No. 270.00)

The form and rules for drawing up the income and asset declaration of an individual have been approved (form No. 270.00). 

The declaration must be submitted annually as of 31 December of the reporting tax period, starting from the year following the year of submission of the declaration of assets and liabilities of an individual. From 2024, managers, founders (participants) of legal entities and their spouses will be required to submit a declaration of income. And starting from 2025 all adults will be required to submit the same. The list includes: citizens; kandas persons; persons with a residence permit; foreigners or stateless persons who are residents of the RK; foreigners or stateless persons who are non-residents in the case of having property that is subject to state registration and/or a share of participation in housing construction. 

The declaration can be drawn up in both paper and electronic format.

You can see more detailed information in the Order of the Minister of Finance of the RK No. 927 dated 13 September 2021[5].

4.     A Threshold Value to Ensure Access to Communication Services for Holders of the Radio Frequency Spectrum Permission[6]

Individuals and legal entities that have received permits for the use of the radio frequency spectrum, issued for organizing broadband access to communication services, must ensure within a period of not more than 2 years from the date of receipt of such permits, the availability of technical infrastructure to provide access to communication services that meet the minimum threshold values ​​for quality, at least 30% of the population in each settlement in the territory of use of the issued permits. It should be noted that before this change, the legislation did not provide for the respective threshold value. 

5.     Pricing Rules for Exported Crude Oil and Gas Condensate[7]

The rules provide for the following methods:

• Methodology for determining the transaction (realization) price for crude oil and gas condensate.

• Methodology for determining the transaction (realization) price for crude oil and gas condensate when selling on FOB terms to the CPC-R terminal using the pipeline system of the Caspian Pipeline Consortium.

• Methodology for determining the transaction (realization) price for crude oil and gas condensate when selling through the Black Sea ports on FOB terms (except for the terminal of the Caspian Pipeline Consortium pipeline system).

• Methodology for determining the transaction (realization) price for crude oil and gas condensate during sales using the ports of the Mediterranean Sea along the route of the railway station of the RK and (or) the port of Aktau - Baku / Sangachal - Ceyhan.

• Methodology for determining the transaction (realization) price for crude oil and gas condensate during sales using the ports of the Caspian Sea on the terms of Free On Board port of the Caspian Sea.

• Methodology for determining the transaction (realization) price for crude oil and gas condensate when selling using the ports of the Baltic Sea.

• Methodology for determining the transaction (realization) price for crude oil and gas condensate exported via the Druzhba main oil pipeline.

• Methodology for determining the transaction (realization) price for crude oil and gas condensate exported by rail.

To determine the market price of crude oil and gas condensate, official sources of information are used, which were determined in the sales contract.

If there is a threat of adverse socio-economic consequences, at the request of the participants in the transaction, the resolution of the Government of the RK may set the price of the transaction and (or) the procedure (methodology) for pricing. 

6.     Rules for the Implementation of Extended Obligations of Manufacturers (importers)[8]

The rules provide for requirements for the fulfillment of extended obligations of producers (importers) and determine the procedure for their implementation for the purposes of environmental protection. The rules provide for:

      (i) the procedure for fulfilling obligations to organize the collection, transportation, preparation for reuse, sorting, processing, processing, neutralization and (or) disposal of waste generated after the loss of consumer properties of products;

      (ii) features of fulfillment of extended obligations by manufacturers (importers) of motor vehicles and self-propelled agricultural machinery;

      (iii) features of fulfillment of extended obligations by manufacturers (importers) of products made of plastic, paper and cardboard, polymer, glass, paper, cardboard and (or) metal packaging, packaging from combined materials, imported products in polymer, glass, paper, cardboard and (or) metal packaging, packaging from combined materials.

[1]Law of the RK No. 96-VII dated 30 December 2021 “On Amendments to Certain Legal Acts of the Republic of Kazakhstan on Issues of Trading Activities, Development of Exchange Trading and Protection of Personal Data”. Effective from 2 March 2022.

[2] Law of the RK No. 72-VII dated 15 November 2021 "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Public Procurement, Procurement of Subsoil Users and Natural Monopolies, Communications, Automobile Transport, Defense and Science Financing". Enters into force on 1 January 2022.

[3] Resolution of the Government of the RK No. 773 dated 28 October 2021. Entered into force on 12 November 2021.

[4] Law of the RK No. 96-VII dated 30 December 2021 “On Amendments to Certain Legal Acts of the Republic of Kazakhstan on Issues of Trading Activities, Development of Exchange Trading and Protection of Personal Data”. Effective from 2 March 2022.

[5] Order of the Minister of Finance of the RK No. 927 dated 13 September 2021. Enters into force on 1 January 2022.

[6] Law of the RK No. 72-VII dated 15 November 2021 "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Public Procurement, Procurement of Subsoil Users and Natural Monopolies, Communications, Automobile Transport, Defense and Science Financing". Enters into force on 1 January 2022.

[7] Decree of the Government of the RK No. 647 dated 21 September 2021 “On Approval of the Rules (Methodology) for Pricing for Exported Crude Oil and Gas Condensate”. Effective from 4 October 2021.

[8] Decree of the Government of the RK No. 763 dated 25 October 2021 "On Approval of the Rules for the Implementation of Extended Obligations of Producers (Importers)". Effective from 7 November 2021.