DOING BUSINESS IN KAZAKHSTAN IN 2017
Since 2003, Healy Consultants Group PLC has been efficiently and effectively assisting our Clients with i) Kazakhstan business registration ii) business licensing iii) Kazakhstan business banking solutions iv) visa options and staff recruitment strategies and v) workspace rental solutions.
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Advantages and disadvantages
Advantages of Kazakhstan company registration
- Kazakhstan has seen consistently high growth over the past decade, with annual growth rates between 7 – 13% every year from 2001 – 2007 and 2010 – 2012, with growth continuing at more than 5% since. Though growth contracted during the global downturn in 2008, Kazakhstan never entered recession and the economy recovered swiftly;
- Kazakhstan has made efforts to improve the quality of Kazakh investment procedures and incentives to help aid the growing manufacturing and resource-processing industries. Demand is also high for foreign expertise to help manage the rapidly expanding banking and space exploration industries;
- Compared to countries in the western world, the cost of living and doing business in Kazakhstan is very cheap, including food, transport, utilities, rent, wages etc. Specifically, office rental and utility costs tend to be a fraction of what they are in most western cities;
- While Kazakhstan is landlocked, it is very close to two major markets – China and Russia. Kazakhstan has established strong trade relationships with both of these countries and owes much of its economic success to wealth gained from trading oil with high-demand markets like these. Kazakhstan has also established successful trade with Italy, Netherlands and France;
- Kazakhstan has seen a large inflow of foreign direct investment since the 1990s, with FDI increasing sharply in 2007 and increasing from that elevated level into the present year. Mining and quarrying remain the largest industry for FDI, while the finance industry has become the second largest industry for FDI, thanks to a 600% increase in investment in 2012;
Disadvantages of Kazakhstan company registration
- Kazakhstan has a corporate tax rate of 20% for foreign and domestic companies. A lesser rate of 5 – 20% applies to income derived by sources in Kazakhstan by a nonresident without the use of a permanent establishment. However, this same group is taxed a 15% withholding rate on dividends paid, with this rate increasing to 20% if the payee is registered in a ‘tax haven’;
- English is spoken by only a small minority of Kazakhs, with Kazakh and Russian being the official and most common languages. Official incorporation documents must be translated in to one of these languages to be accepted;
- Kazakhstan’s court system is still underdeveloped, with courts lacking the ability to adequately protect property rights. Intellectual property rights are also ignored throughout the country;
- Kazakhstan suffers from high corruption, which can act as a barrier to completing many standard business practices. Kazakhstan is ranked 123rd out of 168 jurisdictions in the 2015 Corruption Perceptions Index by Transparency International. Entrepreneurs should expect under-the-table bribes in order to expedite business operations;
- Exporting goods in Kazakhstan often requires stiff bribes to be paid to border guards and custom officers on a regular basis. While the tariff rate is just 3.4%, the lack of transparent import standards and licensing requirements can make trading a burden;
- While Kazakhstan is fully capable of protecting investors, the infrastructure in place to accept investments is poor, with convoluted legal codes and inconsistent application of regulations creating difficulties in the investment process.
Best uses for a Kazakhstan company
Mining, natural resources and auxiliary businesses
Kazakhstan has a wealth of natural resources. Kazakhstan is the 18th largest oil producer, has the 2nd largest deposits of uranium in the world, and has the largest nickel, zinc, and silver deposits in West Asia. The mining industry represents nearly one third of Kazakhstan’s exports and the burgeoning industry is completely open to foreign investment, with many of the major investments in the industry being joint ventures with foreign businesses. There are therefore large opportunities for companies engaged in exploiting these resources, or supplying materials to those who do.
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- Time to incorporate: Four weeks
- Cost to set up: US$13,220
- Minimum capital: US$1
- Physical office required: No
- Shareholders: 1
- Directors: 1
- Company secretary: No
- Resident director: No
- Corporate tax rate: 20%
- Corporate tax base: Worldwide
- Shelf companies: No
- Main company type: LLP
Frequently asked questions
Can my business register a subsidiary in Kazakhstan?Yes. Kazakh subsidiaries may be established by international businesses with relative ease, as the country has relaxed rules on foreign investment in most sectors.
What kinds of companies are most likely to want to register a subsidiary in Kazakhstan?Oil and natural resources companies often do business in Kazakhstan through local subsidiaries and joint ventures in order to take advantage of the country’s mineral wealth. Financial services firms have also been expanding into Kazakhstan to handle the money being generated by these industries.
Useful links for Kazakhstan
Government and public authority websites:
- Invest in Kazakhstan
- Kazakhstan Central Bank
- Kazakhstan Stock Exchange
- Chamber of Commerce
- Kazakhstan airports
- Visiting Kazakhstan
- Doing Business in Kazakhstan
- Doing Business 2015
- PWC; Doing Business Guide Kazakhstan
- Success Stories: Foreign Investors in Kazakhstan
- Doing Business in Kazakhstan; Tax and Legal Issues
- PFK; Kazakhstan Tax Guide
- Kazakhstan Corporate Governance