Summary of the lecture for #techmeetupkz, Guide for investment, incorporation and doing business in Kazakhstan

1. Guide for investment, incorporation
and doing business in Kazakhstan.

2. Legal Forms - Comparison
The most popular legal forms of business in Kazakhstan are as follows:
Limited Liability
Company (LLC)
Joint Stock Company
(JSC)
Simple partnership
(SP)
Sole Proprietorship
Number of owners
Min. 1 owner, either
individual or business
entity
Min. 1 owner, either
individual or business
entity
Min. 2 owners, either
individual or business
entity
1 individual owner
Extent of liability
Owners are not liable
for company’s
obligations and bear
risks to the extent of
their equity
contributions
Owners are not liable
for company’s
obligations and bear
risks to the extent of
their equity
contributions
Participants are jointly
and severally liable for
obligations unless
agreement on joint
activity provides
otherwise
Full personal
ownership, therefore
unlimited liability
Min. paid-up capital
100 monthly index
factors or approx.
$1,000
50,000 monthly index
factors or approx.
$500,000
No requirements No requirements
Availability of
transfer of ownership
or exit opportunities
Allowed only to the
extent of LLC’s
founding documents
Full freedom in
transferring ownership
to third parties
Participant may
transfer its rights and
obligations to a third
party only with the
approval of all other
participants
Not available
Access to capital
markets
Only bank loans,
private placements or
government supported
programs
Full availability of debt
and equity instruments
including placements
on stock exchange
No access to capital
markets, participants
finance fully on their
own
Only bank loans or
government supported
programs

3. Legal Forms - Comparison
Colored are the most preferred legal forms for small investors, business angels, VC and
PE firms, development institutions, etc.:
Limited Liability
Company (LLC)
Joint Stock Company
(JSC)
Simple partnership
(SP)
Sole Proprietorship
Number of owners
Min. 1 owner, either
individual or business
entity
Min. 1 owner, either
individual or business
entity
Min. 2 owners, either
individual or business
entity
1 individual owner
Extent of liability
Owners are not liable
for company’s
obligations and bear
risks to the extent of
their equity
contributions
Owners are not liable
for company’s
obligations and bear
risks to the extent of
their equity
contributions
Participants are jointly
and severally liable for
obligations unless
agreement on joint
activity provides
otherwise
Full personal
ownership, therefore
unlimited liability
Min. paid-up capital
100 monthly index
factors or approx.
$1,000
50,000 monthly index
factors or approx.
$500,000
No requirements No requirements
Availability of
transfer of ownership
or exit opportunities
Allowed only to the
extent of LLC’s
founding documents
Full freedom in
transferring ownership
to third parties
Participant may
transfer its rights and
obligations to a third
party only with the
approval of all other
participants
Not available
Access to capital
markets
Only bank loans,
private placements or
government supported
programs
Full availability of debt
and equity instruments
including placements
on stock exchange
No access to capital
markets, participants
finance fully on their
own
Only bank loans or
government supported
programs

4. Legal Forms - Comparison
Colored are the most preferred legal forms for investment banks, PE firms, strategic
investors, large institutions etc.:
Limited Liability
Company (LLC)
Joint Stock
Company (JSC)
Simple partnership
(SP)
Sole Proprietorship
Number of owners
Min. 1 owner, either
individual or business
entity
Min. 1 owner, either
individual or business
entity
Min. 2 owners, either
individual or business
entity
1 individual owner
Extent of liability
Owners are not liable
for company’s
obligations and bear
risks to the extent of
their equity
contributions
Owners are not liable
for company’s
obligations and bear
risks to the extent of
their equity
contributions
Participants are jointly
and severally liable
for obligations unless
agreement on joint
activity provides
otherwise
Full personal
ownership, therefore
unlimited liability
Min. paid-up capital
100 monthly index
factors or approx.
$1,000
50,000 monthly index
factors or approx.
$500,000
No requirements No requirements
Availability of
transfer of
ownership or exit
opportunities
Allowed only to the
extent of LLC’s
founding documents
Full freedom in
transferring
ownership to third
parties
Participant may
transfer its rights and
obligations to a third
party only with the
approval of all other
participants
Not available
Access to capital
markets
Only bank loans,
private placements or
government
supported programs
Full availability of
debt and equity
instruments including
placements on stock
exchange
No access to capital
markets, participants
finance fully on their
own
Only bank loans or
government
supported programs

5. Kazakhstan taxation highlights for 2014
Source: Deloitte Touche Tohmatsu Limited.
Corporate Taxation:
Residence - registered in Kazakhstan or
permanent establishment (PE) location in
Kazakhstan;
Basis - Residents are taxed on worldwide
income. Nonresidents are generally taxed only
on Kazakhstan-sourced income.
Taxation of dividends - Dividends received
(except from risk investment funds) are
effectively exempt from income taxation.
Capital gains - Capital gains are treated as
normal income and taxed at the standard tax
rate.
Rate - The main corporate income tax rate of
20% applies to domestic and foreign
companies.
Withholding Taxes:
Dividends, Interest and Royalties - A
withholding tax of 15% is levied on dividends,
interest and royalties paid to nonresidents
without a PE in Kazakhstan.
A 20% tax rate applies to dividends, interest
and royalties paid to nonresidents registered in
tax haven jurisdiction.
Technical service fees - Same as royalties
stated above. However, if the service is
regarded as income of a nonresident from the
provision of general technical services, rather
than as royalty, then a 20% tax rate is applied.
For payments to nonresidents registered in tax
haven jurisdictions rules are similar to
royalties.
Value Added Tax:
Taxable transactions - VAT is levied on
supply of goods and services and imports.
Rate - 12%. Certain exemptions exist for
exports and financial transactions.
Registration - Compulsory for entities whose
turnover exceeds KZT 55,560,000 in a
calendar year period.
Filing - Payment is due by the 25th day of the
month following the reporting quarter. Should
be reported by the 15th day of the second
month following the reporting quarter.
Other taxes:
Payroll tax - 11% rate of social tax is applied
to employee’s gross salary (both local and
foreign).
As tax agents, employers must withhold and
remit a 10% individual income tax and
obligatory pension fund contributions on behalf
of employees. Contributions are equal to 10%
of monthly salary with a cap of KZT 149,745
per month.
Social security - Employer must pay social
security contributions at a rate of 5% (with an
income cap of KZT 199,660) in addition to
local employee’s salaries.
Real property tax - Property tax is levied on
immovable property located in Kazakhstan at
progressive rates of 0.1% to 1.5%, depending
on taxpayer’s activities.
Stamp duty - No standalone stamp duty
regime exists.
Transfer tax - No.
Capital duty - No.
Administration and Compliance:
Tax year - Calendar year.
Consolidated returns - Consolidated returns
are not permitted. Each company must file a
separate return.
Filing requirements - The corporate income
tax return is due by March 31 of the year
following the reporting year.
Penalties - Penalties are assessed at 2.5
times the official refinancing rate established
by the national bank for each day of delay.

6. Kazakhstan incorporation guide
Source: Doing Business in Kazakhstan, 2014
Basic Incorporation Procedure:
* - Time to complete can last longer depending on how fast you submit required documents.
** - Add consulting costs if you’re hiring a legal consultant (approx. $1,000 to $10,000 depending on a consultant,
chosen legal structure and business).
In case if you decide to change your legal structure, time completed and associated costs can be different
depending on your activities, audit requirements, obligations, etc.
No. Procedure
Time to
complete*
Associated costs**
1 Pay registration fee into the account of the Ministry of Justice 1 day no charge
2
State registration of legal entity and tax registration at the Public
Registration Center
7 days KZT 3,462
3 Make a company seal 1 day KZT 2,000 - KZT 4,500
4
Notarize certificate of state registration and other post-registration
documents
1 day 10% MIF per page
5 Open the current account in the bank 1 day no charge
6
Register for the obligatory insurance of life and health for
employees
1 day no charge

7. For further reference:
1. Doing Business in Kazakhstan, 2014. URL:
http://www.doingbusiness.org/data/exploreeconomies/kazakhstan
2. Kazakhstan Tax and Investment Highlights 2014, Deloitte. URL:
http://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-
kazakhstanhighlights-2014.pdf
3. Doing Business in Kazakhstan: An Introductory Guide to Tax and Legal
Issues, Ernst&Young. URL:
http://invest.gov.kz/upload/docs/en/fe7b5ae9e350a23a97174ac289889332.pdf
4. Investment Guide, KPMG. URL:
https://www.kpmg.com/KZ/en/IssuesAndInsights/ArticlesAndPublications/Documents
/Investment%20guide.pdf

8. • Created by Gaziz Seilkhanov, Berik Dossayev
• Inspired by Start Ups and Venture Capital lecture by
Gunter Festel, ETH Zurich, Spring 2012